AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 14, 2001

REGISTRATION NO.


SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

OMNICELL, INC.
(Exact name of registrant as specified in its charter)

           DELAWARE                          3571                         94-3166458
 (State or other jurisdiction    (Primary Standard Industrial          (I.R.S. Employer
              of                 Classification Code Number)         Identification No.)
incorporation or organization)


1101 EAST MEADOW DRIVE
PALO ALTO, CALIFORNIA 94303
(650) 251-6100

(Address, including zip code, and telephone number, including area code, of registrant's principal executive offices)

Sheldon D. Asher President and Chief Executive Officer 1101 East Meadow Drive Palo Alto, California 94303 (650) 251-6100

(Name, address, including zip code, and telephone number, including area code, of agent for service)

Copies to:

    Robert J. Brigham, Esq.                             Gary J. Kocher, Esq.
      COOLEY GODWARD LLP                             PRESTON GATES & ELLIS LLP
     Five Palo Alto Square                          701 Fifth Avenue, Suite 5000
      3000 El Camino Real                          Seattle, Washington 98104-7078
Palo Alto, California 94306-2155                          (206) 623-7580
        (650) 843-5000


APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:

As soon as practicable after the Registration Statement becomes effective.

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. / /

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. / /

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. / /

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. / /

If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. / /

CALCULATION OF REGISTRATION FEE

       TITLE OF SECURITIES              PROPOSED MAXIMUM AGGREGATE                  AMOUNT OF
         TO BE REGISTERED                   OFFERING PRICE(1)                  REGISTRATION FEE(2)
Common Stock......................             $69,000,000                           $17,250

(1) Estimated solely for the purpose of calculating the amount of the registration fee in accordance with Rule 457 under the Securities Act of 1933, as amended.

(2) $17,002 offset, pursuant to Rule 457, by previously paid registration fee of registrant's registration statement, No. 333-35258.

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT THAT SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.




SUBJECT TO COMPLETION, DATED MARCH 14, 2001

THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY NOT SELL THESE SECURITIES UNTIL THE SECURITIES AND EXCHANGE COMMISSION DECLARES OUR REGISTRATION STATEMENT EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND IS NOT SOLICITING AN OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.


PRELIMINARY PROSPECTUS
SHARES

OMNICELL, INC.

[LOGO]

COMMON STOCK
$ PER SHARE


-   Omnicell, Inc. is offering                 -   This is our initial public offering and
    shares.                                    no public market currently exists for our
                                                   shares.
-   We anticipate that the initial public      -   Proposed trading symbol: Nasdaq National
    offering price will be between $    and        Market - OMCL.
    $    per share.


THIS INVESTMENT INVOLVES RISKS. SEE "RISK FACTORS" BEGINNING ON PAGE 6.



                                                              PER SHARE      TOTAL
                                                              ---------   ------------
Public offering price.......................................  $           $
Underwriting discount.......................................  $           $
Proceeds to Omnicell, Inc...................................  $           $



THE UNDERWRITERS HAVE A 30-DAY OPTION TO PURCHASE UP TO ADDITIONAL SHARES
OF COMMON STOCK FROM US TO COVER OVER-ALLOTMENTS, IF ANY.

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OF ANYONE'S INVESTMENT IN THESE SECURITIES OR DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

U.S. BANCORP PIPER JAFFRAY

CIBC WORLD MARKETS
SG COWEN

THE DATE OF THIS PROSPECTUS IS , 2001.


INSIDE FRONT COVER

Clinical infrastructure and workflow automation solutions for healthcare
(header, centered)

Omnicell Patient Medication Profiling screen shot image (upper left)

Clinical Pharmacology screen shot image (center left)

Person and one automated dispensing cabinet (center right)

OmniBuyer application screen shot (lower left)

Omnicell Logo image (lower right)


SUMMARY

THE ITEMS IN THE FOLLOWING SUMMARY ARE DESCRIBED IN MORE DETAIL LATER IN THIS PROSPECTUS. THIS SUMMARY PROVIDES AN OVERVIEW OF SELECTED INFORMATION AND DOES NOT CONTAIN ALL THE INFORMATION YOU SHOULD CONSIDER. THEREFORE, YOU SHOULD ALSO READ THE ENTIRE PROSPECTUS, ESPECIALLY "RISK FACTORS" AND THE CONSOLIDATED

FINANCIAL STATEMENTS AND NOTES, BEFORE DECIDING TO INVEST IN SHARES OF OUR COMMON STOCK.

OUR BUSINESS

We provide an integrated suite of clinical infrastructure and workflow automation solutions for healthcare facilities. These solutions include pharmacy and supply systems, clinical reference tools, an Internet-based procurement application and decision support tools. We sell and lease our products and related services to a wide range of healthcare facilities such as hospitals, integrated delivery networks and alternate care facilities, which include nursing homes, outpatient surgery centers, catheterization labs and clinics. As of February 28, 2001, we had approximately 18,000 pharmacy and supply systems installed in over 1,100 healthcare facilities. In 2000, we generated revenue of $64.2 million from the sale and lease of our products and related services.

Our solutions enable healthcare facilities to acquire, manage, dispense and deliver pharmaceuticals and medical supplies more effectively and efficiently. Our pharmacy and supply systems facilitate the distribution of pharmaceuticals and medical supplies at the point of care. These systems interface with healthcare facilities' existing information systems to accurately capture and display critical patient data. Our Internet-based procurement application automates and integrates healthcare facilities' requisition and approval processes. Furthermore, our Internet-enabled decision support product allows healthcare facilities to monitor trends in drug utilization and diversion, improve regulatory compliance and reduce costs by monitoring usage patterns and optimizing product management. When used in combination, our products and services offer a comprehensive clinical infrastructure and workflow automation solution for healthcare facilities.

OUR MARKET

The delivery of healthcare in the United States is dependent upon predominantly manual and paper-based methods, resulting in a highly fragmented, complex and inefficient system. A primary cause of this inefficiency is the relatively small investment made by healthcare facilities in information technology in the last two decades. Many existing healthcare information systems are unable to support the modernization of healthcare delivery processes and address patient safety initiatives. These factors have contributed to medical errors and unnecessary process costs across the sector.

The Institute of Medicine highlighted the prevalence of medical errors in a November 1999 report based on the results of more than 30 independent studies. The report indicated that medical errors are among the top ten causes of death in the United States, and that medication errors specifically were responsible for more than an estimated 7,000 deaths in 1993. In March 2001, the Institute of Medicine issued a follow-up report that recommended increased investment in information technology as a means of reducing medical errors and improving the overall quality of patient care.

Economic pressures have also dramatically impacted patient care by reducing the flow of funds to healthcare providers and facilities. For example, the passage of the Balanced Budget Act of 1997 proposed a reduction of payments to healthcare providers by more than $250 billion over a five-year period. Continuing consolidation in the healthcare industry and shortages in the U.S. labor market for healthcare professionals have also significantly impacted patient care and contributed to the pressures faced by healthcare providers and facilities.

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OUR SOLUTIONS

Our clinical infrastructure and workflow automation solutions are designed to:

- reduce medication errors;

- reduce costs;

- improve operating efficiency;

- leverage investments in existing information systems;

- simplify the process of ordering pharmaceuticals and medical supplies; and

- monitor utilization trends.

OUR STRATEGY

Our goal is to become the leading provider of clinical infrastructure and workflow automation solutions for the healthcare industry by focusing on the following strategies:

- continue to leverage and extend our solutions to address patient safety and cost-containment pressures facing healthcare facilities;

- continue to collaborate with leading healthcare providers in the definition, development and deployment of our products and services;

- further penetrate our installed customer base, which to date has purchased only a subset of our available products and services;

- develop solutions that enhance our customers' existing systems in order to preserve, leverage and upgrade their existing information systems; and

- develop strategic relationships with other healthcare and non-healthcare partners to enhance our product offerings, broaden our automation solutions and increase our sales opportunities.

OFFICE LOCATION AND CORPORATE INFORMATION

Our principal executive offices are located at 1101 East Meadow Drive, Palo Alto, California 94303, and our telephone number is (650) 251-6100. Our Web site is located at www.omnicell.com. The information on our Web site is neither incorporated by reference into, nor a part of, this prospectus.

We were incorporated in California in September 1992 under the name OmniCell Technologies, Inc. In September 1999, we changed our name to Omnicell.com. We intend to reincorporate in Delaware and change our name to Omnicell, Inc. prior to the completion of the offering. Our logo, Omnicell-Registered Trademark-, OmniCenter-Registered Trademark-, OmniRx-Registered Trademark-, See & Touch-TM- and Sure-Med-Registered Trademark- are trademarks of Omnicell, Inc. This prospectus also includes trademarks of other companies.

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THE OFFERING

Common stock offered.........................  shares

Common stock outstanding after the
  offering...................................  shares

Offering price...............................  $    per share

Use of proceeds..............................  To expand sales, marketing, research and
                                               development and customer support activities;
                                               to repay debt owed to Baxter Healthcare; to
                                               redeem preferred stock held by Sun
                                               Healthcare; and for working capital and other
                                               general corporate purposes, including
                                               potential acquisitions.

Proposed Nasdaq National Market symbol.......  OMCL

The number of shares of common stock to be outstanding after the offering is based on 14,861,351 shares outstanding as of February 28, 2001 and excludes:

- 3,678,336 shares of our common stock issuable upon exercise of outstanding options;

- 102,183 shares of our common stock issuable upon exercise of outstanding warrants;

- 1,067,776 shares of common stock reserved for issuance under our stock option plan;

- 174,488 shares of common stock reserved for issuance under our employee stock purchase plans; and

- 540,600 shares of our Series J Preferred Stock that will be redeemed in connection with the completion of this offering.

Except as otherwise noted, all information in this prospectus:

- assumes no exercise of the underwriters' over-allotment option;

- reflects our reincorporation into Delaware;

- reflects the completion of a 1-for-1.6 reverse stock split that will occur prior to the closing of this offering; and

- reflects the conversion or redemption of all outstanding redeemable convertible preferred stock and the conversion of all outstanding convertible preferred stock and a convertible note into shares of common stock upon completion of this offering.

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SUMMARY CONSOLIDATED FINANCIAL AND OPERATING DATA
(in thousands, except per share and other data)

You should read the following summary consolidated financial data together with "Management's Discussion and Analysis of Financial Condition and Results of Operations" and our consolidated financial statements and related notes included in this prospectus.

The pro forma net loss per share data and the pro forma as adjusted balance sheet data give effect to (i) the redemption of 540,600 shares of our redeemable convertible preferred stock and (ii) the conversion of 180,200 shares of our redeemable convertible preferred stock, all of our convertible preferred stock and a convertible note into shares of our common stock, which we expect to occur upon the completion of this offering. The pro forma as adjusted balance sheet data also give effect to the sale of shares of common stock by us at an assumed initial public offering price of $ per share and the application of the net proceeds from this offering as discussed in "Use of Proceeds."

                                                                   YEAR ENDED DECEMBER 31,
                                                     ----------------------------------------------------
                                                       1996       1997       1998     1999(1)    2000(2)
                                                     --------   --------   --------   --------   --------
CONSOLIDATED STATEMENT OF OPERATIONS DATA:
Revenues...........................................  $ 21,554   $ 36,073   $48,212    $ 53,381   $ 64,210
Cost of revenues(3)................................    10,643     16,572    18,144      33,880     26,002
                                                     --------   --------   -------    --------   --------
Gross profit.......................................    10,911     19,501    30,068      19,501     38,208
Loss from operations(4)............................   (11,154)   (10,941)     (211)    (25,826)   (21,296)
Net income (loss)..................................  $(10,460)  $(10,189)  $   643    $(27,742)  $(22,552)
                                                     ========   ========   =======    ========   ========
Net income (loss) applicable to common
  stockholders.....................................  $(10,471)  $(10,211)  $   621    $(27,742)  $(22,552)
                                                     ========   ========   =======    ========   ========
Net income (loss) per common share:
  Basic............................................  $ (10.39)  $  (8.93)  $  0.48    $ (18.86)  $ (13.23)
                                                     ========   ========   =======    ========   ========
  Diluted..........................................  $ (10.39)  $  (8.93)  $  0.06    $ (18.86)  $ (13.23)
                                                     ========   ========   =======    ========   ========
  Pro forma basic and diluted (unaudited)..........                                              $  (1.57)
                                                                                                 ========

Weighted average common shares outstanding:
  Basic............................................     1,008      1,144     1,302       1,471      1,704
  Diluted..........................................     1,008      1,144    11,013       1,471      1,704
  Pro forma basic and diluted (unaudited)..........                                                14,403

OTHER DATA(5):
Cumulative number of sites of installed pharmacy
  and supply systems...............................       119        176       258         910      1,096
Cumulative number of installed pharmacy and supply
  systems..........................................     2,227      3,928     5,875      14,242     17,772

                                                               DECEMBER 31, 2000(2)
                                                              -----------------------
                                                                           PRO FORMA
                                                               ACTUAL     AS ADJUSTED
                                                              ---------   -----------
CONSOLIDATED BALANCE SHEET DATA:
Cash, cash equivalents and short-term investments...........  $ 11,967     $
Total assets................................................    43,905
Deferred gross profit(6)....................................    29,898
Long-term obligations, net of current portion...............     9,218
Redeemable convertible preferred stock......................    10,113
Total stockholders' equity (net capital deficiency).........  $(29,075)    $


(1) The amounts shown for the year ended December 31, 1999 include the results of the Sure-Med acquisition from January 29, 1999 to the end of 1999.

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(2) The amounts shown for the year ended December 31, 2000 include special charges in the third quarter of 2000 related to: restructuring activities--$2.0 million writedown of Commerce One MarketSite software license, $0.6 million in employee severance expenses and $0.3 million writedown of capitalized software development costs; recognition of $1.1 million expense associated with previously deferred offering expenses; and $0.2 million writedown of identified intangible assets remaining from the Sure-Med acquisition.

(3) Cost of revenues for the year ended December 31, 1999 includes: special charges related to the writedown of Sure-Med inventory--$9.7 million; purchase accounting adjustment due to the sale of Sure-Med inventories that had been written-up to fair value--$1.1 million; and costs incurred to complete Sure-Med installation obligations--$0.8 million.

(4) Loss from operations for the year ended December 31, 1999 includes:
integration expenses associated with the Sure-Med acquisition--$0.8 million; and write-off of an equity investment--$0.6 million.

(5) Figures do not include systems installed at Sun Healthcare sites.

(6) Deferred gross profit represents gross profit on sales of pharmacy and supply systems, excluding installation cost, that have been shipped to, accepted and, in most instances, paid for by our customer but not yet installed at the customer site. The revenues and cost of revenues for such items will be recorded upon completion of installation.

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RISK FACTORS

YOU SHOULD CAREFULLY CONSIDER THE FOLLOWING RISK FACTORS BEFORE YOU DECIDE TO BUY OUR COMMON STOCK. YOU SHOULD ALSO CONSIDER THE OTHER INFORMATION IN THIS PROSPECTUS. IN ADDITION, THE RISKS AND UNCERTAINTIES DESCRIBED BELOW ARE NOT THE ONLY ONES FACING US BECAUSE WE ARE ALSO SUBJECT TO ADDITIONAL RISKS AND UNCERTAINTIES NOT PRESENTLY KNOWN TO US. IF ANY OF THESE RISKS ACTUALLY OCCURS, OUR BUSINESS, FINANCIAL CONDITION, OPERATING RESULTS OR CASH FLOWS COULD BE SERIOUSLY HARMED. THIS COULD CAUSE THE TRADING PRICE OF OUR COMMON STOCK TO DECLINE, AND YOU MAY LOSE PART OR ALL OF YOUR INVESTMENT.

RISKS RELATED TO OUR BUSINESS

ANY REDUCTION IN THE GROWTH AND ACCEPTANCE OF OUR PRODUCTS AND SERVICES WOULD HARM OUR BUSINESS.

Our pharmacy and supply systems represent a relatively new approach to managing the distribution of pharmaceuticals and supplies at healthcare facilities. Many healthcare facilities still use traditional approaches that do not include automated methods of pharmacy and supply management. As a result, we must continuously educate existing and prospective customers about the advantages of our products. Our pharmacy and supply systems typically represent a sizeable initial capital expenditure for healthcare organizations. Changes in the budgets of these organizations and the timing of spending under these budgets can have a significant effect on the demand for our pharmacy and supply systems and related services. In addition, these budgets are often characterized by limited resources and conflicting spending priorities among different departments. Any decrease in expenditures by these healthcare facilities could harm our business. We cannot assure you that we will continue to be successful in marketing our pharmacy and supply systems or that the level of market acceptance of such systems will be sufficient to generate operating income.

THE HEALTHCARE INDUSTRY FACES FINANCIAL CONSTRAINTS AND CONSOLIDATION THAT COULD ADVERSELY AFFECT THE DEMAND FOR OUR PRODUCTS AND SERVICES.

The healthcare industry has faced, and will likely continue to face, significant financial constraints. For example, the shift to managed care in the 1990s put pressure on healthcare organizations to reduce costs, and the Balanced Budget Act of 1997 significantly reduced Medicare reimbursement to healthcare organizations. Our automation solutions often involve a significant financial commitment by our customers, and, as a result, our ability to grow our business is largely dependent on our customers' information technology budgets. To the extent healthcare information technology spending declines or increases more slowly than we anticipate, demand for our products and services would be adversely affected.

Many healthcare providers have consolidated to create larger healthcare delivery organizations with greater market power. If this consolidation continues, it could erode our customer base and could reduce the size of our target market. In addition, the resulting organizations could have greater bargaining power, which may lead to price erosion.

Sun Healthcare Group, Inc., a customer that has accounted for a significant percentage of our sales over the past five years, filed for Chapter 11 bankruptcy protection in 1999. Revenues from Sun Healthcare were significantly reduced in 2000, and we do not expect any purchases of our products and services by Sun Healthcare in 2001 or future years.

THE CLINICAL INFRASTRUCTURE AND WORKFLOW AUTOMATION MARKET IS HIGHLY COMPETITIVE AND WE MAY BE UNABLE TO COMPETE SUCCESSFULLY AGAINST NEW ENTRANTS AND ESTABLISHED COMPANIES WITH GREATER RESOURCES.

The clinical infrastructure and workflow automation market is intensely competitive and is characterized by evolving technologies and industry standards, frequent new product introductions and dynamic customer requirements. We expect continued and increased competition from current and

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future competitors, many of whom have significantly greater financial, technical, marketing and other resources than we do. Our current direct competitors in the clinical infrastructure and workflow automation market include Pyxis Corporation (a division of Cardinal Health) and Automated Healthcare (a division of McKessonHBOC).

The competitive challenges we face in the clinical infrastructure and workflow automation market include, but are not limited to:

- Our competitors may develop, license or incorporate new or emerging technologies or devote greater resources to the development, promotion and sale of their products and services.

- Certain competitors have greater name recognition and a more extensive installed base of pharmacy and supply systems or other products and services, and such advantages could be used to increase their market share.

- Other established or emerging companies may enter the clinical infrastructure and workflow automation market.

- Current and potential competitors may make strategic acquisitions or establish cooperative relationships among themselves or with third parties, including larger, more established healthcare supply companies, thereby increasing their ability to develop and offer products and services to address the needs of our prospective customers.

- Our competitors may secure products and services from suppliers on more favorable terms or secure exclusive arrangements with suppliers or buyers that may impede the sales of our products and services.

Competitive pressures could result in price reductions of our products and services, fewer customer orders and reduced gross margins, any of which could harm our business.

WE HAVE A HISTORY OF OPERATING LOSSES AND WE CANNOT ASSURE YOU THAT WE WILL ACHIEVE PROFITABILITY.

For 1996 and 1997, we incurred net losses of approximately $10.5 million and $10.2 million, respectively. We had net income of approximately $0.6 million in 1998 and had net losses of $27.7 million and $22.6 million in 1999 and 2000, respectively. As of December 31, 2000, we had an accumulated deficit of approximately $96.0 million. There can be no assurance we will achieve profitability in the future. Even if we achieve profitability, we may not be able to sustain or increase profitability on a quarterly or annual basis.

IF WE FAIL TO MANAGE OUR GROWING AND CHANGING OPERATIONS, OUR BUSINESS COULD BE HARMED.

During 2000, we experienced a period of significant fluctuation in our number of employees and expansion of the scope of our operating and financial systems. This has resulted in new and increased responsibilities for management personnel. To accommodate our changing operations, compete effectively and manage potential future growth, we must continue to implement and improve our information systems, procedures and controls, and we must hire competent and qualified personnel. In addition, we must train, motivate and manage our workforce to meet the increasing challenge of expanding our automation solutions business. These demands will require the addition of new management personnel and the training of existing management personnel, including information systems, sales, technical, service support and financial reporting personnel. We cannot assure you that our personnel, systems, procedures and controls will be adequate to support our future operations.

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OUR QUARTERLY OPERATING RESULTS MAY FLUCTUATE SIGNIFICANTLY AND MAY CAUSE OUR STOCK PRICE TO DECLINE.

Our quarterly operating results have varied significantly in the past and may vary significantly in the future depending on many factors that may include, but are not limited to, the following:

- the size and timing of orders for our pharmacy and supply systems, and their installation and integration;

- the overall demand for healthcare clinical infrastructure and workflow automation solutions;

- changes in pricing policies by us or our competitors;

- the number, timing and significance of product enhancements and new product announcements by us or our competitors;

- the relative proportions of revenues we derive from products and services;

- our customers' budget cycles;

- changes in our operating expenses;

- the performance of our products;

- changes in our business strategy; and

- economic and political conditions, including fluctuations in interest rates and tax increases.

Due to the foregoing factors, our quarterly revenues and operating results are difficult to forecast. Revenues are also difficult to forecast because the clinical infrastructure and workflow automation market is rapidly evolving.

The purchase of our pharmacy and supply systems is often part of a customer's larger initiative to re-engineer their pharmacy, distribution and materials management systems. As a result, the purchase of our pharmacy and supply systems generally involves a significant commitment of management attention and resources by prospective customers and often requires the input and approval of many decision makers, including pharmacy directors, materials managers, nurse managers, financial managers, information systems managers, administrators and boards of directors. For these and other reasons, the sales cycle associated with the sale or lease of our pharmacy and supply systems is often lengthy and subject to a number of delays over which we have little or no control. We cannot assure you that we will not experience delays in the future. A delay in, or loss of, sales of our pharmacy and supply systems could cause our operating results to vary significantly from quarter to quarter and could harm our business. Accordingly, we believe that period-to-period comparisons of our operating results are not necessarily indicative of our future performance. Although we recently experienced revenue growth, this growth should not be considered indicative of future revenue growth, if any, or of future operating results.

OUR BUSINESS COULD BE HARMED IF WE ARE UNABLE TO RECRUIT AND RETAIN PERSONNEL.

Our success is highly dependent upon the continuing contributions of our key management, sales, technical and engineering staff. We believe that our future success will depend upon our ability to attract, train and retain highly skilled and motivated personnel. In particular, we will need to hire a number of information technology, research and development, programming and engineering personnel to assist in the continued development of our business. As our products are installed in increasingly complex environments, greater technical expertise will be required. As our installed base of customers increases, we will also face additional demands on our customer service and support personnel, requiring additional resources to meet these demands. We may experience difficulty in recruiting qualified personnel. Competition for qualified technical, engineering, managerial, sales, marketing, financial reporting and other personnel is intense and we cannot assure you that we will be successful

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in attracting and retaining qualified personnel. Competitors have in the past attempted, and may in the future attempt, to recruit our employees. Failure to attract and retain key personnel could harm our business, results of operations and financial condition.

IF WE ARE UNABLE TO MAINTAIN OUR RELATIONSHIPS WITH GROUP PURCHASING ORGANIZATIONS OR OTHER SIMILAR ORGANIZATIONS, WE MAY HAVE DIFFICULTY SELLING OUR PRODUCTS AND SERVICES.

We have agreements with various group purchasing organizations, such as Premier, Inc., Novation, LLC and Consorta Catholic Resources Partners, that enable us to more readily sell our products and services to customers represented by these organizations. Our relationships with these organizations are terminable at the convenience of either party. The loss of our relationship with Premier, for example, could impact the breadth of our customer base and could impair our ability to increase our revenues. We cannot guarantee that these organizations will renew our contracts on similar terms, if at all, and we cannot guarantee that they will not terminate our contracts before they expire.

WE DEPEND ON A LIMITED NUMBER OF SUPPLIERS FOR OUR PHARMACY AND SUPPLY SYSTEMS AND OUR BUSINESS MAY SUFFER IF WE ARE UNABLE TO OBTAIN AN ADEQUATE SUPPLY OF COMPONENTS AND EQUIPMENT ON A TIMELY BASIS.

Our production strategy for our pharmacy and supply systems is to work closely with several key sub-assembly manufacturers and utilize lower cost manufacturers whenever possible. Although many of the components of our systems are standardized and available from multiple sources, certain components or subsystems are fabricated according to our specifications. At any given point in time, we may only use a single source of supply for certain components. Our failure to obtain alternative vendors, if required, for any of the numerous components used to manufacture our products would limit our ability to manufacture our products and could harm our business. In addition, any failure of a maintenance contractor to perform adequately could harm our business.

WE DEPEND ON SERVICES FROM THIRD PARTIES TO SUPPORT OUR PRODUCTS, AND IF WE ARE UNABLE TO CONTINUE THESE RELATIONSHIPS AND MAINTAIN THEIR SERVICES, OUR BUSINESS COULD SUFFER.

Our ability to develop, manufacture and support our existing products and any future products depends upon our ability to enter into and maintain contractual arrangements with others. We currently depend upon services from a number of third-party vendors, including Dade Behring Inc., Gold Standard Multimedia and U.S. Pharmacopeia to support our products. We cannot be sure that we will be able to maintain our existing or future service arrangements, or that we will be able to enter into future arrangements with third parties on terms acceptable to us, or at all. If we fail to maintain our existing service arrangements or to establish new arrangements when and as necessary, our business may be harmed.

IF WE ARE UNABLE TO SUCCESSFULLY INTEGRATE OUR AUTOMATION SOLUTIONS WITH THE EXISTING INFORMATION SYSTEMS OF OUR CUSTOMERS, THEY MAY CHOOSE NOT TO USE OUR PRODUCTS AND SERVICES.

For healthcare facilities to fully benefit from our automation solutions, our systems must integrate with their existing information systems. This may require substantial cooperation, investment and coordination on the part of our customers. There is little uniformity in the systems currently used by our customers, which complicates the integration process. If these systems are not successfully integrated, our customers could choose not to use or to reduce their use of our automation solutions, which would harm our business.

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ANY DETERIORATION IN OUR RELATIONSHIP WITH COMMERCE ONE WOULD ADVERSELY AFFECT OUR INTERNET-BASED PROCUREMENT CAPABILITIES.

We have entered into an agreement with Commerce One, Inc., a provider of business-to-business technology solutions that link buyers and suppliers of goods and services to trading communities over the Internet. Our agreement with Commerce One enables us to implement a customized version of Commerce One's BuySite software at customer sites. We cannot be sure that Commerce One will not license its BuySite technology to our competitors. We cannot guarantee that Commerce One will be able to develop and introduce enhancements to its products that keep pace with emerging technological developments and emerging industry standards. Moreover, we cannot guarantee that the Commerce One network will not experience performance problems or delays. The failure by Commerce One in any of these areas could harm our Internet-based procurement capabilities.

OUR FAILURE TO PROTECT OUR INTELLECTUAL PROPERTY RIGHTS COULD ADVERSELY AFFECT OUR ABILITY TO COMPETE.

We believe that our success will depend in part on our ability to obtain patent protection for products and processes and our ability to preserve our trademarks, copyrights and trade secrets. We have pursued patent protection in the United States and foreign jurisdictions for technology that we believe to be proprietary and for technology that offers us a potential competitive advantage for our products, and we intend to continue to pursue such protection in the future. We currently own ten U.S. patents. In addition, we currently have one U.S. patent allowed and awaiting issue and five U.S. patents in application. The issued patents relate to various features of our pharmacy and supply systems. There are other issued patents and applications in process in Australia, Japan, Hong Kong, Canada and European countries related to issued and pending applications in the United States. There can be no assurance that we will file any patent applications in the future, that any of our patent applications will result in issued patents or that, if issued, such patents will provide significant protection for our technology and processes. Furthermore, there can be no assurance that others will not develop technologies that are similar or superior to our technology or that others will not design around the patents we own. All of our operating system software is copyrighted and subject to the protection of applicable copyright laws. Despite our efforts to protect our proprietary rights, unauthorized parties may attempt to copy aspects of our products or obtain and use information that we regard as proprietary.

INTELLECTUAL PROPERTY OR PRODUCT LIABILITY CLAIMS AGAINST US COULD CAUSE OUR BUSINESS TO SUFFER.

We do not believe that any of our products infringe upon the proprietary rights of third parties. We cannot assure you, however, that third parties will not claim that we have infringed upon their intellectual property rights with respect to current or future products. We expect that developers of pharmacy and supply systems will be increasingly subject to infringement claims as the number of products and competitors in our industry grows and the functionality of products in different industry segments overlaps. We do not possess special insurance that covers intellectual property infringement claims; however, such claims may be covered under our traditional insurance policies. These policies contain terms, conditions and exclusions that make recovery for intellectual infringement claims difficult to guarantee. Any infringement claims, with or without merit, could be time-consuming to defend, result in costly litigation, divert management's attention and resources, cause product shipment delays or require us to enter into royalty or licensing agreements. These royalty or licensing agreements, if required, may not be available on terms acceptable to us, or at all, which could harm our business.

We provide products that build clinical infrastructure and automate workflow. Despite the presence of healthcare professionals as intermediaries between our products and patients, if our products fail to provide accurate and timely information or operate as designed, customers, patients or their family members could assert claims against us for product liability. Also, in the event that any of our products is defective, we may be required to recall or redesign such products. Litigation with respect to liability

10

claims, regardless of its outcome, could result in substantial cost to us, divert management's attention from operations and decrease market acceptance of our products. Although we have not experienced any product liability claims to date, the sale and support of our products entail the risk of product liability claims. We possess a variety of insurance policies that include coverage for general commercial liability and technology errors and omissions liability. However, these policies may not be adequate against product liability claims. A successful claim brought against us, or any claim or product recall that results in negative publicity about us, could harm our business.

CHANGING CUSTOMER REQUIREMENTS COULD DECREASE THE DEMAND FOR OUR PRODUCTS AND SERVICES, WHICH COULD HARM OUR BUSINESS.

The clinical infrastructure and workflow automation market is intensely competitive and is characterized by evolving technologies and industry standards, frequent new product introductions and dynamic customer requirements that may render existing products obsolete or less competitive. As a result, our position in the clinical infrastructure and workflow automation market could erode rapidly due to unforeseen changes in the features and functions of competing products, as well as the pricing models for such products. Our future success will depend in part upon our ability to enhance our existing products and services and to develop and introduce new products and services to meet changing customer requirements. The process of developing products and services such as those we offer is extremely complex and is expected to become increasingly complex and expensive in the future as new technologies are introduced. If we are unable to enhance our existing products or develop new products to meet changing customer requirements, demand for our products could suffer.

WE MAY BE REQUIRED TO SEEK ADDITIONAL FINANCING TO MEET OUR FUTURE CAPITAL NEEDS, WHICH WE MAY NOT BE ABLE TO SECURE ON FAVORABLE TERMS, OR AT ALL.

We plan to continue to expend substantial funds for research and development activities, product development, integration efforts and expansion of sales and marketing activities. We may be required to expend greater than anticipated funds if unforeseen difficulties arise in the course of completing the development and marketing of our products or services or in other aspects of our business. Our future liquidity and capital requirements will depend upon numerous factors, including:

- the development of new products and services on a timely basis;

- the receipt of and timing of orders for our pharmacy and supply systems; and

- the cost of developing increased manufacturing and sales capacity.

As a result of the foregoing factors, it is possible that we will be required to raise additional funds through public or private financings, collaborative relationships or other arrangements. We cannot assure you that this additional funding, if needed, will be available on terms attractive to us, if at all. Furthermore, any additional equity financing may be dilutive to stockholders, and debt financing, if available, may involve restrictive covenants that could affect our ability to pay dividends or raise additional capital. Our failure to raise capital when needed could harm our business.

GOVERNMENT REGULATION OF THE HEALTHCARE INDUSTRY COULD HARM OUR BUSINESS.

While the manufacture and sale of our current products are not regulated by the United States Food and Drug Administration (FDA), we cannot assure you that these products, or our future products, if any, will not be regulated in the future. A requirement for FDA approval could have a material adverse effect on our business. Pharmacies are regulated by individual state boards of pharmacy that issue rules for pharmacy licensure in their respective jurisdictions. State boards of pharmacy do not license or approve our pharmacy and supply systems; however, pharmacies using our equipment are subject to state board approval. The failure of such pharmacies to meet differing requirements from a significant

11

number of state boards of pharmacy could harm our business, results of operations and financial condition. Similarly, hospitals must be accredited by the Joint Commission on Accreditation of Healthcare Organizations (JCAHO) in order to be eligible for Medicaid and Medicare funds. JCAHO does not approve or accredit pharmacy and supply systems; however, disapproval of our customers' pharmacy and supply management methods and their failure to meet JCAHO requirements could harm our business.

While we have implemented a Privacy and Use of Information Policy and strictly adhere to established privacy principles, use of customer information guidelines and federal and state statutes and regulations regarding privacy and confidentiality, we cannot assure you that we will be in compliance with the Health Insurance Portability and Accountability Act of 1996 (HIPAA). This legislation requires the Secretary of Health and Human Services (HHS), to adopt national standards for some types of electronic health information transactions and the data elements used in those transactions, adopt standards to ensure the integrity and confidentiality of health information and establish a schedule for implementing national health data privacy legislation or regulations. In December 2000, HHS published its final health data privacy regulations, which will take effect in December 2002. These regulations restrict the use and disclosure of personally identifiable health information without the prior informed consent of the patient. HHS has not yet issued final rules on most of the other topics under HIPAA and has yet to issue proposed rules on some topics. The final rules, if and when issued, may differ from the proposed rules. We cannot predict the potential impact of rules that have not yet been proposed or any other rules that might be finally adopted instead of the proposed rules. In addition, other federal and/or state privacy legislation may be enacted at any time. These laws or regulations, if adopted, could restrict the ability of our customers to obtain, use or disseminate patient information. This could adversely affect demand for our products or force us to redesign our products in order to meet the requirements of any new regulations.

OUR FACILITIES ARE LOCATED NEAR KNOWN EARTHQUAKE FAULT ZONES, AND THE OCCURRENCE OF AN EARTHQUAKE OR OTHER NATURAL DISASTER COULD CAUSE DAMAGE TO OUR FACILITIES AND EQUIPMENT, WHICH COULD REQUIRE US TO CEASE OR CURTAIL OPERATIONS.

Our facilities are located near known earthquake fault zones and are vulnerable to significant damage from earthquakes. We are also vulnerable to damage from other types of disasters, including tornadoes, fires, floods, power loss, communications failures and similar events. If any disaster were to occur, our ability to operate our business at our facilities would be seriously, or potentially completely, impaired or destroyed. The insurance we maintain may not be adequate to cover our losses resulting from disasters or other business interruptions.

RISKS RELATED TO THIS OFFERING

OUR STOCK PRICE MAY BE EXTREMELY VOLATILE AND YOU MAY NOT BE ABLE TO RESELL YOUR SHARES AT OR ABOVE THE INITIAL PUBLIC OFFERING PRICE.

Prior to the offering, there has been no public market for our common stock. We do not know the extent to which investor interest will lead to the development of an active public market. The initial public offering price will be determined by negotiations between the representatives of the underwriters and us and may not be indicative of the market price for our common stock after the offering. With the current uncertainty about healthcare reimbursement and coverage in the United States, there has been significant volatility in the market price and trading volume of securities of healthcare related companies unrelated to the performance of these companies. These broad market fluctuations may negatively affect the market price of our common stock. As a consequence, you may not be able to sell the common stock you purchase at or above the initial public offering price.

12

In the past, securities class action litigation has often been brought against companies following periods of volatility in the market price of their securities. If brought against us, regardless of the outcome, litigation could result in substantial costs and a diversion of our management's attention and resources and could harm our business.

IF WE FAIL TO MEET THE EXPECTATIONS OF PUBLIC MARKET ANALYSTS AND INVESTORS, THE MARKET PRICE OF OUR COMMON STOCK MAY DECREASE SIGNIFICANTLY.

We may fail to meet the revenue and profitability expectations of public market analysts and investors. If this occurs, the price of our common stock will likely fall.

AFTER THIS OFFERING, OUR OFFICERS AND DIRECTORS WILL OWN A LARGE PERCENTAGE OF OUR COMMON STOCK AND WILL BE ABLE TO CONTROL THE OUTCOME OF MATTERS REQUIRING STOCKHOLDER APPROVAL.

Upon the completion of this offering, executive officers, directors and current holders of five percent (5%) or more of our outstanding common stock will, in the aggregate, beneficially own approximately % of our outstanding common stock. As a result, these stockholders will be able to effectively control all matters requiring approval of our stockholders, including the election of directors and approval of significant corporate transactions. This concentration of ownership may also delay, deter or prevent a change in control and may make some transactions more difficult or impossible to complete without the support of these stockholders, even if the transaction is favorable to our stockholders. In addition, because of their ownership of our common stock, these stockholders will be in a position to significantly affect our corporate actions in a manner that could conflict with the interests of our public stockholders.

SUBSTANTIAL SALES OF COMMON STOCK BY OUR EXISTING STOCKHOLDERS COULD CAUSE OUR STOCK PRICE TO FALL.

The market price of our common stock could decline if our existing stockholders sell substantial amounts of our common stock in the public market after this offering. These sales also might make it more difficult for us to sell equity securities in the future at a time and at a price that we deem appropriate. Upon completion of this offering, assuming the number of outstanding shares as of February 28, 2001, we will have shares of common stock outstanding, shares if the underwriters exercise their over-allotment option in full. Of these shares, shares, plus an additional shares if the underwriters exercise their over-allotment option in full, will be freely tradeable without restriction or further registration under the Securities Act of 1933, as amended. Of the remaining shares, a total of approximately shares held by our directors, executive officers and our existing stockholders are subject to lock-up agreements providing that these stockholders will not sell or otherwise dispose of any of their shares for a period of 180 days following the date of the final prospectus for this offering without the prior written consent of U.S. Bancorp Piper Jaffray Inc. U.S. Bancorp Piper Jaffray can release these lock-up agreements at any time. In addition, options to purchase 3,678,336 shares of our common stock are outstanding as of February 28, 2001, under our 1992 Equity Incentive Plan, our 1995 Management Stock Option Plan and our 1999 Equity Incentive Plan. Following this offering, we expect to register the shares underlying these options. Subject to the exercise of these options, shares included in such registration will be available for sale in the open market immediately after the 180-day lock-up period expires. See "Shares Eligible For Future Sale" for a more detailed discussion.

After this offering, the holders of approximately 11,714,782 shares of common stock will be entitled to rights with respect to registration of such shares under the Securities Act. If such holders, by exercising their registration rights, cause a large number of securities to be registered and sold in the public market, these sales could have an adverse effect on the market price for our common stock. If we were to initiate a registration and include shares held by these holders pursuant to the exercise of their registration rights, these sales may impair our ability to raise capital.

13

OUR CERTIFICATE OF INCORPORATION AND BYLAWS CONTAIN PROVISIONS THAT COULD DELAY OR PREVENT A CHANGE IN CONTROL THAT MAY BE FAVORABLE TO OUR STOCKHOLDERS.

Upon the completion of this offering, we will be subject to the Delaware anti-takeover laws regulating corporate takeovers. These laws prevent Delaware corporations from engaging in a merger or sale of more than 10% of their assets with any stockholder who owns 15% or more of the corporation's outstanding voting stock, including all affiliates and associates of any stockholder, for three years following the date that such stockholder acquired 15% or more of the corporation's voting stock unless:

- prior to such date, the board of directors of the corporation approved either the business combination or the transaction that resulted in the stockholder becoming an interested stockholder;

- upon consummation of the transaction that resulted in the stockholder's becoming an interested stockholder, the interested stockholder owned at least 85% of the voting stock of the corporation outstanding at the time the transaction commenced, excluding those shares owned by persons who are directors and also officers, and employee stock plans in which employee participants do not have the right to determine confidentially whether shares held subject to the plan will be tendered in a tender or exchange offer; or

- on or subsequent to such date, the business combination is approved by the board of directors and authorized at an annual or special meeting of stockholders, and not by written consent, by the affirmative vote of at least two-thirds of the outstanding voting stock that is not owned by the interested stockholder.

As such, these laws could prohibit or delay mergers or a change of control of us and may discourage attempts by other companies to acquire us.

In addition, our Certificate of Incorporation and Bylaws include a number of provisions that may deter or impede hostile takeovers or changes of control or management. These provisions include:

- a Board of Directors classified into three classes of directors with staggered three-year terms;

- the authority of the Board of Directors to issue up to 5,000,000 shares of preferred stock and to determine the price, rights, preferences and privileges of these shares, without stockholder approval; and

- all stockholder actions must be effected at a duly called meeting of stockholders and not by written consent.

YOU WILL INCUR IMMEDIATE AND SUBSTANTIAL DILUTION OF YOUR SHARES.

The initial public offering price is substantially higher than the pro forma net tangible book value of each outstanding share of our common stock. As a result, investors participating in this offering will suffer immediate and substantial dilution. The dilution will be $ per share in the pro forma net tangible book value of the common stock from the assumed initial public offering price of $ (or $ per share if the underwriters' option to purchase additional shares is exercised in full). This dilution is described in greater detail under "Dilution" in this prospectus. If outstanding options or warrants to purchase shares of common stock are exercised, there will be further dilution.

14

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This prospectus contains forward-looking statements. These statements relate to future events or our future financial performance. We have attempted to identify forward-looking statements by terminology including, "anticipates," "believes," "can," "continue," "could," "estimates," "expects," "intends," "may," "plans," "potential," "predicts," "should" or "will" or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors, including the risks outlined under "Risk Factors," that may cause our or our industry's actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements.

Although we believe that our expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. We are not under any duty to update any of the forward-looking statements after the date of this prospectus to conform these statements to actual results, unless required by law.

USE OF PROCEEDS

We estimate that our net proceeds from the sale of the shares of common stock we are offering, assuming an initial public offering price of $ per share, will be approximately $ , or $ if the underwriters' over-allotment option is exercised in full, after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us.

We will use a significant portion of the net proceeds for the expansion of sales, marketing, research and development and customer support activities. We also intend to use approximately $7.9 million of the net proceeds to repay the outstanding principal and interest related to the note held by Baxter Healthcare incurred in connection with our acquisition of the Sure-Med product line in January 1999. The Baxter Healthcare note accrues interest at a rate of 8.0%. In addition, the principal under the note is repayable in eight equal quarterly installments beginning in March 2002. We also intend to use approximately $7.6 million of the net proceeds to redeem 540,600 shares of redeemable convertible preferred stock held by Sun Healthcare. In addition, in the event that the price per share to the public (prior to deducting the underwriter commissions and offering expenses) is less than $11.78, we intend to use an additional $2.5 million of the net proceeds to redeem the remaining 180,200 shares of redeemable convertible preferred stock held by Sun Healthcare.

We expect to use the remainder of the net proceeds for working capital and other general corporate purposes, including potential acquisitions and costs to support our leasing activities. We currently have no commitments or agreements and are not involved in any negotiations for acquisitions of complementary products, technologies or businesses.

The amounts that we actually expend on these matters will vary significantly, depending on a number of factors, including future revenue growth, if any, and the amount of cash we generate from operations. As a result, we will retain broad discretion in the allocation of the net proceeds of this offering. Pending use of the net proceeds of this offering, we intend to invest the net proceeds in interest bearing, investment-grade securities.

DIVIDEND POLICY

We currently intend to retain future earnings, if any, to finance the expansion of our business and do not anticipate paying any cash dividends on our common stock in the foreseeable future. The terms of our line of credit prohibit the payment of cash dividends on our capital stock without the consent of our lender.

15

CAPITALIZATION

The table below presents the following information:

- our actual capitalization as of December 31, 2000; and

- our pro forma as adjusted capitalization as of December 31, 2000 after giving effect to (i) the redemption of 540,600 shares of our redeemable convertible preferred stock and (ii) the conversion of 180,200 shares of our redeemable convertible preferred stock, all of our convertible preferred stock and a convertible note into shares of our common stock upon completion of this offering and to reflect the receipt and application of the net proceeds from our sale of shares of common stock at an assumed initial public offering price of $ per share in this offering, less underwriting discounts and commissions and estimated offering expenses payable by us as discussed in "Use of Proceeds."

You should read this table in conjunction with the financial statements and the other financial information included in this prospectus.

                                                                DECEMBER 31, 2000
                                                              ----------------------
                                                                          PRO FORMA
                                                               ACTUAL    AS ADJUSTED
                                                              --------   -----------
                                                                  (in thousands)
Cash, cash equivalents and short-term investments...........  $ 11,967     $
                                                              ========     ========
Long-term obligations, net of current portion...............  $  9,218     $
Redeemable convertible preferred stock, no par value;
  1,802,000 shares designated, 720,800 shares issued and
  outstanding, actual; none, pro forma as adjusted..........    10,113           --
Stockholders' equity (net capital deficiency):
  Convertible preferred stock, no par value; 18,500,000
    shares authorized (including 1,802,000 shares designated
    as redeemable convertible preferred stock); 14,538,376
    shares issued and outstanding, actual; 5,000,000 shares
    authorized, no shares issued and outstanding, pro forma
    as adjusted.............................................    62,392           --
  Common stock, no par value, 35,000,000 shares authorized,
    3,080,140 shares issued and outstanding, actual;
    50,000,000 shares authorized, 14,796,082 shares issued
    and outstanding, pro forma as adjusted..................     9,137
  Notes receivable from stockholders........................    (4,578)
  Accumulated deficit.......................................   (96,030)
  Accumulated other comprehensive income....................         4
                                                              --------     --------
    Total stockholders' equity (net capital deficiency).....   (29,075)
                                                              --------     --------
      Total capitalization..................................  $ (9,744)    $
                                                              ========     ========

This table excludes the following shares issued or issuable as of February 28, 2001:

- 3,678,336 shares of our common stock issuable upon exercise of outstanding options;

- 102,183 shares of our common stock issuable upon exercise of outstanding warrants;

- 1,067,776 shares of common stock reserved for issuance under our equity incentive plans; and

- 174,488 shares of common stock reserved for issuance under our employee stock purchase plan.

Upon completion of the offering, 540,600 of the shares of redeemable convertible preferred stock will be redeemed in accordance with their terms and the remaining 180,200 shares of redeemable convertible preferred stock will convert into 133,191 shares of common stock (assuming the price per share to the public, prior to deducting the underwriter commissions and offering expenses, is more than $11.78), and the 14,538,376 shares of convertible preferred stock will convert into 11,714,782 shares of common stock.

16

DILUTION

Our pro forma net tangible book value (deficiency) as of December 31, 2000, was approximately $(18.3) million, or $(1.27) per share. Pro forma net tangible book value (deficiency) per share represents the amount of pro forma stockholders' equity (or net capital deficiency), assuming (i) the redemption of 540,600 shares of our redeemable convertible preferred stock and (ii) the conversion of 180,200 shares of our redeemable convertible preferred stock, all of our convertible preferred stock and a convertible note into common stock, less intangible assets, divided by the pro forma number of shares of common stock outstanding as of December 31, 2000. Dilution per share represents the difference between the amount per share paid by purchasers of shares of common stock in this offering and the pro forma net tangible book value per share of common stock immediately after completion of this offering.

Pro forma net tangible book value as of December 31, 2000, after giving effect to the sale of shares of common stock offered by us at an initial public offering price of $ per share and after deducting underwriting discounts and commissions and estimated offering expenses payable by us, would have been approximately $ million, or approximately $ per share. This represents an immediate increase in pro forma net tangible book value of $ per share to existing stockholders and an immediate dilution in pro forma net tangible book value of $ per share to investors purchasing our common stock in this offering, as illustrated in the following table:

Assumed initial public offering price per share.............              $
  Pro forma net tangible book value (deficiency) per share
    as of December 31, 2000.................................
  Increase per share attributable to new investors..........
                                                               ------
Pro forma net tangible book value per share after this
  offering..................................................
                                                                          ------
Pro forma dilution per share to new investors...............              $
                                                                          ======

The table below summarizes, on a pro forma basis, the differences between our existing stockholders and the new investors purchasing our common stock in this offering with respect to the total number of shares purchased from us, the total consideration paid and the average price per share paid, based upon an initial public offering price of $ per share.

                                             SHARES PURCHASED       TOTAL CONSIDERATION
                                           ---------------------   ----------------------   AVERAGE PRICE
                                             NUMBER     PERCENT      AMOUNT      PERCENT      PER SHARE
                                           ----------   --------   -----------   --------   -------------
Existing stockholders....................  14,796,082        %     $80,916,000        %         $5.47

New investors............................
                                           ----------     ---      -----------     ---          -----

  Total..................................                 100%     $               100%
                                           ==========     ===      ===========     ===

The above discussion and tables assume no exercise of stock options after December 31, 2000.

If the underwriters exercise their over-allotment in full, the following will occur:

- the number of shares of common stock held by existing stockholders will decrease to approximately % of the total number of shares of our common stock outstanding; and

- the number of shares held by new investors will increase to shares, or approximately % of the total number of our common stock outstanding after this offering.

17

SELECTED CONSOLIDATED FINANCIAL DATA

To aid you in your analysis, we are providing the following information. We derived the selected consolidated financial data as of December 31, 1999 and 2000 and for the years ended December 31, 1998, 1999 and 2000 from our audited consolidated financial statements included elsewhere in this prospectus. The selected consolidated financial data as of December 31, 1996, 1997 and 1998 and for the years ended December 31, 1996 and 1997 are derived from audited consolidated financial statements not included in this prospectus. The pro forma net loss per common share and shares used in computing pro forma net loss per share are calculated as if (i) redemption of 540,600 shares of our redeemable convertible preferred stock and (ii) conversion of 180,200 shares of our redeemable convertible preferred stock, all of our convertible preferred stock and a convertible note into shares of our common stock occur on the date of their issuance. The other data, although not derived from our financial statements, was derived from a customer information database. When you read this selected consolidated financial data, it is important that you also read the historical consolidated financial statements and related Notes included in this prospectus, as well as the section of this prospectus entitled "Management's Discussion and Analysis of Financial Condition and Results of Operations."

                                                            YEAR ENDED DECEMBER 31,
                                              ----------------------------------------------------
                                                1996       1997       1998     1999(1)    2000(2)
                                              --------   --------   --------   --------   --------
                                                (in thousands, except per share and other data)
CONSOLIDATED STATEMENT OF OPERATIONS DATA:
Product revenues............................  $ 18,958   $ 26,683   $34,690    $ 42,184   $ 55,303
Product revenues from related party(3)......     1,551      6,864     9,398       4,163      1,097
Service and other revenues..................     1,045      2,526     4,124       7,034      7,810
                                              --------   --------   -------    --------   --------
    Total revenues..........................    21,554     36,073    48,212      53,381     64,210
Cost of product revenues....................     9,883     15,155    16,343      28,503     18,280
Cost of service and other revenues..........       760      1,417     1,801       5,377      7,722
                                              --------   --------   -------    --------   --------
    Total cost of revenues(4)...............    10,643     16,572    18,144      33,880     26,002
                                              --------   --------   -------    --------   --------
Gross profit................................    10,911     19,501    30,068      19,501     38,208
Operating expenses:
  Research and development..................     4,052      5,922     5,987       8,745     11,276
  Selling, general and administrative.......    18,013     24,520    24,292      35,797     45,320
  Integration...............................        --         --        --         785         --
  Restructuring.............................        --         --        --          --      2,908
                                              --------   --------   -------    --------   --------
    Total operating expenses................    22,065     30,442    30,279      45,327     59,504
                                              --------   --------   -------    --------   --------
Loss from operations(5).....................   (11,154)   (10,941)     (211)    (25,826)   (21,296)
Interest income (expense), net..............       694        953     1,039      (1,767)    (1,156)
                                              --------   --------   -------    --------   --------
Income (loss) before income taxes...........   (10,460)    (9,988)      828     (27,593)   (22,452)
Provision for income taxes..................        --        201       185         149        100
                                              --------   --------   -------    --------   --------
Net income (loss)...........................  $(10,460)  $(10,189)  $   643    $(27,742)  $(22,552)
                                              ========   ========   =======    ========   ========
Preferred stock accretion...................       (11)       (22)      (22)         --         --
Net income (loss) applicable to common
  stockholders..............................  $(10,471)  $(10,211)  $   621    $(27,742)  $(22,552)
                                              ========   ========   =======    ========   ========
Net income (loss) per common share:
  Basic.....................................  $ (10.39)  $  (8.93)  $  0.48    $ (18.86)  $ (13.23)
                                              ========   ========   =======    ========   ========
  Diluted...................................  $ (10.39)  $  (8.93)  $  0.06    $ (18.86)  $ (13.23)
                                              ========   ========   =======    ========   ========
  Pro forma basic and diluted (unaudited)...                                              $  (1.57)
                                                                                          ========

Weighted average common shares outstanding:
  Basic.....................................     1,008      1,144     1,302       1,471      1,704
  Diluted...................................     1,008      1,144    11,013       1,471      1,704
  Pro forma basic and diluted (unaudited)...                                                14,403

18

                                                                  DECEMBER 31,
                                              ----------------------------------------------------
                                                1996       1997       1998     1999(1)    2000(2)
                                              --------   --------   --------   --------   --------
                                                                 (in thousands)
CONSOLIDATED BALANCE SHEET DATA:
Cash, cash equivalents and short-term
  investments...............................  $20,821    $ 16,540   $ 22,072   $  6,698   $ 11,967
Total assets................................   37,246      43,227     46,498     37,117     43,905
Deferred gross profit(6)....................    7,883      17,958     21,099     28,167     29,898
Long-term obligations, net of current
  portion...................................      160         160         67      9,252      9,218
Redeemable convertible preferred stock......   25,238      25,260     25,282     15,166     10,113
Total stockholders' equity
  (net capital deficiency)..................  $(2,295)   $(11,730)  $(10,471)  $(37,320)  $(29,075)

OTHER DATA(7):
Cumulative number of sites of installed
  pharmacy and supply systems...............      119         176        258        910      1,096
Cumulative number of installed pharmacy and
  supply systems............................    2,227       3,928      5,875     14,242     17,772


(1) The amounts shown for the year ended December 31, 1999 include the results of the Sure-Med acquisition from January 29, 1999 to the end of 1999.

(2) The amounts shown for the year ended December 31, 2000 include special charges in the third quarter of 2000 related to: restructuring activities--$2.0 million writedown of Commerce One MarketSite software license, $0.6 million in employee severance expenses and $0.3 million writedown of capitalized software development costs; recognition of $1.1 million expense associated with previously deferred offering expenses; and $0.2 million writedown of identified intangible assets remaining from the Sure-Med acquisition.

(3) These revenues represent revenues from Sun Healthcare which was formerly a related party to Omnicell.

(4) Cost of revenues for the year ended December 31, 1999 includes: special charges related to the writedown of Sure-Med inventory--$9.7 million; purchase accounting adjustment due to the sale of Sure-Med inventories that had been written up to fair value--$1.1 million; and costs incurred to complete Sure-Med installation obligations--$0.8 million.

(5) Loss from operations for the year ended December 31, 1999 includes:
integration expenses associated with the Sure-Med acquisition--$0.8 million; and write-off of an equity investment--$0.6 million.

(6) Deferred gross profit represents gross profit on sales of pharmacy and supply systems, excluding installation cost, that have been shipped to, accepted and, in most instances, paid for by our customer but not yet installed at the customer site. The revenues and cost of revenues for such items will be recorded upon completion of installation.

(7) Figures do not include systems installed at Sun Healthcare sites.

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MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

YOU SHOULD READ THE FOLLOWING DISCUSSION OF THE FINANCIAL CONDITION AND RESULTS OF OPERATIONS IN CONJUNCTION WITH OUR FINANCIAL STATEMENTS AND THE NOTES TO THOSE STATEMENTS INCLUDED ELSEWHERE IN THIS PROSPECTUS. THIS DISCUSSION AND ANALYSIS CONTAINS FORWARD-LOOKING STATEMENTS THAT INVOLVE RISK, UNCERTAINTIES AND ASSUMPTIONS. OUR ACTUAL RESULTS MAY DIFFER MATERIALLY FROM THOSE ANTICIPATED IN THESE FORWARD-LOOKING STATEMENTS AS A RESULT OF MANY FACTORS, INCLUDING BUT NOT LIMITED TO THOSE SET FORTH UNDER "RISK FACTORS" AND ELSEWHERE IN THIS PROSPECTUS.

OVERVIEW

We were formed in 1992 and began offering our supply systems for sale in 1993. In late 1996, we introduced our Omnicell pharmacy system. In January 1999, we expanded our line of pharmacy systems and customer base with the acquisition of the Sure-Med product line from Baxter Healthcare. As of February 28, 2001, we have installed approximately 18,000 of our pharmacy and supply systems in over 1,100 healthcare facilities.

We sell our pharmacy and supply systems primarily in the United States. We have a direct sales force organized into six regions in the United States and Canada. We sell through distributors in Europe, the Middle East, Asia and Australia. We manufacture the majority of our systems in our production facility in Palo Alto, California, with refurbishment and spare parts activities conducted in our Waukegan, Illinois facility.

Sun Healthcare, a formerly related party, was previously a significant customer of ours, representing 19.7% of our total revenues in 1997, 20.5% in 1998, 9.6% in 1999 and 2.9% in 2000. Sun Healthcare filed for Chapter 11 bankruptcy protection in the third quarter of 1999. We do not anticipate any significant revenue from Sun Healthcare in 2001 or in future years.

REVENUES

Customers acquire our pharmacy and supply systems either through an outright purchase or a non-cancelable long-term lease, which typically has a term of 60 months. We bill our customers upon delivery and acceptance of our pharmacy and supply systems and recognize revenue when the systems are installed. Generally, we try to install our pharmacy and supply systems within three to six months after shipment, but installation, at the customer's request, can be delayed for a year or more. Some customers experience delays in installation due to site construction and delays in receiving interfaces from third parties.

Typically, we will sell our customer lease agreements on a non-recourse basis to third-party leasing companies. Lease revenue is recognized in the amount funded by the leasing company. As part of the initial sale of our pharmacy and supply systems, customers typically sign a one-year service agreement, and service revenues are recognized over the term of these agreements. Service and other revenues also include month to month rentals of our pharmacy and supply systems and monthly subscription fees from our Internet-based procurement application.

Deferred gross profit on our balance sheet represents pharmacy and supply systems that have been shipped to, accepted, and, in most instances, paid for by our customers but not yet installed at the customer site. We record these shipments as deferred gross profit because title to the inventory has passed to the customer. Deferred gross profit is not equal to gross margin because it does not include installation costs, which are incurred and recorded in the period when revenue is recognized. Our installation process typically takes a week or less to complete.

Revenues from our pharmacy and supply systems are difficult to forecast because the sales cycle, from initial assessment to product installation, involves a significant commitment of capital and time, varies

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substantially from customer to customer and can take more than one year. The order approval process of our customers is subject to internal procedures associated with large capital expenditures and the time associated with accepting new technologies. For these and other reasons, the sales cycle associated with the purchase of our pharmacy and supply systems is typically lengthy and subject to a number of significant risks, including customers' budgetary constraints and internal acceptance reviews over which we have little or no control.

In part due to our acquisition of the Sure-Med product line from Baxter Healthcare, sales of pharmacy systems have grown, in dollar terms, from 23% of our product shipments in 1997 to 40% in 2000. As of December 31, 2000, we had generated only minimal revenues from subscription fees for our OmniBuyer application. We intend to generate additional revenue from consulting fees for installation and integration services for OmniBuyer.

COSTS AND EXPENSES

Our current expense levels are based, in part, on our expectations of higher future revenue levels. If revenue levels are below expectations, operating results are likely to be disproportionately impacted given our significant investment in infrastructure. We have never achieved profitability on an annual operating basis, and our current revenues and gross profit are not sufficient to support our operating expenses. Based on the foregoing, we believe that period to period comparisons of our results of operations are not necessarily meaningful and should not be relied upon as indications of future performance.

Cost of product revenues consists primarily of direct materials, labor and overhead required to manufacture pharmacy and supply systems and also includes costs required to install our systems at the customer location. Costs of service and other revenue include spare parts required to maintain and support installed systems and service and maintenance expense, including outsourced contract services. Direct materials and installation costs are mostly variable. Manufacturing labor and overhead remain relatively fixed over ranges of production volume. The cost of service and spare parts has increased as the size of our installed base of customers increases.

Our research and development expenses include engineering and development salaries, wages and benefits, prototyping and laboratory expenses, consulting expenses and engineering-related facilities and overhead charges. Most of the research and development expenses are personnel- or facilities-related and are relatively fixed. Prototyping and consulting expenses will vary depending on the stage of completion of various engineering and development projects.

Our selling, general and administrative expenses include costs to support the sales, marketing, field operations and customer support and administration organizations. Most of these costs are personnel- or facilities-related and are relatively fixed. Bonuses and sales commissions will typically change in proportion to revenue or profitability. Other expenditures, such as advertising, promotions and consulting, are neither fixed nor variable and will fluctuate depending on product introductions, promotional programs and trade shows.

Due to relatively low demand for our Internet-based procurement application, OmniBuyer, we restructured our e-commerce business in the third quarter of 2000 and reduced operating expenses. In particular, we decreased the number of employees in this area and lowered our spending on sales, marketing and research and development. We decided not to pursue an exchange based on the Commerce One MarketSite license and refocused on marketing OmniBuyer to our hospital and alternate care customers. As part of this restructuring, we recorded a charge of $2.9 million, comprised of a $2.0 million writedown of our Commerce One MarketSite license, $0.6 million in employee severance-related expenses and a $0.3 million writedown of previously capitalized software.

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RESULTS OF OPERATIONS

The following table sets forth certain items included in our results of operations for each of the three years in the period ended December 31, 2000, expressed as a percentage of our total revenues for these periods:

                                                                 YEAR ENDED DECEMBER 31,
                                                              ------------------------------
                                                                1998       1999       2000
                                                              --------   --------   --------
STATEMENT OF OPERATIONS:
Product revenues............................................    91.4%      86.8%      87.8%
Service and other revenues..................................     8.6       13.2       12.2
                                                               -----      -----      -----
  Total revenues............................................   100.0      100.0      100.0

Cost of product revenues....................................    33.9       53.4       28.5
Cost of service and other revenues..........................     3.7       10.1       12.0
                                                               -----      -----      -----
    Total cost of revenues..................................    37.6       63.5       40.5
                                                               -----      -----      -----

Gross profit................................................    62.4       36.5       59.5
Operating expenses:
  Research and development..................................    12.4       16.4       17.6
  Selling, general and administrative.......................    50.4       67.1       70.6
  Integration...............................................      --        1.4         --
  Restructuring.............................................      --         --        4.5
                                                               -----      -----      -----
    Total operating expenses................................    62.8       84.9       92.7

Loss from operations........................................    (0.4)     (48.4)     (33.2)
Interest income (expense), net..............................     2.1       (3.3)      (1.8)
                                                               -----      -----      -----
Income (loss) before provision for income taxes.............     1.7      (51.7)     (35.0)
Provision for income taxes..................................     0.4        0.3        0.1
                                                               -----      -----      -----
Net income (loss)...........................................     1.3      (52.0)     (35.1)
                                                               =====      =====      =====

Net income (loss) applicable to common stockholders.........     1.3      (52.0)     (35.1)
                                                               =====      =====      =====

YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998

REVENUES. Total revenues increased 20.3% from $53.4 million for the year ended December 31, 1999 to $64.2 million for the year ended December 31, 2000. Total revenues increased 10.7% from $48.2 million for the year ended December 31, 1998 to $53.4 million for the year ended December 31, 1999.

Product revenues increased by 21.7% from $46.3 million in 1999 to $56.4 million in 2000, due primarily to a change in our product mix to a larger proportion of higher-priced pharmacy systems from 1999 to 2000 and an increase in the number of pharmacy and supply systems installed from 1999 to 2000. Product revenues increased by 5.1% from $44.1 million in 1998 to $46.3 million in 1999, due to an increase in the number of pharmacy and supply systems installed from 1998 to 1999 partially offset by sales of a larger proportion of supply systems from 1998 to 1999. Our slower rate of product revenue growth in 1999 compared to preceding years was due to our largest customer Sun Healthcare's financial difficulties and by delays in purchase decisions by other customers over concerns related to Year 2000.

Service and other revenues increased by 11.0% from $7.0 million in 1999 to $7.8 million in 2000. This increase was due to a higher installed base of systems partially offset by lower service revenue from Sun Healthcare. Under the terms of the Sure-Med acquisition, we assumed from Baxter Healthcare the remaining service obligations to certain Sure-Med lease customers, but we do not receive any service

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revenue associated with such obligations. Service and other revenues increased by 70.6% from $4.1 million in 1998 to $7.0 million in 1999. The increase in service and other revenues in 1999 was due primarily to the increase in our installed base of pharmacy and supply systems. We anticipate that service and other revenues will continue to grow in dollar terms and as a percentage of our total revenues due to continued growth in our installed base of pharmacy and supply systems.

Deferred gross profit increased by 6.1% from $28.2 million at December 31, 1999 to $29.9 million at December 31, 2000 due to slightly more shipments of pharmacy and supply systems than installations during 2000. Deferred gross profit increased by 33.5% from $21.1 million at December 31, 1998 to $28.2 million at December 31, 1999 due to significantly more shipments of pharmacy and supply systems than installations during 1999. We anticipate that deferred gross profit will remain relatively constant with the December 31, 2000 balance due to shipments approximating installations in future periods. Delays in installation occur for a variety of reasons, including construction delays and delays in receiving software from third party vendors. We recognize revenue and reduce deferred gross profit when installation is complete.

COST OF REVENUES. Cost of product revenues decreased by 35.9% from $28.5 million in 1999 to $18.3 million in 2000. Gross profit on product revenues was $17.8 million, or 38.5% of product revenues in 1999, compared to $38.1 million, or 67.6% of product revenues in 2000. The 2000 decrease in cost of product revenues and increase in gross profit percentage were due primarily to a $9.7 million writedown of Sure-Med inventory in the fourth quarter of 1999 because of lower than anticipated demand for Sure-Med pharmacy systems. Subsequent to the January 1999 acquisition of the Sure-Med product line, product integration issues related to the Sure-Med acquisition slowed our sales force's ability to effectively sell the Sure-Med pharmacy systems. Cost of product revenues increased by 74.4% from $16.3 million in 1998 to $28.5 million in 1999. Gross profit on product revenues was $27.7 million, or 62.9% of product revenues in 1998 compared to $17.8 million, or 38.5% of product revenues in 1999. The 1999 increase in cost of product revenues was due primarily to the writedown of Sure-Med inventory. Cost of product revenues and gross profit on product revenues in 1999 were also adversely affected by the minimal gross profit recorded on sales of Sure-Med inventories that had been written up to fair value upon the acquisition.

Excluding the impact of the Sure-Med inventory and other writedowns, cost of product revenues increased modestly to $17.7 million for 1999 compared to $16.3 million in 1998, reflecting an increase in the number of systems installed and higher manufacturing costs per unit. As a percent of product revenues, cost of product revenues, excluding the impact of the Sure-Med inventory and other writedowns, increased from 37.1% in 1998 to 38.2% in 1999.

Cost of service and other revenues increased by 43.6% from $5.4 million in 1999 to $7.7 million in 2000. The decline in gross profit on service and other revenue in 2000 compared to 1999 was due to service and maintenance costs on Sure-Med units sold prior to the acquisition, for which we did not receive revenue, being significantly higher than our original estimates reflected in the purchase price allocation. For the same periods, gross profit on service and other revenues was $1.7 million, or 23.6% of service and other revenues in 1999 compared to $0.1 million, or 1.1% of service and other revenues in 2000. Cost of service and other revenues increased by 198.6% from $1.8 million in 1998 to $5.4 million in 1999. For the same periods, gross profit on service and other revenues was $2.3 million, or 56.3% of service and other revenues in 1998 compared to $1.7 million or 23.6% of service and other revenues in 1999. The lower gross profit on service and other revenues in 1999 compared to 1998 was due primarily to the acquisition of the Sure-Med product line and the higher level of service required for the Sure-Med pharmacy systems.

RESEARCH AND DEVELOPMENT. Research and development expenses increased by 28.9% from $8.7 million in 1999 to $11.3 million in 2000. Research and development expenses represented 16.4% and 17.6% of total revenues in 1999 and 2000, respectively. The increase in research and development expenses was

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primarily attributable to higher costs associated with additional engineering for enhancements to our pharmacy systems and for customization of Commerce One's technology for OmniBuyer customers. We anticipate that we will continue to commit significant resources to research and development in future periods to enhance and extend our pharmacy and supply systems. We expect that research and development expenses will increase in overall dollars, but not as a percentage of total revenues from current levels. To date, we have capitalized approximately $0.9 million of software development costs in 2000 for our pharmacy and supply systems.

Research and development expenses increased by 46.1% from $6.0 million in 1998 to $8.7 million in 1999. Research and development expenses represented 12.4% and 16.4% of total revenues in 1998 and 1999, respectively. The increase in research and development expenses was primarily attributable to higher costs associated with additional engineering personnel retained as part of the acquisition of the Sure-Med product line from Baxter Healthcare.

SELLING, GENERAL AND ADMINISTRATIVE. Selling, general and administrative costs increased by 26.6% from $35.8 million in 1999 to $45.3 million in 2000. Selling, general and administrative expenses represented 67.1% and 70.6% of total revenues in 1999 and 2000, respectively. The increase in selling, general and administrative expenses is due primarily to staffing increases associated with the introduction of OmniBuyer and supporting the growth of our pharmacy and supply system business. In addition, we wrote off approximately $1.1 million in previously capitalized offering expenses. We anticipate that we will continue to commit significant resources to our sales, customer support, marketing, finance and administration organizations. We expect that selling, general and administrative expenses will continue to increase in dollar terms. However, we do not anticipate that selling, general and administrative expenses will increase significantly, if at all, as a percentage of total revenues.

Selling, general and administrative costs increased by 47.4% from $24.3 million in 1998 to $35.8 million in 1999. Selling, general and administrative expenses represented 50.4% and 67.1% of total revenues in 1998 and 1999, respectively. The increase in selling, general and administrative expenses is due to staffing increases necessary to manage and support our growth in revenues, as well as increased staffing as a result of the acquisition of the Sure-Med product line from Baxter Healthcare. Also included in selling, general and administrative costs in 1999 is $0.6 million relating to the write-off of an equity investment.

INTEGRATION. Integration expenses of $0.8 million in 1999 consist of costs associated with the integration of Omnicell and Sure-Med engineering efforts, product lines and marketing efforts.

RESTRUCTURING. Restructuring charges in 2000 of $2.9 million include the $2.0 million write-off of the Commerce One MarketSite license, $0.3 million write-off of capitalized software development costs and $0.6 million in employee severance and related expenses.

INTEREST INCOME (EXPENSE). Net interest expense was $1.8 million in 1999 compared to net interest expense of $1.2 million in 2000. The lower net interest expense was primarily due to an increase in interest income from employee loans in 2000 as well as higher average cash balances than in 1999 and a reduction in interest paid to Sun Healthcare due to lower average outstanding balances of redeemable preferred stock. Net interest income was $1.0 million in 1998 compared to net interest expense of $1.8 million in 1999, reflecting a reduction in interest income due to a decrease in cash, cash equivalents and short-term investment balances and an increase in interest expense due to debt obligations incurred as part of the Sure-Med acquisition, as well as interest paid to Sun Healthcare for redemption of its redeemable preferred stock.

QUARTERLY RESULTS OF OPERATIONS

In any given quarter, it is common for a few customers to make up a substantial percentage of our pharmacy and supply systems revenues, although the identity of such customers generally varies from

24

quarter to quarter. The timing of purchase decisions by large hospital customers has a material impact on our deferred gross profit position but a less significant impact on quarterly results of operations which depend on our ability to install systems that have already been shipped to customers.

Our quarterly operating results have varied significantly in the past and may vary significantly in the future depending on many factors that may include, but are not limited to, the following:

- the size and timing of significant orders and their fulfillment and installation;

- changes in pricing policies by us or our competitors;

- the number, timing and significance of product enhancements and new product announcements by us or our competitors;

- changes in the level of our operating expenses;

- our customers' budgeting cycles; and

- changes in our strategy and general domestic and international economic and political conditions.

The following tables present certain unaudited statement of operations data for each quarter of 1999 and 2000. These data have been derived from unaudited consolidated financial statements and have been prepared on the same basis as our audited consolidated financial statements which appear elsewhere in this prospectus. In the opinion of our management, these data include all adjustments,

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consisting only of normal recurring adjustments and, in the fourth quarter of 1999 and third quarter of 2000, special charges described below, necessary for a fair presentation of such data.

                                                                  THREE MONTHS ENDED
                                 -------------------------------------------------------------------------------------
                                 MAR 31,    JUN 30,    SEP 30,    DEC 31,    MAR 31,    JUN 30,    SEPT 30,   DEC 31,
                                   1999       1999       1999       1999       2000       2000       2000       2000
                                 --------   --------   --------   --------   --------   --------   --------   --------
                                                                    (in thousands)
STATEMENT OF OPERATIONS DATA:
Product revenues...............  $ 7,694    $ 8,898    $10,976    $ 14,616   $12,128    $13,727    $13,891    $15,557
Product revenues from related
  party........................    3,090        840        181          52        --         --      1,097         --
Service and other revenues.....    1,339      1,784      2,098       1,813     2,034      1,853      2,032      1,891
                                 -------    -------    -------    --------   -------    -------    -------    -------
Total revenues.................   12,123     11,522     13,255      16,481    14,162     15,580     17,020     17,448
Cost of product revenues(1)....    3,503      3,500      3,850      17,650     4,523      3,854      4,876      5,027
Cost of service and other
  revenues(2)..................      901        731      1,317       2,428     2,097      2,124      1,627      1,874
                                 -------    -------    -------    --------   -------    -------    -------    -------
Total cost of revenues.........    4,404      4,231      5,167      20,078     6,620      5,978      6,503      6,901
                                 -------    -------    -------    --------   -------    -------    -------    -------
Gross profit (loss)............    7,719      7,291      8,088      (3,597)    7,542      9,602     10,517     10,547

OPERATING EXPENSES:
  Research and development.....    1,819      2,078      2,505       2,343     3,455      2,500      2,621      2,700
  Selling, general and
    administrative(3)..........    7,862      8,400      9,426      10,109    11,401     11,856     11,600     10,463
  Integration..................      286        362        137          --        --         --         --         --
  Restructuring(4).............       --         --         --          --        --         --      2,908         --
                                 -------    -------    -------    --------   -------    -------    -------    -------
    Total operating expenses...    9,967     10,840     12,068      12,452    14,856     14,356     17,129     13,163
                                 -------    -------    -------    --------   -------    -------    -------    -------
Loss from operations...........   (2,248)    (3,549)    (3,980)    (16,049)   (7,314)    (4,754)    (6,612)    (2,616)
Interest expense, net..........     (374)      (521)      (569)       (303)     (321)      (221)      (506)      (108)
                                 -------    -------    -------    --------   -------    -------    -------    -------
Loss before provision for
  income taxes.................   (2,622)    (4,070)    (4,549)    (16,352)   (7,635)    (4,975)    (7,118)    (2,724)
Provision for income taxes.....       24         40         --          85        25         25         25         25
                                 -------    -------    -------    --------   -------    -------    -------    -------
Net loss.......................  $(2,646)   $(4,110)   $(4,549)   $(16,437)  $(7,660)   $(5,000)   $(7,143)   $(2,749)
                                 =======    =======    =======    ========   =======    =======    =======    =======


(1) Includes special charges in the fourth quarter of 1999 related to:
writedown of Sure-Med inventory--$9.7 million; purchase accounting adjustment due to the sale of Sure-Med inventories that had been written up to fair value--$1.1 million; and costs incurred to complete Sure-Med installation obligations--$0.8 million.

(2) Includes a special charge in the fourth quarter of 1999 for costs incurred to complete Sure-Med installation obligations--$0.8 million.

(3) Includes a special charge in the fourth quarter of 1999 related to the write-off of an equity investment--$0.6 million. Includes special charges in the third quarter of 2000 related to a $1.1 million expense associated with previously deferred offering expenses and a $0.2 million writedown of identifiable intangible assets remaining from the Sure-Med acquisition.

(4) Includes special charges in the third quarter of 2000 related to:
$2.0 million writedown of Commerce One MarketSite software license; $0.6 million in employee severance expenses; and $0.3 million writedown of capitalized software development costs.

LIQUIDITY AND CAPITAL RESOURCES

We have financed our operations since inception primarily through the private placement of equity securities, as well as through equipment financing and secured loan arrangements. Through December 31, 2000, we have raised approximately $77.5 million from the private placement of equity securities, net of redemptions. This includes net proceeds of approximately $28.6 million from our last equity financing in the first quarter of 2000.

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As of December 31, 2000, our principal sources of liquidity included approximately $12.0 million in cash, cash equivalents and short-term investments and an undrawn $10.0 million revolving credit facility. Our funds are currently invested in U.S. Treasury and government agency obligations, investment grade commercial paper and short-term interest-bearing securities.

In connection with the acquisition of the Sure-Med product line, we incurred a note payable to Baxter Healthcare of approximately $7.9 million. The note is secured by substantially all of the assets supporting the Sure-Med product line. The note is for a term of five years and is repayable in eight equal quarterly installments beginning on March 31, 2002, or earlier upon the closing of an initial public offering. Interest payments are due quarterly at a rate of 8.0%. We expect to utilize a portion of the proceeds from this offering to repay the Baxter Healthcare note in full.

We have established a credit facility with a bank that provides us with advances of up to 75% of eligible receivables, as defined, up to $10.0 million, and expires on April 27, 2001. Any advances under the credit facility would be secured by substantially all of our assets. Interest under the credit agreement is payable at an annual rate equal to our lender's prime rate plus 2.25%. Our credit agreement contains covenants that include limitations on indebtedness and liens, in addition to thresholds relating to net capital deficiencies and ratios that define borrowing availability and restrictions on the payment of dividends. As of December 31, 2000, we had no borrowings under this credit facility, were eligible to borrow approximately $4.4 million, and were in compliance with the covenants.

We used cash of $19.2 million in operating activities in 2000 compared to $5.0 million used in operating activities in 1999 and $6.7 million provided by operating activities in 1998. The net loss of $22.6 million for 2000 included non-cash charges for depreciation and amortization of $2.8 million, non-cash stock compensation charges of $0.7 million and an increase of deferred gross profit of $1.7 million. The net loss of $27.7 million for 1999 included non-cash charges for depreciation and amortization of $2.0 million, Sure-Med pharmacy systems inventory write-off of $9.7 million, an investment writedown of $0.6 million, and an increase in deferred gross profit of $7.4 million. In 1998, cash was provided by net income of $0.6 million, a decrease in accounts receivable of $2.1 million and an increase in deferred gross profit of $4.0 million

Cash of $1.4 million was provided from investing activities in 2000 compared to cash of $0.2 million used in investing activities in 1999 and cash of $7.3 million used in investing activities in 1998. Net maturities of short-term investments were $1.9 million in 2000 and $6.4 million in 1999 compared to net purchases of $5.5 million in 1998. Our 2000 expenditures for property and equipment of $0.5 million was less than the $6.2 million expended in 1999 and the $1.8 million expended in 1998. We generated cash from financing activities of $24.9 million in 2000 primarily due to completing a private placement of $28.5 million in Series K Preferred Stock partially offset by redemptions of redeemable preferred stock. We used $3.8 million of cash in financing activities in 1999 due primarily to redemption of redeemable preferred stock and $0.6 million of cash was provided by financing activities in 1998 through the issuance of common stock.

Through December 31, 2000, we had redeemed 1,081,200 shares of Series J redeemable convertible preferred stock from Sun Healthcare for $15.2 million plus interest of $2.7 million. Cash of $11.6 million was used to satisfy this redemption, with the balance paid by offsetting Sun Healthcare's outstanding accounts receivable balances. In January 1999, Sun Healthcare exercised its right to have us redeem its 1,802,000 shares of Series J Preferred Stock in ten equal quarterly installments beginning in March 1999. All payments have been made except the three quarterly redemption payments of $2.5 million each that were due in September 2000, December 2000 and March 2001, which we were not obligated to make because we did not meet certain balance sheet tests under California law. We plan to make these three payments, totaling $7.6 million, with a portion of the proceeds from this offering.

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We have not paid any significant amount of taxes to date. As of December 31, 2000, we have a net operating loss carryforward for U.S. income tax purposes of approximately $38.0 million, expiring beginning in 2009. There are certain limitations on the use of this net operating loss carryforward. For more information, please see the notes to our consolidated financial statements.

We may be required to raise additional capital through the public equity market, private financings, collaborative arrangements and debt. If additional capital is raised through the issuance of equity or securities convertible into equity, our stockholders may experience dilution, and such securities may have rights, preferences or privileges senior to those of the holders of the common stock. Additional financing may not be available to us on favorable terms, if at all. If we are unable to obtain financing, or to obtain it on acceptable terms, we may be unable to execute our business plan.

QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET AND INTEREST RATE RISK

The following discusses our exposure to market risk related to changes in interest rates, foreign currency exchange rates and equity prices. We reduce the sensitivity of our results of operations to these risks by maintaining an investment portfolio which is comprised solely of highly rated, short-term investments. We do not hold or issue derivative, derivative commodity instruments or other financial instruments for trading purposes. We are exposed to currency exchange fluctuations, as we sell our products internationally. We manage the sensitivity of our international sales by denominating all transactions in U.S. dollars.

We are exposed to interest rate risk, as we use additional debt financing periodically to fund capital expenditures. The interest rate that we may be able to obtain on debt financings will depend on market conditions at that time and may differ from the rates we have secured in the past.

RECENT ACCOUNTING PRONOUNCEMENTS

In March 2000, the Emerging Issues Task Force (EITF) published its consensus on Issue No. 00-2, "Accounting for Web Site Development Costs." This EITF sets forth guidance on whether to capitalize or expense certain development costs. We have adopted EITF 00-2 effective January 1, 2000 and capitalized $260,000 of web site development costs in the year ended December 31, 2000. These costs were written off as a part of the 2000 restructuring activities.

In March, 2000, the FASB issued Interpretation No. 44, "Accounting for Certain Transactions Involving Stock Compensation," an interpretation of APB 25. The Interpretation is applied prospectively to all new awards, modifications to outstanding awards, and changes in employee status after July 1, 2000, with the exception of the definition of employee and stock option repricings as to which the effective date is December 15, 1998. The adoption of this Interpretation did not have a significant effect on our results of operations or financial condition.

In December 1999, the Securities and Exchange Commission issued SAB No. 101, "Revenue Recognition in Financial Statements." SAB 101 provides guidance on the recognition, presentation and disclosure of revenue in financial statements. We have adopted SAB 101 for all periods presented.

In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities," as amended by SFAS 137 and 138, which is effective for years beginning after June 15, 2000. SFAS 133, as amended, will require us to recognize all derivatives on the balance sheet at fair value. Gains or losses resulting from changes in the values of those derivatives would be accounted for depending on the use of the derivative and whether it qualifies for hedge accounting. SFAS 133 will be effective for our financial statements for the year ended December 31, 2001. Management believes that this statement will not have a significant effect on our results of operations or financial condition.

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BUSINESS

OVERVIEW

We provide an integrated suite of clinical infrastructure and workflow automation solutions for healthcare facilities. These solutions include pharmacy and supply systems, clinical reference tools, an Internet-based procurement application and decision support capabilities. We sell and lease our products and related services to a wide range of healthcare facilities such as hospitals, integrated delivery networks and alternate care facilities, which include nursing homes, outpatient surgery centers, catheterization labs and clinics. As of February 28, 2001, we had approximately 18,000 of our pharmacy and supply systems installed in over 1,100 healthcare facilities in the United States. In 2000, we generated revenue of $64.2 million from the sale and lease of our products and related services.

The healthcare industry's clinical workflow processes are highly inefficient and predominantly manual. The industry's historical reluctance to invest in information technology has contributed to medical errors and high process costs. Our automation solutions are designed to enable healthcare facilities to reduce medication errors, decrease costs, enhance operating efficiency and improve patient care.

Our clinical infrastructure and workflow automation solutions enable healthcare facilities to acquire, manage, dispense and deliver pharmaceuticals and medical supplies more effectively and efficiently. Our pharmacy and supply systems facilitate controlled delivery of pharmaceuticals and medical supplies directly to clinicians at the point of care. Our Internet-based procurement application automates and integrates healthcare facilities' requisition and approval processes. Our decision support product provides healthcare facilities with the ability to identify trends in drug utilization and diversion, improve regulatory compliance and reduce costs by monitoring usage patterns and optimizing product management.

Our goal is to become the leading provider of clinical infrastructure and workflow automation solutions for the healthcare industry. We will continue to be innovative in the expansion and enhancement of our product offerings. We also intend to expand the adoption of our automation solutions by continuing to collaborate with leading healthcare organizations. Furthermore, we believe our sizable installed customer base provides us with a significant opportunity to grow our business through increased sales to our existing customers.

INDUSTRY BACKGROUND

The healthcare delivery system in the United States is highly fragmented, complex and inefficient. Despite significant advances in science and medical technology, the clinical and management processes employed in healthcare facilities have made little progress in the past 20 years. Presently, many major clinical workflow processes at healthcare facilities are still predominantly manual and paper-based, which reflect healthcare facilities' relatively limited investment in information technology. Gartner, Inc., an independent market research organization, estimates that for 2001 the healthcare industry will invest only 1.6% of its revenue in information technology compared to 13.2% and 5.6% for the communications industry and retail industry, respectively.

Existing healthcare information systems are also limited in their ability to support the modernization of healthcare delivery processes or to address evolving patient safety initiatives, requirements of managed care and new healthcare regulations. Today, most healthcare facilities' information systems are oriented toward financial functions such as patient billing. These systems generally do not provide current, real-time information that healthcare providers need to make clinical and managerial decisions. Furthermore, individual departments within the same healthcare facility or network frequently purchase separate systems customized to their specific requirements, forcing the healthcare facility to maintain disparate information systems that do not operate or interface well with one another.

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NEED FOR CLINICAL INFRASTRUCTURE SYSTEMS

In November 1999, the Institute of Medicine issued a report based on the results of over 30 independent studies appearing in medical peer review journals over a 12-year period. The report indicated that medical errors are among the top ten causes of death in the United States, accounting for more deaths than motor vehicle accidents, breast cancer or AIDS. The report also indicated that in 1993 over 7,000 deaths resulted from medication errors. The following findings were noted in the report:

- A 1995 study of 4,031 adult admissions to 11 medical and surgical units at two hospitals estimated that an average of 1,900 adverse drug events occur per hospital per year, with 28% judged to be preventable.

- The same 1995 study found that approximately three out of every four medication errors were caused by one of seven types of systems failures, including drug knowledge dissemination, dose and identity checking, order transcription and medication order tracking.

- A 1997 study of two hospitals over a six-month period estimated that approximately 2% of admissions experienced a preventable adverse drug event, resulting in average increased hospital costs of $4,700 per adverse drug event admission or approximately $2.8 million annually for a 700-bed hospital.

In March 2001, the Institute of Medicine issued a follow-up report that recommended increased investment in information technology as a means of reducing medical errors and improving the overall quality of patient care.

Since the 1999 Institute of Medicine report was released, California has passed legislation requiring the eventual adoption of technologies aimed at reducing avoidable medication errors. Other states are considering similar legislation. Additionally, a consortium of large employers known as the Leapfrog Group was recently formed with the express purpose of pressuring healthcare facilities to provide safer care for employees of Leapfrog member companies. The Leapfrog Group's members, which include companies such as AT&T, Ford Motor Company, General Electric, IBM and 3M, employ approximately 20 million people and spend an estimated $40 billion annually on healthcare. One of the initiatives of the Leapfrog Group is to encourage employees to use healthcare facilities that invest in computerized systems designed to prevent avoidable medical errors.

In January 2001, the Joint Commission on Accreditation of Healthcare Organizations (JCAHO), an independent, not-for-profit organization that evaluates and accredits approximately 19,000 healthcare facilities in the United States, approved standards directly focused on patient safety and medical error reduction in healthcare facilities. Healthcare facilities seeking accreditation from JCAHO are required to establish ongoing patient safety programs, including the application of knowledge-based information to reduce risks to patients and the creation of an environment that encourages identification of errors, establishment of remedial steps to reduce the likelihood of recurring errors and identification of risks to patients.

ECONOMIC PRESSURES ON HEALTHCARE FACILITIES

Throughout the 1990s, the increasing cost of providing healthcare led to the rise of managed care. Healthcare providers aligned into networks and health plans established guidelines for reimbursement for healthcare delivery, reducing overall reimbursement rates. Federal policy in the United States also influenced the economic climate of the healthcare industry. Passage of the Balanced Budget Act of 1997 proposed a reduction of payments to healthcare providers of more than $250 billion over a five-year period. This significantly reduced the operating margins of healthcare facilities and limited their access to capital. Although these pressures resulted in lower total spending on healthcare, many of

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the larger systemic issues in the industry have not been adequately addressed, including improving patient care and upgrading outdated information systems.

Economic pressures and the need to negotiate more effectively with managed care organizations have also induced a wave of consolidation, both vertically and horizontally, among healthcare providers to form newly defined delivery organizations. Many of these newly created organizations expected to realize significant economies of scale as a result of consolidation. These economies of scale have not fully materialized, however, and new problems have emerged from consolidation, including inefficiencies associated with managing disconnected and disparate information systems. Integrated delivery networks are only now beginning to address these issues.

Labor shortages in the U.S. healthcare market also have adversely impacted patient care and accentuated the need for investment in information technology to improve labor productivity. A December 2000 report from the U.S. Department of Health and Human Services indicated that the United States is experiencing a growing shortage of licensed pharmacists, a trend that it expects to continue. According to the report, the shortage has resulted in less time for pharmacists to counsel patients, longer working hours and a greater potential for fatigue-related errors. Similarly, according to the American Organization of Nurse Executives, most regions in the United States are also experiencing a major nursing shortage. In February 2001, a survey by the American Nursing Association revealed that 75% of nurses feel the quality of patient care has declined over the past two years, and a majority of nurses cited inadequate staffing as the primary cause of this decline.

THE OMNICELL SOLUTION

We provide an integrated suite of clinical infrastructure and workflow automation solutions capable of enterprise-wide implementation by healthcare providers. These solutions include pharmacy and supply systems, clinical reference tools, an integrated Internet-based procurement application and decision support capabilities. Our solutions enable healthcare providers to:

- REDUCE MEDICATION ERRORS. Our pharmacy systems (i) track clinician, patient and drug data, (ii) display a patient's full drug profile,
(iii) alert clinicians to allergies and drug interactions and (iv) track late or missed doses. Our systems interface directly with a healthcare facility's clinical pharmacy system, facilitating the dissemination of clinical pharmacy data and effectively extending the pharmacist's control of dispensed pharmaceuticals to the point of care. Our pharmacy systems are equipped with a touch screen Web browser that provides direct access to a third-party drug information database. This functionality allows clinicians to review information on dosage, administration, contra-indications and drug interactions at the point of care. Our pharmacy systems also support drug error detection by providing direct access, via the Internet, to medication error reporting and analysis software.

- REDUCE COSTS. Our pharmacy and supply systems store pharmaceuticals and medical supplies in a closed, controlled environment. By requiring a caregiver to enter their identification code and select a patient's name before removing a pharmaceutical or supply, only the items needed for each particular patient procedure are removed. This ensures that items are allocated properly and charged to the appropriate patient. Our automation systems also capture data on product utilization and inventory levels in real-time, allowing pharmacy and materials management departments to avoid shortages in care areas, improving patient care. Furthermore, by comparing actual utilization rates with standing inventory levels, business managers can optimize inventory levels across the entire enterprise. By controlling and monitoring access to pharmaceuticals and supplies, our systems also discourage stockpiling or theft. We estimate that our supply systems can reduce our customers' annual supply consumption costs by approximately 15% to 20% and reduce their required inventory levels by approximately 25% to 30%.

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- IMPROVE OPERATING EFFICIENCY. Our pharmacy and supply systems accurately capture data by patient, physician, location and billing code. These systems interface with our customers' existing clinical pharmacy, financial and materials management systems to automate such processes as medication reporting, patient billing and inventory replenishment. This eliminates manual processes and provides our customers with immediate access to data gathered by our systems to facilitate real-time operations management. Use of our pharmacy and supply systems also reduces process costs and increases labor productivity, enabling caregivers to devote more time to delivering patient care and allowing support personnel to provide additional services with fewer people. We estimate that our supply systems can reduce our customers' personnel needs by 1.5 full-time equivalent employees for every 100 occupied hospital beds.

- LEVERAGE INVESTMENTS IN EXISTING INFORMATION SYSTEMS. Because our automation solutions are designed to integrate with healthcare facilities' existing clinical pharmacy, financial and materials management systems, we can preserve their existing investments in these systems and enhance those systems' functionality. We have developed over 1,500 live, proprietary software interfaces that integrate our automation solutions with healthcare facilities' existing information systems. We believe our interface capabilities make our solutions particularly useful to large enterprises, such as integrated delivery networks, that often use multiple, disparate information systems among their facilities.

- SIMPLIFY ORDERING PROCESSES. Our Internet-based procurement application, OmniBuyer, simplifies the predominantly manual, paper-based procurement processes that currently exist in most healthcare facilities. By automating the purchasing process, OmniBuyer reduces administrative work and processing costs, increases contract compliance and improves order accuracy and information management. Used in conjunction with our pharmacy and supply systems, our customers are able to benefit from a fully electronic supply chain, from selected suppliers to the point of use. We estimate that OmniBuyer reduces the cost of issuing a purchase order from an average of $75 to $125 per purchase order to $15 to $30.

- MONITOR UTILIZATION TRENDS. Our Internet-enabled decision support tool, DecisionCenter, tracks pharmaceutical and supply utilization by physician, patient, procedure, item and diagnosis code. DecisionCenter provides healthcare facilities with the ability to identify trends in drug utilization and diversion, improve regulatory compliance and reduce costs by monitoring usage patterns and optimizing product management. DecisionCenter also provides secured trend analysis, decision support and regulatory compliance reports based on data gathered from our pharmacy and supply systems and other information systems within the healthcare facility.

STRATEGY

Our goal is to become the leading provider of clinical infrastructure and workflow automation solutions for the healthcare industry. We intend to achieve this goal through the following strategies:

- CONTINUE TO LEVERAGE AND EXTEND OUR SOLUTIONS. We intend to continue to develop features and functionality for our automation solutions that address the patient safety and cost-containment pressures confronting healthcare facilities. In addition, we intend to continue to add software, hardware and Internet-based solutions that complement and extend our automation solutions. For example, in 1999, we introduced OmniBuyer, which automates healthcare facilities' purchasing processes, to provide a complementary service to our pharmacy and supply systems.

- COLLABORATE WITH LEADING HEALTHCARE PROVIDERS. We work closely with leading healthcare institutions, such as Massachusetts General Hospital, New York University Hospitals Center and the Cleveland Clinic, in the definition, development and deployment of our products and services. These institutions demand innovative and cost-effective products and services that address their clinical infrastructure and workflow automation needs. They also require that our

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products and services be comprehensive in scope and capable of supporting the operations of an entire healthcare enterprise. Through our collaborations with leading healthcare institutions, we seek to establish our automation solutions as industry standards for clinical infrastructure and workflow automation.

- FURTHER PENETRATE OUR INSTALLED CUSTOMER BASE. We have a sizable installed base of approximately 18,000 pharmacy and supply systems in over 1,100 healthcare facilities. Most of our customers have purchased only a subset of our products and services, or have not yet implemented our products and services throughout their facilities. As a result, we believe a significant opportunity exists to expand sales to our existing customers. We intend to leverage our close customer relationships and the measurable benefits of our products and services to capitalize on this opportunity.

- DEVELOP SOLUTIONS THAT ENHANCE OUR CUSTOMERS' EXISTING SYSTEMS. We expect healthcare facilities to continue to demand our clinical infrastructure and workflow automation solutions as a means to preserve, leverage and upgrade their existing information systems. We will continue to deliver Internet-based and fully integrated automation solutions that are cost-effective and enhance our customers' existing information systems. We will also continue to utilize our dedicated interface team, proprietary hardware and software interface technologies and over 1,500 live interfaces to fully integrate our automation solutions with our customers' existing information systems.

- DEVELOP STRATEGIC RELATIONSHIPS. We expect to continue to enter into strategic relationships that enhance our product offerings, broaden our automation solutions and increase our sales opportunities. We expect these relationships to increase the clinical efficacy of our automation solutions and open new markets for them. We currently have a relationship with Gold Standard Multimedia whose Clinical Pharmacology database connects to our pharmacy systems through the Internet, providing important drug allergy and drug interaction information to clinicians as they remove medications from our pharmacy systems. We also have a strategic relationship with Becton, Dickinson and Company that allows us to co-market their bedside Rx System for prevention of medication errors to our installed customer base. The Becton Dickinson system is intended to be fully integrated with our pharmacy systems to promote maximum safety in the delivery of medications to the patient while automating and enhancing workflow.

OMNICELL PRODUCTS AND SERVICES

Our automation solutions include pharmacy and supply systems, an Internet-based procurement application and decision support capabilities. Our pharmacy and supply systems consist of modular, secured and computerized cabinets and related software technology that manage and dispense pharmaceuticals and medical supplies. OmniBuyer automates the healthcare facility's requisition process, and DecisionCenter provides trend analysis and decision support based on data gathered by our pharmacy and supply systems.

PHARMACY SYSTEMS

We offer two lines of pharmacy systems, Omnicell and Sure-Med. Our Omnicell pharmacy systems are highly configurable and are typically installed with high-resolution color touch screens. Our color touch screens provide users with a Windows-based graphical interface that is suited for displaying a patient's medical profile and Internet-based clinical information. In addition, our Omnicell pharmacy systems have dispensing drawers that support multiple levels of security by utilizing single-dose lids, locking lids, sensing lids and patented guiding lights. The systems are configured to support clinical workflow in all areas of the hospital including the operating rooms, emergency rooms, intensive care units and medical/ surgical floors.

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We acquired the Sure-Med pharmacy system from Baxter Healthcare in 1999. Our Sure-Med systems incorporate a variety of storage compartments and software that is compatible with all of our automation solutions. Our Sure-Med systems offer a wide range of configuration and dispensing technologies, including unit-dose dispensers and multiple drawer sizes. The unit-dose module dispenses only the requested medication doses and is best suited for medications where regulatory guidelines mandate a highly controlled environment. Clinicians prefer this technology in high-security situations because it automates much of the logistical and documentation burden and responsibility associated with dispensing controlled medications. In late 2000, we extended our color touch screens and associated software available on our Omnicell pharmacy system to the Sure-Med pharmacy system. This will enable both systems to function on a common platform, allowing customers to add our other products to their Sure-Med pharmacy systems. We expect broad adoption of this new technology across our Sure-Med installed base.

SUPPLY SYSTEMS

Our primary supply systems are comprised of one, two or three cabinets. Each cabinet is approximately two feet wide, six feet high and two feet deep with capacity for up to 120 stock keeping units. Each supply system includes a processor and user interface. Auxiliary cabinets can be added to the system to provide additional storage capacity. Various shelf, drawer and rack modules facilitate a wide array of storage configurations.

Our supply systems incorporate locked transparent doors that restrict access to the supplies contained in our systems. Users enter their identification number on a console and select the appropriate patient name. Specific doors then open based on the security level of the user. Using our patented "See & Touch" technology, the user is able to record supply utilization by pushing a dedicated reorder button on the shelf in front of the selected item.

COMBINATION SYSTEMS

Our combination systems allow healthcare organizations to store pharmaceuticals and medical supplies in a single system. The architecture of our combination system enables each operating department to manage its products independently of other operating departments, restricting clinician and technician access to only appropriate pharmaceuticals and medical supplies and allowing the tracking of transaction data, inventory levels, expenses and patient treatment costs through a single database. By utilizing our combination systems, healthcare facilities are able to handle pharmaceuticals and medical supplies with greater flexibility and efficiency.

OMNICENTER

OmniCenter is a computerized central server that processes transaction data to and from our pharmacy and supply systems, recording each transaction by user, patient, item quantity, cost, date and time. OmniCenter enables the pharmacy and materials management departments to run reports automatically or on demand, indicating when to restock the systems and when to reorder pharmaceuticals and supplies. OmniCenter also permits the user to generate a wide range of standard and customized reports. As a diagnostic service, we are able to remotely access an installed OmniCenter from our technical support center to monitor the status of the server and all installed pharmacy and supply systems.

OMNIBUYER

OmniBuyer is a secure Internet-based procurement application that automates and integrates a healthcare facility's requisition and approval processes. The application incorporates buyer-specific business rules, such as spending limits, negotiated pricing, approval routing and customized access

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profiles. In addition, OmniBuyer is integrated with the healthcare facility's existing information systems, further streamlining the purchasing process. OmniBuyer is based on Commerce One's BuySite technology that we have customized to meet the complex needs of the healthcare industry.

OmniBuyer provides a single online point of entry to meet the procurement needs of buyers at healthcare facilities. We typically sell OmniBuyer on an application service provider basis. Using OmniBuyer, our customers determine the specific suppliers, including manufacturers, distributors, marketplaces and exchanges, to which their buyers will have access.

DECISIONCENTER

DecisionCenter is an Internet-enabled decision support product that provides secure trend analysis, decision support and regulatory compliance reports based on data from our pharmacy and supply systems. It consolidates information from one or more OmniCenters into one database. The data are stored in a raw format as well as aggregated for rapid response to queries. We have developed the "My-Omni" Web page that allows users to configure frequently requested information from a short menu. In addition, we offer sophisticated graphical tools that allow users to make detailed queries across all data fields. These systems are typically interfaced with the healthcare facility's medical records system in order to augment the database with correctly associated diagnosis codes. Data can be viewed by authorized users and personnel at any time, allowing for easy and comprehensive analysis to improve decision making.

SERVICES

We provide three types of services in support of our automation solutions:
(i) post-sales installation services at customer facilities, provided by our field service organization; (ii) integration services in which our interface development team interfaces our solutions with our customers' existing clinical pharmacy, financial, and materials management systems; and
(iii) post-installation technical support. We generate revenue from service contracts for post-installation technical support, which provides our customers with phone support, on-site service, parts, and access to software upgrades. On-site service is provided by a combination of our field service operations team, technical support group and 150 field service representatives from Dade Behring Inc., a third-party service company.

MEDCENTERCITY

We own and operate MedCenterCity, a Web site for healthcare professionals, as a service to the healthcare community. The site includes articles on relevant issues, including the cost of healthcare, reducing medical errors and the Healthcare Information Portability and Accountability Act of 1996.

CUSTOMERS

Our target customers for our automation solutions are healthcare facilities, including hospitals and alternate care facilities. As of February 28, 2001, over 1,100 hospitals and alternate care facilities had

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purchased or leased our pharmacy and supply systems. The following entities are representative of our largest hospital customers based on pharmacy and supply systems purchased or leased:

- Bellevue Hospital Center                    New York, NY
- Children's Medical Center of Dallas         Dallas, TX
- Cleveland Clinic                            Cleveland, OH
- Jackson Memorial Hospital                   Miami, FL
- Massachusetts General Hospital              Boston, MA
- Madigan Army Medical Center                 Tacoma, WA
- New York University Hospitals Center        New York, NY
- Northwestern Memorial Hospital              Chicago, IL
- Raritan Bay Medical Center                  Perth Amboy, NJ
- Rush-Presbyterian-St. Luke's Medical
Center                                        Chicago, IL
- University of Utah Hospitals and Clinics    Salt Lake City, UT
- University of Texas Medical Branch          Galveston, TX
- Walter Reed Army Medical Center             Washington, D.C.

Rush-Presbyterian, Madigan Army Medical Center and Raritan Bay Medical Center are among the 15 customers that have purchased supplies through OmniBuyer.

RUSH-PRESBYTERIAN CASE STUDY

Rush-Presbyterian-St. Luke's Medical Center in Chicago, Illinois is an example of a healthcare facility progressively adopting our automation solutions to derive benefits across the enterprise. In December 1993, Rush-Presbyterian installed our supply systems in an area of its facility called the Atrium. A two-year retrospective study was performed to assess the long-term impact of our supply systems on Rush-Presbyterian's inventory management processes. The study found that total supply consumption in the Atrium for the first year, 1994, declined by almost $150,000 or 20.3% versus the baseline year. In 1995, total supply consumption in the Atrium dropped an additional $30,000 below the already reduced first-year level, to 24.3% below the baseline year. Rush-Presbyterian has expanded its use of our supply systems to other areas of the facility, including the Cardiovascular Catheterization Unit (CVCU).

In November 1999, Rush-Presbyterian implemented OmniBuyer in the CVCU. In the CVCU, Rush-Presbyterian has automated the procurement process from the point of use to the supplier. The automation process begins when an item such as a catheter is removed from one of our supply systems. The user then pushes a dedicated reorder button for each item removed. The usage data generated by these transactions are consolidated by our OmniCenter, which interfaces with OmniBuyer. When a reorder point is reached, the manager of the CVCU receives an automatic e-mail message, notifying him to log on to OmniBuyer, where he views a requisition detailing the products to be reordered. The manager is then able to edit and approve the requisition. Once approved, OmniBuyer transmits the requisition to the supplier, accessing current pricing information from the supplier and sends the order to the Rush-Presbyterian enterprise resource planning system in order to generate an accurate purchase order. After the requisition has been received and processed by the supplier, an e-mail message is sent back to the requisitioner to verify that the order has been received and processed. The e-mail message identifies backorder status, which is helpful if a different supplier needs to be contacted to obtain a required product. The e-mail message also identifies discrepancies in supplier pricing by comparing automatically purchased goods to contract prices. This feature has already saved Rush-Presbyterian thousands of dollars in inadvertent supplier overcharges.

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STRATEGIC RELATIONSHIPS

We establish and maintain relationships with companies whose products, services, technologies and/or market presence enhance our ability to deliver value to our customers and who open up additional sales opportunities for our automation solutions. Among the most significant relationships are the following:

BECTON, DICKINSON AND COMPANY

Becton Dickinson is a manufacturer of medical supplies, devices and diagnostic systems, including the BD Rx System. The BD Rx System allows nurses to perform a final, bedside safety check by positively identifying the correct patient, medication, dosage, time and method of delivery before administering the medication. The system utilizes a sophisticated hand-held computing platform and bar code scanner that a nurse can transport from patient to patient. In June 2000, we agreed to co-market the BD Rx System to our installed base of pharmacy system customers.

GOLD STANDARD MULTIMEDIA (CLINICAL PHARMACOLOGY)

Gold Standard Multimedia is a provider of multimedia programs for the healthcare market. Gold Standard Multimedia's drug information application, Clinical Pharmacology, was named eHealthcareWorld's 1999 Gold Award winner for best online publication for professionals. We have an agreement with Gold Standard Multimedia to make the Clinical Pharmacology database available to our customers through the Web browser loaded onto all of our color touch screens. Access to the database is integrated with our pharmacy systems so that when a nurse removes a drug for a patient, commands are processed through the browser that make clinical information about that drug available to the nurse on our color touch screen. The nurse can view allergy and drug interaction information, locate specific details and view an image of the drug. We believe that access to these types of information from our pharmacy systems can prevent medication errors. Clinical Pharmacology also provides drug information that nurses can print for patients prior to discharge to reinforce patient education.

U.S. PHARMACOPEIA

U.S. Pharmacopeia is a non-profit organization that establishes standards to ensure the quality of medicines. We have a co-marketing agreement with U.S. Pharmacopeia that makes their MedMARx medication error reporting and analysis software available on our pharmacy systems. The MedMARx software provides a standardized framework for medication error reporting. From our color touch screen, clinicians can record medication errors, run standard and customized reports and view the results in chart and graph form. These reports help clinicians follow trends and pinpoint problem areas. U.S. Pharmacopeia also maintains a national medication errors database that allows healthcare facilities to anonymously compare themselves to similar institutions.

COMMERCE ONE, INC.

Commerce One, Inc. is a provider of e-commerce solutions that dynamically link buying and supplying organizations to form real-time trading communities. In August 1999, we entered into an agreement with Commerce One and paid a license fee pursuant to which we received a perpetual license to Commerce One's Hosted BuySite software for use in developing our OmniBuyer application. The agreement also provides for program management services and ongoing maintenance and support of the software for additional fees. The agreement continues perpetually unless otherwise terminated by either party pursuant to the termination provisions of the agreement. In addition, our strategic relationship with Commerce One allows for co-marketing and co-development efforts and enables us to

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utilize their e-commerce technology platform and access their Global Trading Web. In March 2000, Commerce One made an equity investment in our company.

RESEARCH AND DEVELOPMENT

We commit significant resources to developing new products and technologies that bring value to our customers. We believe that our research and development focus and quality team are key competitive advantages in the industry. As of February 28, 2001, we have 59 employees in research and development, approximately 17% of our entire workforce. Research and development expenses were $6.0 million, $8.7 million and $11.3 million in the years ended December 31, 1998, 1999 and 2000, respectively, representing 12.4%, 16.4% and 17.6% of total revenues in those years.

Our architecture and sophisticated product development process allow for rapid development and testing times. The software architecture for our pharmacy and supply systems is based on database products and development tools centered around the Microsoft Windows NT platform and the Microsoft Internet Information Server. This software is installed at the customer site. We develop application software that is generally applicable to all customers, while retaining broad customization functionality. We maintain a single release applicable to both our pharmacy and supply systems, with each new release containing more configurable options as new features are added, while retaining previous functionality for backward compatibility. Interfacing with our customer's existing information systems is done according to the Health Level Seven (HL7) standards or, for non-compliant systems, is done utilizing our custom interface software. Interface software is kept separate from the main software release. Communication between the OmniCenter server and the pharmacy and supply systems and interface software is accomplished through an application programming interface. Each new release of server software maintains backward compatibility with this application programming interface, so that previous versions of interfaces and pharmacy and supply systems continue to operate when the OmniCenter server software is upgraded. Our products currently do not require approvals beyond standard Underwriters Laboratories or Canadian Safety Association equivalent certification.

A vital part of our automation solutions business and among our core competencies is a dedicated hardware group. While software occupies the majority of our development resources, the knowledge and expertise of our hardware group is one of the significant barriers to entry for potential competitors. Since our pharmacy and supply systems handle physical product, a considerable amount of skill is required in designing mechanisms that will automatically dispense a variety of sizes of pharmaceuticals and medical supplies. Our mechanical and electronic designers use automated design tools to allow full three-dimensional simulation down to individual piece part drawings. In many cases our design documentation is transmitted to suppliers electronically.

For our OmniBuyer application, our strategic relationship with Commerce One allows us to incorporate and extend Commerce One's technology platforms, applications, source code and documentation into healthcare. Their tools allow us to modify their BuySite software to produce our branded OmniBuyer application, minimizing the effort to port specific software changes to the latest Commerce One release.

TECHNOLOGY

Much of our architecture is based on industry standards such as programming languages like C++, Visual Basic and Java, standard HL7 healthcare interfaces, the Microsoft Windows NT operating systems, Intel microprocessors and standard IEEE 802.11b wireless protocols. Our product development teams employ object-oriented analysis and design principles to guide the development of an object-oriented system of software code. Our methodology allows us to utilize the capabilities of object-oriented programming languages like C++ and Java to build reusable components and designs. This

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methodology also helps reduce the risks inherent in developing complex systems and helps us design our solutions to meet the needs of our customers.

Scalability is a key benefit of our product offering and an area of continuous focus in our research and development activities. Our pharmacy and supply systems deploy current industry standard Microsoft Windows NT 4.0 Server operating software and Pentium-class Intel microprocessors. The OmniCenter server is designed to support our systems, fully deployed, at the largest healthcare facility. Historically, we routinely upgrade our application software to a major new release once a year. We also offer our customers server hardware upgrades to take advantage of improvements in computer performance. Current server hardware is available with single or dual processor platforms with, or without, redundant arrays of independent disks and power supplies, depending on the size of the application. In addition to developing new application features, our software development group makes continuous improvements to our proprietary applications and communications software to optimize the speed and performance of our systems. We maintain a separate software quality assurance department that provides testing of new features and regression testing of the existing features before we release software for test sites. At the successful completion of the testing period, the software is released for general availability.

In the Internet-based procurement area, Commerce One's solution utilizes XML software technology platform servers to generate and securely transmit XML documents over the Internet. Commerce One has also created a common business library designed to enable a common language-based framework for uniting disparate business document types. While we believe that XML software technology is emerging as an industry standard for business-to-business electronic commerce, we have also developed translation technology that converts XML documents into other document formats. This translation technology allows us to deliver purchase orders to suppliers in a wide variety of document formats, including electronic data interchange, Open Buying on the Internet, ASCII flat file, e-mail, Microsoft Excel and facsimile.

Our Internet-based products use 128-bit encryption, HTTPS-SSL and password-protected user access. Our servers are located behind corporate firewalls and access is multiple password-protected. We recognize our obligations to safeguard patient information and other customers' proprietary or confidential information to which we may have access through the use of our automation systems and OmniBuyer. We have implemented a Privacy and Use of Information Policy and strictly adhere to established privacy principles, use of customer information guidelines and federal and state statutes and regulations regarding privacy and confidentiality, including those measures and practices required under the Health Insurance Portability and Accountability Act of 1996.

SALES, MARKETING AND CUSTOMER SUPPORT

We market and sell our products and services to a variety of healthcare organizations, including hospitals and alternate care facilities, targeting hospitals with over 100 beds and alternate care organizations with multiple facilities. In the United States and Canada, we have a direct sales force organized into six regions. We sell through distributors in Europe, the Middle East, Asia and Australia. Each of the members of our direct sales force sells our pharmacy and supply systems, OmniBuyer and DecisionCenter. Our sales representatives have, on average, over eight years of sales experience in the healthcare industry. A regional vice president coordinates both the sales and field service operations activities in each region.

Our marketing group is responsible for product marketing, marketing communications, Web site development, public relations, sales support and training. It generates leads through a variety of means, including advertising, direct marketing and participation in trade shows and conferences covering such areas as pharmacy, nursing, anesthesiology, operating room management, hospital administration, materials management, electronic commerce and supply chain management.

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The sales cycle for our automation systems is long and can take in excess of 12 months. This is due in part to the cost of our systems and the number of people within a healthcare facility involved in the purchasing decision. To initiate the selling process, the sales representative generally targets the director of pharmacy, the director of materials management and/or other decision makers and is responsible for educating each group within the healthcare facility about the benefits of automation. To assist hospitals in the acquisition of our systems, we offer multi-year, non-cancelable leases that reduce up-front acquisition costs. Typically, we sell our customers' lease agreements to a third-party leasing company. We have contracts with several group purchasing organizations (GPOs) that enable us to sell our automation systems to GPO-member healthcare facilities without going through a lengthy request for proposal and bidding process. These GPO contracts are typically for multiple years with options to renew or extend for up to two years but can be terminated by either party at any time. Our current GPO contracts include Premier, Inc., Novation, LLC, Consorta Catholic Resources Partners, Tenet Healthcare Corporation and the Department of Veterans Affairs.

Our field service operations representatives support our sales force by providing operational and clinical expertise prior to the close of a sale and installing our automation systems post-sale. This group assists the customer with the technical implementation of our automation systems, including configuring our systems to address the specific needs of each individual customer. After the systems are installed, on-site support is provided by a combination of our field service operations team, technical support group and a third-party service company.

We offer technical support through our technical support center in Waukegan, Illinois. The support center is staffed 24 hours a day, 365 days a year. We use the Siebel Systems software package, an industry standard for call centers, to field calls from customers. We have found that two-thirds of all service issues can be addressed either over the phone or by our support center personnel utilizing their on-hand remote diagnostics tools. In addition, we have developed remote dial-in software that monitors customer conditions on a daily basis.

We leverage our sales and field service organizations, along with our technical support center, to sell, implement and support OmniBuyer. In addition, we have added specialists who work solely with healthcare facilities to implement OmniBuyer. The implementation process is done in phases. We work with each healthcare facility to determine its purchasing and approval flows. We also interface OmniBuyer to all relevant information systems, assist with connectivity to suppliers, marketplaces and exchanges and provide training on the application.

MANUFACTURING OF PHARMACY AND SUPPLY SYSTEMS

Our pharmacy and supply systems manufacturing strategy is to produce custom configured systems with rapid turnaround in a high-quality and cost-effective manner. We currently conduct our manufacturing operation in a 23,000 square foot facility in Palo Alto, California operating on one shift. We operate on a continuous flow, just-in-time basis to perform final assembly, configuration and system testing of all products. Our customer service personnel work closely with the end user to determine specific customer requirements for each installation. The detailed customer requirements are transmitted electronically to our manufacturing facility where they are used to custom configure each unit. Our operating software is installed as a part of the assembly process. Once assembled, every unit undergoes mechanical and systems testing prior to shipping.

Our production activities consist primarily of final assembly of mechanical components and electronic sub-systems outsourced to key suppliers. While many components of our systems are standardized and available from multiple sources, certain components or subsystems are fabricated according to our specifications. We endeavor to obtain multiple sources of supplies for certain components. We believe we could obtain alternative sources of supplies within two to four months if our current suppliers were unable to provide us with adequate quantities of such components.

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Our products are designed with a high degree of modularity that facilitates manufacturing, assembly and configuration and enables rapid deployment of new products and product enhancements. We have automated much of the software quality assurance process and have streamlined key steps in the mechanical prototyping process in order to minimize the time from design prototype to volume production. We work closely with several key fabricators and subassembly manufacturers on new products and utilize lower-cost manufacturers whenever possible while maintaining product quality and availability. We are continuously re-engineering our products to reduce manufacturing costs while improving product reliability and serviceability.

Our quality assurance team inspects and creates an electronic record for every product before it is shipped using personal digital assistants. This information is used to monitor workmanship by recording the number of defects per thousand units. Each manufacturing employee is part of an incentive program tied to reducing defects per thousand units. Quality issues are gathered through weekly field updates and direct calls from our sales and customer support groups. These issues are addressed in weekly reliability meetings, which bring together our engineering, manufacturing and quality assurance teams.

COMPETITION

The clinical infrastructure and workflow automation market is intensely competitive and characterized by evolving technology and industry standards, frequent new product introductions and dynamic customer requirements. Many healthcare facilities still use and may continue to use highly manual approaches that do not utilize automated methods of distribution, inventory tracking or procurement. As a result, we must continuously educate existing and prospective customers regarding the advantages of our products.

We expect continued and increased competition from current and future competitors, many of which have greater financial, technical, marketing and other resources. Our current direct competitors in the pharmacy and supply systems market include Pyxis Corporation (a division of Cardinal Health) and Automated Healthcare (a division of McKessonHBOC).

We believe that companies in the clinical infrastructure and workflow automation market compete based on:

- breadth and depth of product offerings;

- ease of use and efficiency;

- ability to incorporate the customer's requisition and approval process;

- ability to integrate their services with the customer's existing systems and software;

- quality and reliability of product offerings;

- customer service; and

- price.

We believe our products and services compare favorably with those offered by our competitors.

GOVERNMENT REGULATION

The manufacture and sale of our current products are not regulated by the FDA. There can be no assurance, however, that these products, or future products, if any, will not be regulated in the future. A requirement for FDA approval could harm our business, results of operations and financial condition. The practice of pharmacy is governed by individual state boards of pharmacy that issue rules for pharmacy licensure in their respective jurisdictions. State boards of pharmacy do not license or

41

approve our distribution systems. However, pharmacies using our equipment are subject to state board approval. Similarly, hospitals must be accredited by JCAHO in order to be eligible for Medicaid and Medicare funds. JCAHO does not approve or accredit distribution systems.

Our online services may be subject to a number of laws and regulations that may be adopted or interpreted in the United States and abroad with particular applicability to the Internet. The laws governing Internet transactions remain largely unsettled, even in areas where there has been some legislative action, such as the federal Internet Tax Freedom Act. It is possible that U.S. and foreign governments will enact legislation that may be applicable to us in areas including content, product distribution, network security, encryption, the use of measures for data and privacy protection, electronic authentication, access charges and re-transmission activities. The adoption or modification of laws or regulations relating to the Internet or its related technologies could have a material adverse effect on our OmniBuyer application and also adversely affect our business by increasing our costs and administrative burdens. It may take years to determine whether and how existing laws such as those governing intellectual property, privacy, libel, consumer protection and taxation apply to the Internet. We believe that our Privacy and Use of Information Policy to be posted on our Web site addresses the concerns raised by the recent privacy initiative of the Federal Trade Commission. However, we cannot assure you that this initiative will not negatively affect our business. Compliance with any newly adopted laws may prove difficult for us and could harm our business.

PROPRIETARY RIGHTS AND LICENSING

Our success depends in part upon a combination of copyright and trademark laws, trade secrets, confidentiality procedures and contractual provisions to protect our proprietary rights. We pursue patent protection in the United States and foreign jurisdictions for technology that we believe to be proprietary and that offers a potential competitive advantage for our products. We currently own ten U.S. patents that will expire between 2010 and 2017. In addition, we currently have one U.S. patent allowed and awaiting issue and have filed five U.S. patent applications. The issued patents relate to our "See & Touch" methodology used in our pharmacy and supply systems, the use of guiding lights in the open matrix pharmacy drawers, the use of locking and sensing lids with pharmacy drawers and the methods of restocking these drawers. The above referenced patents also apply to our unit-dose mechanism and methods, the single-dose dispensing mechanism and the methods for restocking the single-dose drawers using exchange liners. There are other issued patents and applications in process in Australia, Japan, Hong Kong, Canada and European countries related to issued and pending applications in the United States. We are not aware that any of our products infringes the proprietary rights of third parties.

All of our operating system software is copyrighted and subject to the protection of applicable copyright laws. We have also obtained registration of our Omnicell logo, Omnicell, OmniCenter, OmniSupplier, OmniRx and Sure-Med trademarks through the United States Patent and Trademark Office. We are in the process of registering other trademarks, in the United States and internationally. We seek to protect and enforce our rights in our patents, copyrights, service marks, trademarks, trade dress and trade secrets through a combination of laws and contractual restrictions, such as confidentiality and licensing agreements.

FACILITIES

We lease approximately 113,000 square feet of office, development and manufacturing space in Palo Alto, California and Waukegan, Illinois. Our principal administrative, marketing and research and development facilities are located in approximately 34,000 square feet of leased office space in Palo Alto, California under leases expiring in January 2002 and June 2004. Our principal manufacturing facility is located in approximately 23,000 square feet of leased space in Palo Alto, California under a lease expiring in June 2003, with an option to renew for an additional five years. We also maintain an

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administrative, marketing, development, technical support and training facility located in approximately 38,000 square feet of leased office space in Waukegan, Illinois under a lease expiring in June 2006, with an option to renew for an additional five years.

EMPLOYEES

As of February 28, 2001, we had a total of 348 employees, including 59 in research and development, 62 in sales, 23 in marketing, 118 in customer support, 40 in administration and 46 in manufacturing. We also employ independent contractors and temporary personnel to support our development, marketing, customer support, field service and administration organizations. None of our employees is represented by a collective bargaining agreement, nor have we experienced any work stoppage. We consider our relations with our employees to be good.

LEGAL PROCEEDINGS

We are not a party to any material legal proceedings.

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MANAGEMENT

DIRECTORS AND OFFICERS

The following table sets forth certain information as of February 28, 2001, about our executive officers, other officers and members of our board of directors:

NAME                                       AGE                            POSITION
----                                     --------   -----------------------------------------------------
Sheldon D. Asher.......................        47   President, Chief Executive Officer and Director
Randall A. Lipps.......................        43   Founder, Chairman of the Board and Director
S. Michael Hanna.......................        49   Vice President of Sales and Field Operations
John D. Higham.........................        58   Vice President of Engineering and Chief Technical
                                                    Officer
Robert Y. Newell, IV...................        52   Vice President of Finance and Chief Financial Officer
Jeffrey L. Arbuckle....................        44   Vice President of Business Development
Herbert J. Bellucci....................        51   Vice President of Manufacturing
Joseph E. Coyne........................        38   Vice President of Customer Service
William R. Dimmer......................        57   Vice President of Human Resources
Kenneth E. Perez.......................        40   Vice President of Marketing
Gary E. Wright.........................        47   Vice President of Supplier Relations and
                                                    International
Gordon V. Clemons(1)...................        57   Director
Frederick J. Dotzler(2)................        55   Director
Christopher J. Dunn, M.D.(2)...........        49   Director
Randall A. Hack(1).....................        53   Director
Benjamin A. Horowitz...................        34   Director
Kevin L. Roberg........................        49   Director
John D. Stobo, Jr.(1)..................        35   Director
William H. Younger, Jr.(1)(2)..........        51   Director


(1) Member of the Audit Committee

(2) Member of the Compensation Committee

SHELDON D. ASHER has served as President and Chief Executive Officer and a Director of Omnicell since December 1993. From May 1991 to August 1993, Mr. Asher served as President and Chief Executive Officer of Option Care, Inc., a home infusion therapy company. Mr. Asher received a B.S. in finance from the University of Illinois.

RANDALL A. LIPPS has served as Chairman of the Board and a Director of Omnicell since founding Omnicell in September 1992. From 1989 to 1992, Mr. Lipps served as the President of Moxie Technologies, Inc., a direct marketing firm specializing in travel and long-distance communications sales. Mr. Lipps received both a B.S. in economics and a B.B.A. from Southern Methodist University.

S. MICHAEL HANNA has served as Vice President of Sales and Field Operations of Omnicell since July 1998. From July 1996 to July 1998, Mr. Hanna served as a Regional Vice President of Omnicell. From 1981 to July 1996, Mr. Hanna was employed by Air Shields, Inc., a medical equipment manufacturer, in a variety of sales positions, most recently as Director of North American Sales. Mr. Hanna received a B.S. in business administration from Shepard College.

JOHN D. HIGHAM has served as Vice President of Engineering and Chief Technical Officer of Omnicell since June 1993. From 1989 to 1993, Mr. Higham served as Vice President of Engineering of Octel Communications, Inc., a supplier of voicemail systems. Mr. Higham received engineering and industrial management degrees from Cambridge University, England, and a master's degree in electrical engineering from Columbia University.

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ROBERT Y. NEWELL, IV has served as Vice President of Finance and Chief Financial Officer of Omnicell since January 2000. From October 1997 to January 2000, Mr. Newell was a partner in the Beta Group, a business development firm. From August 1992 to August 1997, he was Vice President and Chief Financial Officer of Cardiometrics, Inc., a medical device company. Mr. Newell received a B.A. in mathematics from the College of William & Mary and an M.B.A. from Harvard Business School.

JEFFREY L. ARBUCKLE has served as Vice President of Business Development of Omnicell since June 1999. From July 1997 to June 1999, Mr. Arbuckle served as Vice President of Marketing of Omnicell. From February 1994 to June 1997, Mr. Arbuckle served as a Regional Vice President of Omnicell. From 1991 to 1994, Mr. Arbuckle served as Regional Manager of Siemens Infusion, a marketer of drug delivery systems. Mr. Arbuckle received a B.A. from Indiana University.

HERBERT J. BELLUCCI has served as Vice President of Manufacturing of Omnicell since April 1994. From August 1993 to March 1994, Mr. Bellucci served as Vice President of Operations of VidaMed, Inc., a medical device company. Mr. Bellucci received a B.S. in engineering from Brown University and an M.B.A. from the Stanford Graduate School of Business.

JOSEPH E. COYNE has served as Vice President of Customer Service of Omnicell since August 1997. From May 1994 to August 1997, Mr. Coyne served as Director of Interface Development of Omnicell. From 1984 to May 1994, Mr. Coyne was employed by HBO & Company, a healthcare information systems company, in various technical capacities, including Technical Manager and Software Interface Team Manager. Mr. Coyne received a B.S. in chemical engineering from Stanford University and an M.B.A. from the Anderson Graduate School of Management at the University of California, Los Angeles.

WILLIAM R. DIMMER has served as Vice President of Human Resources of Omnicell since March 2000. From July 1998 to March 2000, Mr. Dimmer served as Vice President of Human Resources and Administrative Services for Collagen Aesthetics, Inc., a healthcare dermatology products company. From June 1994 to July 1998, Mr. Dimmer was a Principal and Senior Consultant for Pragma, International, an international management and consulting firm. Mr. Dimmer received a B.A. in liberal arts and an advanced management degree from the University of Chicago, C.R.C.

KENNETH E. PEREZ has served as Vice President of Marketing of Omnicell since April 2000. From September 1999 through March 2000, Mr. Perez served as Vice President of e-Strategies of Omnicell. From November 1998 to August 1999, Mr. Perez served as Senior Vice President of Marketing for CyberCash, Inc., an electronic commerce payment solutions company. From 1992 to 1998, Mr. Perez held a number of positions at Hewlett-Packard Company, including Director of Business Development for the Extended Enterprise Business Unit. Mr. Perez received a B.A. in international relations from Stanford University and an M.B.A. from the Anderson Graduate School of Management at the University of California, Los Angeles.

GARY E. WRIGHT has served as Vice President of Supplier Relations and International of Omnicell since July 2000. From September 1999 to June 2000, Mr. Wright served as Vice President of Supplier Relations of Omnicell. From July 1998 until August 1999, Mr. Wright served as Vice President of Business Development of Omnicell, and from June 1994 until June 1998 Mr. Wright served as Vice President of Sales and Field Operations of Omnicell. From September 1993 to May 1994, Mr. Wright served as a Vice President of PCS Health Systems, a managed healthcare company. Mr. Wright received a B.S. from Northern Illinois University.

GORDON V. CLEMONS has served as a Director of Omnicell since December 1995. He has been the President, Chief Executive Officer and Chairman of the Board of CorVel Corp., a provider of managed healthcare services, since 1991. Mr. Clemons received a B.S. in business and technology from Oregon State University and an M.B.A. from the University of Oregon.

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FREDERICK J. DOTZLER has served as a Director of Omnicell since December 1993. He has been a partner with Medicus Venture Partners, a venture capital firm, since 1989, and is a managing director of De Novo Ventures. Mr. Dotzler received a B.S. in industrial engineering from Iowa State University, an M.B.A. from the University of Chicago and an advanced degree in economics from Louvain University, Belgium.

CHRISTOPHER J. DUNN, M.D. has served as a Director of Omnicell since September 1992. Dr. Dunn has been in private medical practice since 1984. Dr. Dunn received an M.D. and a master's degree in health service administration from Stanford University. Dr. Dunn is also Director of the Respiratory Care Unit at Care West Gateway, Director of Subacute Care at Care West Burlingame and Medical Director of Critical Care Transport for American Medical Response--Sacramento Valley. He is a fellow of the American College of Chest Physicians and is an Associate Clinical Professor of Medicine at Stanford University School of Medicine.

RANDALL A. HACK has served as a Director of Omnicell since September 1995. Mr. Hack has served as a senior managing director of Nassau Capital L.L.C., a private investment management firm which he co-founded, since January 1995. From 1990 to 1994, Mr. Hack served as President and Chief Executive Officer of the Princeton University Investment Company, Princeton's portfolio of public and private assets. Mr. Hack received a B.A. from Princeton University and an M.B.A. from Harvard University. Mr. Hack serves as a director of CompHealth Inc., Corporate Realty Investment Company L.L.C., Crown Castle International Corporation, Cypress Communications and Vector ESP, Inc.

BENJAMIN A. HOROWITZ has served as a Director of Omnicell since September 1999. Mr. Horowitz has been President, Chief Executive Officer and a director of Loudcloud, Inc., an Internet company, since September 1999. From March 1999 to September 1999, he served as Vice President and General Manager of the E-commerce Platform division of America Online, Inc. an Internet service provider. From July 1995 to March 1999, Mr. Horowitz was employed by Netscape Communications, an Internet company, in various capacities, including Vice President of the directory and security product line from 1997 to 1998. From 1994 to 1995, Mr. Horowitz was employed by Lotus Development Corporation, a software company. Mr. Horowitz received a B.S. from Columbia University and an M.S. in computer science from the University of California, Los Angeles.

KEVIN L. ROBERG has served as a Director of Omnicell since June 1997. He has been a general partner of Delphi Ventures, a venture capital firm, since October 1999. From August 1998 to September 1999, Mr. Roberg was an independent venture capitalist. From December 1995 to June 1998, Mr. Roberg served as Chief Executive Officer and President of ValueRx, a pharmacy benefit and medication management company and a former subsidiary of Value Health, Inc., a healthcare benefit and information service provider. From April 1995 until it was acquired by ValueRx in December 1995, Mr. Roberg served as President and Chief Executive of Medintell Systems Corporation, a pharmaceutical information management company. From June 1994 to April 1995, Mr. Roberg served as President--Western Health Plans and President--PRIMExtra, Inc. for EBP Health Plans, Inc., a third party administrator. Mr. Roberg is also a director of Duane Reade, Inc., a retail pharmacy company, Accredo Health, Inc., a bio-pharmaceutical company, and the American Society of Health System Pharmacists Foundation. Mr. Roberg is also a director and the immediate past chairman of Children's Hospitals and Clinics of Minneapolis/St. Paul. Mr. Roberg received a B.S. from the University of Iowa.

JOHN D. STOBO, JR. has served as a Director of Omnicell since February 2000. Since November 1998, he has been a managing member of ABS Partners III, LLC, which is the general partner of ABS Capital Partners III, L.P., a venture capital firm. From December 1993 to November 1998, Mr. Stobo was a principal of ABS Capital Partners and related entities. Prior to joining ABS Capital Partners, Mr. Stobo worked in the healthcare investment banking group at Alex. Brown & Sons Incorporated, an

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investment banking firm. Mr. Stobo received a B.A. from the University of California, San Diego, and an M.B.A. from Cornell University. Mr. Stobo is also a director of several privately held companies.

WILLIAM H. YOUNGER, JR. has served as a Director of Omnicell since September 1992. Mr. Younger is a managing director of the general partner of Sutter Hill Ventures, a venture capital firm, where he has been employed since 1981. Mr. Younger holds a B.S. in electrical engineering from the University of Michigan and an M.B.A. from Stanford University. Mr. Younger is also a director of Vitria Technology, Inc., Virage, Inc., and several privately held companies.

There are no family relationships between any of the directors and officers of Omnicell.

BOARD COMMITTEES

Our Board of Directors has a Compensation Committee and an Audit Committee. The Compensation Committee makes recommendations to the Board of Directors concerning salaries and incentive compensation for our officers and employees and administers our stock option plans. The Audit Committee makes recommendations to the Board of Directors regarding the selection of independent auditors, reviews the results and scope of the audit and other services provided by our independent auditors, and reviews and evaluates our audit and control functions. Members of these committees will serve until their successors are appointed. Members of our Compensation Committee are Mr. Dotzler, Dr. Dunn and Mr. Younger. Members of our Audit Committee are Messrs. Clemons, Hack, Stobo and Younger.

DIRECTOR COMPENSATION

The members of our Board of Directors do not currently receive compensation for their services as directors, but are reimbursed for travel expenses in connection with attendance at Board and committee meetings. We have typically granted non-employee directors options to purchase 15,625 shares of common stock at the then fair market value upon election to the Board of Directors. In February 1998, Dr. Dunn received a non-qualified stock option to purchase 15,625 shares of common stock at an exercise price of $10.40 per share. In September 1999, Mr. Horowitz received a non-qualified stock option to purchase 15,625 shares of common stock at an exercise price of $10.40 per share. These options vest over a five-year period. In September 1999, each of Messrs. Younger, Hack and Dotzler received options to purchase 9,375 shares of common stock at an exercise price of $10.40 per share that vest over a three-year period. In April 2000, Mr. Horowitz received a non-qualified stock option to purchase 6,250 shares of common stock at an exercise price of $10.40 per share that vests over a 30-month period. In August 2000, Messrs. Younger, Dotzler, and Hack each received a non-qualified stock option to purchase 4,687 shares of common stock at an exercise price of $2.00 per share that will vest over a 36-month period with a six-month cliff, Messrs. Stobo and Clemons each received a non-qualified stock option to purchase 7,812 shares of common stock at an exercise price of $2.00 per share that will vest over a 36-month period with a six-month cliff, Messrs. Dunn and Roberg each received a non-qualified stock option to purchase 7,812 shares of common stock at an exercise price of $2.00 per share that will vest over a 24-month period with a six-month cliff, and Mr. Horowitz received a non-qualified stock option to purchase 10,937 shares of common stock at an exercise price of $2.00 per share that will vest over a 36-month period with a six-month cliff. Following this offering, each member of our Board of Directors who is not an employee will be eligible to receive initial and annual stock option grants to purchase our common stock. These grants are more fully described below.

EXECUTIVE COMPENSATION

The following table sets forth all compensation awarded to, earned by or paid to our Chief Executive Officer and our four next most highly compensated executive officers whose annual compensation

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exceeded $100,000 for the year ended December 31, 2000. These individuals are referred to as the named executive officers in this prospectus.

SUMMARY COMPENSATION TABLE

                                                                                       LONG-TERM
                                                                                     COMPENSATION
                                                  ANNUAL COMPENSATION(1)                AWARDS
                                            ----------------------------------   ---------------------
                                                                  OTHER ANNUAL   SECURITIES UNDERLYING
NAME AND PRINCIPAL POSITION                  SALARY     BONUS     COMPENSATION        OPTIONS(2)
---------------------------                 --------   --------   ------------   ---------------------
Sheldon D. Asher .........................  $312,900   $140,421     $      --           172,798
  President, Chief Executive
  Officer and Director

Randall A. Lipps .........................   312,900    140,421            --           174,098
  Chairman of the Board
  and Director

S. Michael Hanna .........................   160,000    138,546            --            43,282
  Vice President of Sales and
  Field Operations

John D. Higham ...........................   200,000     96,464            --            85,469
  Vice President of Engineering
  and Chief Technical Officer

Robert Y. Newell, IV .....................   164,583     38,753            --           126,562
  Vice President of Finance and
  Chief Financial Officer


(1) In accordance with Securities and Exchange Commission rules, Other Annual Compensation in the form of perquisites and other personal benefits has been omitted where the aggregate amount of such perquisites and other personal benefits constitutes less than the lesser of $50,000 or 10% of the total annual salary and bonus for the named executive officer for the fiscal year.

(2) These shares are subject to exercise under stock options granted under our stock option plans.

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STOCK OPTION GRANTS

The following table sets forth information regarding options granted to each of the named executive officers during the year ended December 31, 2000.

                                              INDIVIDUAL GRANTS
                             ---------------------------------------------------   POTENTIAL REALIZABLE VALUE AT
                             NUMBER OF      PERCENTAGE                                ASSUMED ANNUAL RATES OF
                             SECURITIES      OF TOTAL                               STOCK PRICE APPRECIATION FOR
                             UNDERLYING      OPTIONS                                       OPTION TERM(1)
                              OPTIONS       GRANTED IN     EXERCISE   EXPIRATION   ------------------------------
NAME                         GRANTED(2)   FISCAL 2000(3)   PRICE(4)      DATE           5%               10%
----                         ----------   --------------   --------   ----------   ------------      ------------
Sheldon D. Asher...........    43,750          1.88%        $10.40     04/02/10
                               88,850          3.82           2.00     08/23/10
                               40,198          1.73           2.00     08/23/10

Randall A. Lipps...........    43,750          1.88          10.40     04/02/10
                               89,062          3.83           2.00     08/23/10
                               41,286          1.78           2.00     08/23/10

S. Michael Hanna...........     3,125          0.13          10.40     01/31/10
                               15,626          0.67          10.40     04/02/10
                                6,328          0.27           2.00     08/23/10
                               20,312          0.87           2.00     08/23/10
                               40,078          1.72           2.00     08/23/10

John D. Higham.............    15,626          0.67          10.40     04/02/10
                               18,750          0.81           2.00     08/23/10
                                8,906          0.38           2.00     08/23/10

Robert Y. Newell, IV.......    75,000          3.23          10.40     01/31/10
                                9,375          0.40          10.40     04/02/10
                               42,187          1.82           2.00     08/23/10


(1) Potential realizable values are computed by multiplying the number of shares of common stock subject to a given option by the initial public offering price of $ per share, assuming that the aggregate stock value derived from that calculation compounds at the annual 5% or 10% rate shown in the table for the entire ten-year term of the option and subtracting from that result the aggregate option exercise price. The 5% and 10% assumed annual rates of stock appreciation are mandated by the rules of the SEC and do not reflect our estimate or projection of future stock price growth.

(2) These options were issued under our 1995 Management Stock Option Plan and our 1999 Equity Incentive Plan. Vesting and exercise terms are as follows:
(a) the options granted in April 2000 vest monthly over a 30-month period and (b) the options granted in August 2000 vest monthly over a 24- or 36-month period.

(3) Based on an aggregate of 2,323,769 shares subject to options granted to our employees (not counting grants to non-employees) in the year ended December 31, 2000, including options granted to the named executive officers.

(4) Options were granted at an exercise price equal to the fair market value of our common stock, as determined by the Board of Directors at the date of the grant.

AGGREGATED OPTIONS EXERCISED IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES

The following table sets forth for each of the named executive officers the shares acquired and the value realized on each exercise of stock options during the year ended December 31, 2000 and number

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and value of securities underlying unexercised options held by the named executive officers at December 31, 2000.

                                                            NUMBER OF SECURITIES
                                                           UNDERLYING UNEXERCISED         VALUE OF UNEXERCISED
                                    SHARES                       OPTIONS AT              IN-THE-MONEY OPTIONS AT
                                   ACQUIRED                 DECEMBER 31, 2000(1)         DECEMBER 31, 2000(1)(2)
                                      ON       VALUE     ---------------------------   ---------------------------
NAME                               EXERCISE   REALIZED   EXERCISABLE   UNEXERCISABLE   EXERCISABLE   UNEXERCISABLE
----                               --------   --------   -----------   -------------   -----------   -------------
Sheldon D. Asher.................  531,941    $665,536     250,986(3)        0         $  (499,484)       $0

Randall A. Lipps.................  155,988      20,512     354,447           0          (2,177,018)        0

S. Michael Hanna.................  105,178           0      82,318           0            (592,690)        0

John D. Higham...................   20,249      45,670      99,218           0            (483,059)        0

Robert Y. Newell, IV.............        0           0     126,563           0            (556,875)        0


(1) Some of the shares are immediately exercisable; however, the shares purchasable under such options are subject to repurchase by us at the original exercise price paid per share upon the optionee's cessation of service prior to the vesting of such shares. The shares listed as exercisable are those shares which are unexercised for which we no longer have a right of repurchase if the option is exercised by the holder; similarly, the shares listed as unexercisable include those shares over which we have a right of repurchase if the option is exercised by the holder.

(2) Based on the fair market value of our common stock at year ended December 31, 2000 ($3.20 per share, as determined by our Board of Directors), less the exercise price payable for such shares.

(3) Diane Snedden, Mr. Asher's ex-wife, has the right to receive 128,165 shares upon the exercise of vested options pursuant to a divorce agreement and any and all proceeds from the sale thereof.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

Our Compensation Committee consists of Mr. Dotzler, Dr. Dunn and Mr. Younger. None of these individuals is or has been an officer or employee of Omnicell. No member of the Compensation Committee serves as a member of our board of directors or compensation committee of any entity that has one or more executive officers serving as a member of our Board of Directors.

STOCK PLANS

1992 EQUITY INCENTIVE PLAN AND 1995 MANAGEMENT STOCK OPTION PLAN

Our 1992 Equity Incentive Plan and 1995 Management Stock Option Plan (collectively, the Incentive Plans) were adopted by our Board of Directors in October 1992 and December 1995, respectively. There are currently 3,995,885 shares of common stock authorized for issuance under the Incentive Plans.

The Incentive Plans provide for the grant of incentive stock options under the Internal Revenue Code of 1986, as amended (the Code), to employees and nonstatutory stock options, restricted stock purchase awards and stock bonuses to employees, directors and consultants. The Incentive Plans are administered by our Board of Directors or a committee appointed by the Board of Directors that determines recipients and types of awards to be granted, including the exercise price, number of shares subject to the award and the exercisability thereof.

The term of stock options granted under the Incentive Plans generally may not exceed 10 years. The exercise price of options granted under the Incentive Plans are determined by our Board of Directors, provided that the exercise price for an incentive stock option cannot be less than 100% of the fair market value of our common stock on the date of the option grant and the exercise price for a nonstatutory stock option cannot be less than 85% of the fair market value of our common stock on the date of option grant. Options granted under the Incentive Plans vest at the rate specified in the applicable option agreement. No incentive stock option may be transferred by the optionee other than

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by will, beneficiary designation or the laws of descent or distribution or, in certain limited instances, pursuant to a qualified domestic relations order. Our Board of Directors may grant a nonstatutory stock option that is transferable. An optionee whose relationship with us or any related corporation ceases for any reason, other than by death or permanent and total disability, may exercise options in the three-month period following such cessation, unless such options terminate or expire sooner or later by their terms. Options may be exercised for up to twelve months after an optionee's relationship with us and our affiliates ceases due to death or disability, unless such options expire sooner or later by their terms.

No incentive stock option may be granted to any person who, at the time of the grant, owns, or is deemed to own, stock possessing more than 10% of the total combined voting power of Omnicell or any of our affiliates, unless the option exercise price is at least 110% of the fair market value of the stock subject to the option on the date of grant and the term of the option does not exceed five years from the date of grant. The aggregate fair market value, determined at the time of grant, of the shares of common stock with respect to which incentive stock options are exercisable for the first time by an optionee and its affiliates during any calendar year under all of our plans may not exceed $100,000.

Shares subject to options that have expired or otherwise terminated without having been exercised in full, or vested in the case of restricted stock awards, will again become available for the grant of awards under the Incentive Plans.

Our Board of Directors has the authority to reprice outstanding options and to offer optionees the opportunity to replace outstanding options with new options for the same or a different number of shares.

We may grant restricted stock awards under the Incentive Plans that are subject to a repurchase option by us in accordance with a vesting schedule and at a price determined by our Board of Directors. Restricted stock purchases must be at a price equal to at least 85% of the stock's fair market value on the award date, but stock bonuses may be awarded in consideration of past services without a purchase payment. Rights under a stock bonus or restricted stock purchase agreement may not be transferred other than by will, the laws of descent and distribution or a qualified domestic relations order while the stock awarded pursuant to such an agreement remains subject to the agreement.

Under certain changes in control of Omnicell including a dissolution, liquidation or sale of substantially all of our assets, a merger or consolidation in which we are not the surviving corporation, or a reverse merger in which we are the surviving corporation but the shares of common stock outstanding immediately preceding the merger are converted by virtue of the merger into other property, whether securities, cash or otherwise, then to the extent permitted by applicable law, any surviving corporation will assume any stock awards, including stock options, outstanding under the Incentive Plans or substitute similar stock awards, or such stock awards under the Incentive Plans will continue in full force and effect. In the event any surviving corporation refuses to assume or continue such stock awards, or to substitute similar stock awards for those outstanding under the Incentive Plans, then the stock awards held by participants whose service with us or the surviving corporation has not terminated shall become fully vested and exercisable prior to the change in control and any such stock awards are not exercised prior to the change in control will terminate thereafter.

As of February 28, 2001, 1,780,602 shares of common stock had been issued upon the exercise of options granted under the Incentive Plans, options to purchase 1,823,917 shares of common stock were outstanding at a weighted average exercise price of $6.09 per share and 391,366 shares of common stock remained available for future grant. The 1992 Equity Incentive Plan and the 1995 Management Stock Option Plan will terminate in October 2002 and December 2005, respectively, unless sooner terminated by our Board of Directors.

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1997 EMPLOYEE STOCK PURCHASE PLAN

In March 1997, our Board of Directors approved the 1997 Employee Stock Purchase Plan which was amended in September 1999 and in April 2000. The 1997 plan is intended to qualify as an employee stock purchase plan within the meaning of that term in Section 423 of the Code. Under the 1997 plan, our Board of Directors may authorize participation by eligible employees, including officers, in periodic offerings following the adoption of the 1997 plan. The offering period for any offering will be no more than 27 months.

The 1997 plan, as amended in September 1999 and April 2000, authorizes the issuance of 468,750 shares of common stock under the 1997 plan which amount is increased each January 1 by the lesser of 312,500 or 1.5% of the number of shares of common stock outstanding each January 1 beginning January 1, 2001 and ending January 1, 2007. However, our Board of Directors has the authority to designate a smaller number of shares by which the authorized number of shares of common stock will be increased on each January 1.

Employees are eligible to participate if they are employed by Omnicell or an affiliate of Omnicell designated by our Board of Directors and are regularly employed at least 20 hours per week and five months per year. Employees who participate in an offering can have up to 15% of their earnings withheld pursuant to the 1997 plan and applied, on specified dates determined by the Board of Directors, to the purchase of shares of common stock. The price of common stock purchased under the 1997 plan will be equal to 85% of the lower of the fair market value of the common stock on the commencement date of each offering period or the relevant purchase date. Employees may end their participation in the offering at any time during the offering period, and participation ends automatically on termination of employment with Omnicell.

In the event of certain changes of control of Omnicell, our Board of Directors has discretion to provide that each right to purchase common stock will be assumed or an equivalent right substituted by the successor corporation, or our Board of Directors may shorten the offering period and provide for all sums collected by payroll deductions to be applied to purchase stock immediately prior to the change in control. The 1997 plan will terminate when all shares reserved for issuance under the 1997 plan have been issued or sooner at the the discretion of our Board of Directors.

As of February 28, 2001, we had issued 340,463 shares of common stock under the 1997 plan and 174,488 shares remain available for future issuance.

1999 EQUITY INCENTIVE PLAN

Our 1999 Equity Incentive Plan was adopted by our Board of Directors in September 1999 and amended in April 2000. The 1999 plan was established to replace the Incentive Plans. The 1999 plan will terminate in September 2009, unless sooner terminated by our Board of Directors.

The 1999 plan provides for the grant of incentive stock options under Code
Section 422 to employees, including officers and employee-directors, and nonstatutory stock options, restricted stock purchase awards and stock bonuses to employees, directors and consultants. The 1999 plan is administered by our Board of Directors or a committee appointed by the Board that determines recipients and the terms and types of awards to be granted, including the exercise price, number of shares subject to the award and the exercisability thereof.

Stock option grants under the 1999 plan are made pursuant to an option agreement. The term of stock options granted under the 1999 plan generally may not exceed 10 years. The exercise price of options granted under the 1999 plan is determined by our Board of Directors, provided that the exercise price for an incentive stock option cannot be less than 100% of the fair market value of the common stock on the date of the option grant and the exercise price for a nonstatutory stock option cannot be less than 85% of the fair market value of the common stock on the date of the option grant.

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Options granted under the 1999 plan vest at the rate specified in the option agreement. No incentive stock options may be transferred by the optionee other than by will, beneficiary designation or the laws of descent and distribution or, in certain limited instances, pursuant to a qualified domestic relations order. Our Board of Directors may grant a nonstatutory stock option that is transferable. An optionee whose relationship with us or our affiliates ceases for any reason may exercise options in the three-month period following such cessation, unless such options terminate or expire sooner or later by their terms. Unless the options expire sooner or later by their terms, options may be exercised for up to twelve months after an optionee's relationship with us and our affiliates ceases due to disability and for up to 18 months after an optionee's relationship with us and our affiliates ceases due to death.

No incentive stock options may be granted to any person who, at the time of the grant, owns, or is deemed to own, stock possessing more than 10% of the total combined voting power of us or of our affiliates, unless the option exercise price is at least 110% of the fair market value of the stock subject to the option on the date of the grant, and the term of the option does not exceed five years from the date of the grant. The aggregate fair market value, determined at the time of the grant, of the shares of common stock with respect to which incentive stock options are exercisable for the first time by an optionee during any calendar year, under all such plans of ours and our affiliates, may not exceed $100,000.

Under the 1999 plan, 3,125,000 shares of common stock are authorized for issuance. Each January 1, beginning January 1, 2001 and ending on January 1, 2009, the number of shares of common stock authorized for issuance under the 1999 plan will be increased on each January 1 by the lesser of (i) 1,875,000 shares, or (ii) 5.5% of the number of shares of common stock outstanding on that date. However, our Board of Directors has the authority to designate a smaller number of shares by which the authorized number of shares of common stock will be increased on each January 1.

Shares subject to stock awards that have expired or otherwise terminated without having been exercised in full, or vested in the case of restricted stock awards, shall again become available for the grant of awards under the 1999 plan. Shares subject to stock awards issued under the 1999 plan that have expired or otherwise terminated without having been exercised in full, or vested in the case of restricted stock awards, shall also become available for the grant of awards under the 1999 plan. Shares issued under the 1999 plan may be previously unissued shares or reacquired shares bought on the market or otherwise.

Restricted stock purchase awards granted under the 1999 plan may be granted pursuant to a repurchase option in our favor in accordance with a vesting schedule and at a price determined by our Board of Directors. Restricted stock purchases must be at a price equal to 85% of the stock's fair market value on the award date, but stock bonuses may be awarded in consideration of past services without a purchase payment. Rights under a stock bonus or restricted stock purchase agreement may not be transferred other than by will, the laws of descent and distribution or a qualified domestic relations order while the stock awarded pursuant to such an agreement remains subject to the agreement.

Under certain changes in control of Omnicell including a dissolution, liquidation or sale of substantially all of our assets, a merger or consolidation in which we are not the surviving corporation, or a reverse merger in which we are the surviving corporation but the shares of common stock outstanding immediately preceding the merger are converted by virtue of the merger into other property, whether securities, cash or otherwise, then to the extent permitted by applicable law, any surviving corporation will assume any stock awards, including stock options, outstanding under the 1999 plan or substitute similar stock awards, or such stock awards under the 1999 plan will continue in full force and effect. In the event any surviving corporation refuses to assume or continue such stock awards, or to substitute similar stock awards for those outstanding under the 1999 plan, then the stock awards held by participants whose service with us or the surviving corporation has not terminated shall become fully

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vested and exercisable prior to the change in control and any such stock awards that are not exercised prior to the change in control will terminate thereafter.

As of February 28, 2001, 148,943 shares of common stock had been issued upon exercise of options granted under the 1999 plan. Options to purchase 1,854,419 shares of common stock were outstanding at a weighted average exercise price of $7.13 per share and 676,410 shares of common stock remained available for future grant. The 1999 plan will terminate in September 2009, unless sooner terminated by our Board of Directors.

NON-EMPLOYEE DIRECTOR STOCK OPTION GRANTS

The 1999 plan provides for automatic stock option grants to non-employee directors on our Board of Directors. After the offering, each person who is not an employee of Omnicell who is elected or appointed to our Board of Directors will be granted an initial grant on the date of his or her election or appointment to purchase 25,000 shares of our common stock at the fair market value of our common stock on that grant date. On the date of the offering, non-employee directors of our Board who have not previously been granted options to purchase our common stock will receive an initial stock option grant as if he or she were first elected or appointed to our Board of Directors after the offering. The non-employee directors become vested in each initial stock option grant 1/36 after each month of service on our Board of Directors from the stock option grant date so that the directors will become vested fully after 36 months of service on our Board of Directors after the grant.

After the offering, each person who is a non-employee director on the day after each annual stockholders' meeting, shall, on that date, be granted an annual stock option grant to purchase 6,250 shares of our common stock at the fair market value of our common stock on that grant date. The non-employee directors become vested in each annual stock option grant 1/12 after each month of service on our Board from the stock option grant date so that the directors will become vested fully after 12 months of service on our Board of Directors after the grant.

The non-employee director stock options will have a maximum term of ten years and generally must be exercised prior to the earliest of 18 months following the death of the non-employee directors, 12 months from the termination of service on our Board of Directors by the non-employee director due to a disability, three months from the termination of the service of non-employee director for any other reason, or the expiration of the original term of the stock options. The stock options shall not be transferable except as otherwise provided in a stock option agreement to the extent permitted by federal securities laws and regulations. If there is a change of control as described above, the directors will become fully vested in their unvested portion of their stock options and the options will be exercisable for a period of the shorter of twelve months following the termination of their service on our Board of Directors or the original term of the stock options.

401(k) PLAN

In October 1993, we adopted a tax-qualified employee savings plan under
Section 401(k) of the Code covering our employees. Pursuant to the 401(k) plan, eligible employees may elect to reduce their current compensation by up to the lesser of 15% of their annual compensation or the statutorily prescribed annual limit and have the amount of such reduction contributed to the 401(k) plan. In addition, eligible employees may make rollover contributions to the 401(k) plan from a tax-qualified retirement plan. The 401(k) plan is intended to qualify under Section 401(a) of the Code, so that contributions by employees or us to the 401(k) plan, and income earned on the 401(k) plan contributions, are not taxable to employees until withdrawn from the 401(k) plan, and so that contributions by us, if any, will be deductible by us when made. We do not presently intend to make any matching or discretionary contributions.

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EMPLOYMENT ARRANGEMENTS

In December 1993, we entered into an employment agreement with Mr. Asher whereby Mr. Asher agreed to serve as our President and Chief Executive Officer. The agreement provides Mr. Asher with an annual base salary of at least $200,000, a performance bonus of at least $50,000 and $1,000,000 of term life insurance, the owner and beneficiary of which are to be designated by Mr. Asher. In the event of termination without cause, Mr. Asher will be entitled to receive the base salary amount then in effect plus $50,000 for one year following the date of termination.

In February 1998 and in February 2000, our Board of Directors approved the acceleration, under certain circumstances, of all prior stock options granted to each officer under our equity incentive plans. Under this arrangement, the unvested portion of each officer's stock options under our equity incentive plans becomes fully-vested and exercisable if we are acquired and the officer is terminated without cause, the principal place of performance of the officer's responsibilities and duties is changed, or there is a material reduction in the officer's responsibilities and duties.

INDEMNIFICATION OF DIRECTORS AND EXECUTIVE OFFICERS AND LIMITATION OF LIABILITY

Section 145 of the Delaware General Corporation Law authorizes a court to award, or a corporation's board of directors to grant, indemnity to directors and officers in terms sufficiently broad to permit such indemnification under certain circumstances for liabilities, including reimbursement for expenses incurred, arising under the Securities Act.

As permitted by Delaware law, our Certificate of Incorporation, which will become effective upon the closing of this offering, includes a provision that eliminates the personal liability of our directors for monetary damages for breach of fiduciary duty as a director, except for liability:

- for any breach of the director's duty of loyalty to us or our stockholders;

- for acts or omissions not in good faith or that involve intentional misconduct or a knowing violation of law;

- under Section 174 of the Delaware law regarding unlawful dividends and stock purchases; or

- for any transaction from which the director derived an improper personal benefit.

As permitted by Delaware law, our Certificate of Incorporation and/or our Bylaws, which will become effective upon the closing of this offering, provide that:

- we are required to indemnify our directors and officers to the fullest extent permitted by Delaware law, so long as such person acted in good faith and in a manner the person reasonably believed to be in or not opposed to the best interests of Omnicell, and with respect to any criminal action or proceeding, had no reasonable cause to believe the person's conduct was unlawful;

- we are permitted to indemnify our other employees to the extent that we indemnify our officers and directors, unless otherwise required by law, our Certificate of Incorporation, our Bylaws or agreements;

- we are required to advance expenses, as incurred, to our directors and officers in connection with a legal proceeding to the fullest extent permitted by Delaware law, subject to certain very limited exceptions; and

- the rights conferred in our Bylaws are not exclusive.

Prior to the closing of this offering, we intend to enter into indemnity agreements with each of our current directors and officers to give such directors and officers additional contractual assurances regarding the scope of the indemnification set forth in our Certificate of Incorporation and our Bylaws and to provide additional procedural protections. At present, there is no pending litigation or proceeding involving any of our directors, officers or employees regarding which indemnification is sought, nor are we aware of any threatened litigation that may result in claims for indemnification.

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RELATED PARTY TRANSACTIONS

Pursuant to his employment agreement, in December 1993, we loaned Mr. Asher an aggregate of $200,000 with an interest rate of 4% per year for the purchase of 92,165 shares of Series D Preferred Stock. The purchase price of $2.17 per share was equal to the fair market value of the shares at the time of the sale. Twenty percent of this loan matured each year beginning on January 1, 1995 and was forgiven at such time so long as Mr. Asher remained employed by us. This loan has been completely forgiven.

Pursuant to the Series E Preferred Stock Purchase Agreements dated December 22, 1993, the purchasers therein agreed to vote their shares to elect to our Board of Directors a designated representative of Medicus Venture Partners 1993. Medicus' right to elect a representative to our Board of Directors expires following the completion of this offering. Mr. Dotzler has been the designated representative thereunder.

Pursuant to the terms of the Series H Stock Purchase Agreement, dated September 18, 1995, we agreed to nominate and use our best efforts to elect the designated representative of Nassau Capital, L.L.C. to our Board of Directors. Nassau's right to elect a representative to our Board of Directors expires following the completion of this offering. Mr. Hack is the current designated representative of Nassau Capital.

We entered into a Stock Purchase Agreement with Sun Healthcare, dated June 7, 1996, for 1,802,000 shares of Series I Preferred Stock. In July 1996, the non-voting Series I Preferred Stock was converted into voting Series J Preferred Stock on a one-for-one basis.

In the years ended December 31, 1998, 1999 and 2000, we recorded revenues of $9.9 million, $5.1 million and $1.9 million, from sales to Sun Healthcare, representing approximately 20.5%, 9.6% and 2.9% of our revenues, respectively, for the year. Sun Healthcare earned a cash rebate of $0.4 million for purchases made from us during the year ended December 31, 1998.

In January 1999, Sun Healthcare exercised its right to have us redeem all of its Series J Preferred Stock on a quarterly basis over the succeeding ten quarters. During 1999 and 2000, we redeemed 1,081,200 shares of Series J Preferred Stock at an approximate price per share of $14.03 for an aggregate redemption amount of approximately $15.2 million. In addition, we paid Sun Healthcare accrued interest on the Series J Preferred Stock of approximately $2.7 million. These redemptions and interest payments were paid for with cash of $11.6 million and the balance was paid for by offsetting Sun Healthcare's outstanding accounts receivable balances of $6.3 million. We were not obligated to make the three quarterly redemption payments of $2.5 million each that otherwise would have been due in September 2000, December 2000 and March 2001 because we did not meet certain balance sheet tests under California law. Upon the closing of this offering, we intend to make such redemption payments. The remaining 180,200 shares of Series J Preferred Stock will automatically convert to common stock upon the completion of this offering, assuming the price per share to the public, prior to deducting the underwriter commissions and offering expenses, is more than $11.78.

Pursuant to the terms of the Series K Stock Purchase Agreement, dated January 20, 2000, we agreed to nominate and use our best efforts to elect the designated representative of ABS Capital Partners to our Board of Directors. ABS's right to elect a representative to our Board of Directors expires following the completion of this offering. Mr. Stobo is the current designated representative of ABS Capital Partners.

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In April, May, August, September, October and November 2000, we made loans to the following executive officers to exercise stock options:

NAME                                                           AMOUNT            DUE DATE
----                                                        -------------   ------------------
Sheldon D. Asher..........................................  $2,006,879.50      August 28, 2003
Sheldon D. Asher..........................................      57,195.18      August 28, 2003
Sheldon D. Asher..........................................     258,097.50    September 6, 2003
Randall A. Lipps..........................................      30,768.00   September 30, 2003
Randall A. Lipps..........................................     260,697.50   September 30, 2003
S. Michael Hanna..........................................     399,997.00          May 4, 2003
S. Michael Hanna..........................................     133,437.50     October 10, 2003
John D. Higham............................................      30,000.00     October 10, 2003

The loans totaled $3,177,072 for the exercise of stock options to purchase 808,110 shares of our common stock at an average exercise price of $3.93 per share. Each loan was made under a promissory note secured by the pledge of shares of our common stock acquired upon exercise of stock options. The notes bear interest at 6.20% and 6.71% per year.

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PRINCIPAL STOCKHOLDERS

The following table sets forth certain information with respect to the beneficial ownership of our outstanding common stock as of February 28, 2001, and as adjusted to reflect the sale of the shares of common stock offered hereby: (1) by each person or entity who is known by us to own beneficially more than 5% of the common stock; (2) by each of our directors; (3) by our Chief Executive Officer, (4) by our other named executive officers, and (5) by all of our directors and executive officers as a group. The table assumes the conversion of all outstanding preferred stock into common stock upon the completion of this offering. Except as otherwise noted, the stockholders named in the table have sole voting and investment power with respect to all shares of common stock shown as beneficially owned by them, subject to applicable community property laws. Unless otherwise indicated in the table, the address of each stockholder identified in the table is 1101 East Meadow Drive, Palo Alto, California 94303.

                                                                              SHARES ISSUABLE
                                                                                PURSUANT TO           PERCENT
                                                           SHARES OMNICELL        OPTIONS          BENEFICIALLY
                                                           MAY REPURCHASE       EXERCISABLE          OWNED(1)
                                              SHARES      WITHIN 60 DAYS OF   WITHIN 60 DAYS    -------------------
                                           BENEFICIALLY     FEBRUARY 28,      OF FEBRUARY 28,    BEFORE     AFTER
NAME OF BENEFICIAL OWNER                      OWNED             2001               2001         OFFERING   OFFERING
------------------------                   ------------   -----------------   ---------------   --------   --------
Entities affiliated with Sutter Hill
 Ventures(2).............................   2,636,938            4,427               4,688        17.8
  755 Page Mill Road, Suite A-200
  Palo Alto, CA 94306
ABS Capital Partners III, L.P.(3)........   2,066,676               --              23,438        14.0
  505 Sansome Street, Suite 1550
  San Francisco, CA 94111
Medicus Venture Partners(4)..............   1,075,943               --              14,063         7.3
  12930 Saratoga Avenue, Suite D8
  Saratoga, CA 95070
FFT Partners II, L.P.....................   1,033,338               --                  --         7.0
  10 Glenville Street
  Greenwich, CT 06831
Nassau Capital Partners L.P.(5)..........   1,015,993               --              14,063         6.9
  22 Chambers Street
  Princeton, NJ 08542
William H. Younger, Jr.(2)...............   2,636,938            4,427               4,688        17.8
John D. Stobo, Jr.(3)....................   2,066,676               --              23,438        14.0
Frederick J. Dotzler(4)..................   1,075,943               --              14,063         7.3
Randall A. Hack(5).......................   1,015,993               --              14,063         6.9
Randall A. Lipps(6)......................     773,176           96,801             354,447         7.4
Sheldon D. Asher(7)......................     703,998          112,160             250,986         6.4
Christopher J. Dunn, M.D.................      38,604               --              20,833           *
Gordon V. Clemons........................           0               --              23,438           *
Kevin L. Roberg..........................           0               --              23,438           *
Benjamin A. Horowitz.....................           0               --              32,813           *
John D. Higham(8)........................     167,961           10,834              99,218         1.8
S. Michael Hanna.........................     113,486           48,212              82,318         1.3
Robert Y. Newell, IV.....................      30,584               --             126,563         1.0
All directors and executive officers as a
 group (13 persons)......................   8,623,359          272,434           1,070,306        60.9


* Represents beneficial ownership of less than 1.0%.

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(1) Applicable percentage ownership is based on 14,861,351 shares of common stock outstanding as of February 28, 2001. Beneficial ownership is determined in accordance with the rules of the SEC, based on factors including voting and investment power with respect to shares, subject to the applicable community property laws. Shares of common stock subject to options or warrants currently exercisable, or exercisable within 60 days after February 28, 2001, are deemed outstanding for the purpose of computing the percentage ownership of the person holding such options or warrants, but are not deemed outstanding for computing the percentage ownership of any other person.

(2) Includes 1,222,125 shares of common stock owned by Sutter Hill Ventures, A California Limited Partnership (Sutter Hill); 316,801 shares of common stock owned by Mr. Younger, a member of our Board of Directors and a managing director of Sutter Hill Ventures LLC, the general partner of Sutter Hill; 636,209 shares owned by the four other managing directors and one other director of Sutter Hill Ventures LLC, a retirement trust of one of the managing directors of Sutter Hill LLC, and family partnerships associated with the managing directors of Sutter Hill LLC; and 461,801 shares owned by other entities and individuals associated with Sutter Hill Ventures. Mr. Younger and the other managing directors of Sutter Hill Ventures LLC disclaim beneficial ownership in the shares listed above except as to their individual pecuniary interest therein.

(3) Includes 2,058,881 shares of common stock held by ABS Capital Partners III, L.P. Mr. Stobo, a member of our Board of Directors, is a managing member of ABS Partners III, LLC, the general partner of ABS Capital Partners III, L.P. Mr. Stobo disclaims beneficial ownership of such shares held by ABS Capital Partners except to the extent of his pecuniary interest therein.

(4) Consists of 13,780 shares of common stock held by Mr. Dotzler, 599,438 shares of common stock held by Medicus Venture Partners 1993, L.P.; 362,088 shares of common stock held by Medicus Venture Partners 1994, L.P.; and 100,637 shares of common stock held by Medicus Venture Partners 1995, L.P. (the Medicus Entities). Medicus Management Partners and a limited partnership affiliated with The Hillman Company are the general partners of each of the Medicus Entities. Mr. Dotzler, a member of our Board of Directors, and John Reher are general partners of Medicus Management Partners. The Hillman Company is controlled by Henry L. Hillman, Elsie Hilliard Hillman and C. G. Grefenstette, Trustees of the Henry L. Hillman Trust U/A dated November 18, 1985. The trustees share the power to vote and dispose of shares representing a majority of the voting shares of the Hillman Company. Mr. Dotzler disclaims beneficial ownership of such shares held by the Medicus Entities, except to the extent of his pecuniary interest therein.

(5) Includes 1,009,753 shares of common stock held by Nassau Capital Partners L.P., and 6,240 shares of common stock held by NAS Partners L.L.C. Mr. Hack, a member of our Board of Directors, is a member of NAS Partners L.L.C. and a member of Nassau Capital L.L.C., the sole general partner of Nassau Capital Partners L.P. The members of Nassau Capital L.L.C., disclaim that they are beneficial owners of shares of Nassau Capital Partners L.P. Mr. Hack disclaims beneficial ownership of the shares held by such entities except to the extent of his proportionate interest therein.

(6) Includes an aggregate of 95,000 shares held in trusts, of which Mr. Lipps is a trustee, for the benefit of Mr. Lipps' minor children.

(7) Includes 651,259 shares held by the Sheldon D. Asher Trust, dated August 31, 1998. Diane Snedden, Mr. Asher's ex-wife, has the right to receive 128,165 shares upon the exercise of vested options pursuant to a divorce agreement. Mr. Asher disclaims beneficial ownership of these shares. Also includes 25,000 shares held by the Asher Family Special Trust, dated November 25, 1991, FBO Rachel A. Asher, Mr. Asher's minor child, 25,000 shares held by the Asher Family Special Trust, dated November 25, 1991, FBO Emily R. Asher, Mr. Asher's minor child, for both of which Diane Snedden is Trustee, 688 shares held by Bernard Asher, custodian for Emily Rose Asher under IL Uniform Trust to Minors Act, and 688 shares held by Bernard Asher, custodian for Rachel Ann Asher under IL Uniform Trust to Minors Act. Bernard Asher is Mr. Asher's brother. Mr. Asher disclaims beneficial ownership of these shares.

(8) Includes 138,620 shares held by the Higham-Bunker 1991 Family Trust, John D. Higham or Carol L. Bunker, Trustees; and 6,250 shares held by John D. Higham or Carol L. Bunker, Guardians of Christina L. Higham.

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DESCRIPTION OF CAPITAL STOCK

GENERAL

Upon the closing of this offering, we will be authorized to issue 50,000,000 shares of common stock, $.001 par value, and 5,000,000 shares of undesignated preferred stock, $.001 par value. As of February 28, 2001, there were 14,861,351 shares of common stock outstanding held of record by approximately 545 stockholders, treating all outstanding preferred stock on an as converted basis.

COMMON STOCK

The issued and outstanding shares of common stock are, and the shares of common stock being offered by us hereby will be upon payment therefor, validly issued, fully paid and nonassessable. Subject to the prior rights of the holders of any preferred stock, the holders of outstanding shares of common stock are entitled to receive dividends out of assets legally available therefor at such times and in such amounts as the Board of Directors may from time to time determine. The shares of common stock are neither redeemable nor convertible and the holders thereof have no preemptive or subscription rights to purchase any of our securities. Upon liquidation, dissolution or winding up of Omnicell, the holders of common stock are entitled to receive pro rata our assets which are legally available for distribution, after payment of all debts and other liabilities and subject to the prior rights of any holders of any preferred stock then outstanding. Each outstanding share of common stock is entitled to one vote on all matters submitted to a vote of stockholders and has cumulative voting rights with respect to the election of directors.

WARRANTS

As of February 28, 2001, there were outstanding warrants to purchase an aggregate of 11,521 shares of common stock at an exercise price of $1.74 per share, an aggregate of 14,452 shares of common stock at an exercise price of $9.84 per share, an aggregate of 44,961 shares of common stock at an exercise price of $5.88 per share, and an aggregate of 31,249 shares of common stock at an exercise price of $5.00. Warrants to purchase an aggregate of 62,503 shares of common stock expire three years from the effective date of this offering, an aggregate of 8,431 shares of common stock expire on July 7, 2005 and an aggregate of 31,249 shares of common stock expire on August 11, 2005.

PREFERRED STOCK

Upon the closing of this offering, (i) all outstanding shares of convertible preferred stock (except the Series J Preferred Stock) will be converted into shares of common stock, provided that the price per share to the public is not less than $8.00 and the aggregate price to the public is not less than $25,000,000, in each case prior to the deduction of underwriter commissions and offering expenses, (ii) 180,200 outstanding shares of Series J Preferred Stock will be converted into shares of common stock, provided that the price per share to the public is not less than $11.78 per share and the aggregate price to the public is not less than $10,000,000, in each case prior to the deduction of underwriter commissions and offering expenses and (iii) 540,600 shares of Series J Preferred Stock will be redeemed. Outstanding shares of the Series J Preferred Stock are currently being redeemed at $14.03274 per share on a quarterly basis spread out in ten equal quarterly installments beginning on March 8, 1999. The first six payments have been made. Since September 2000, the three quarterly redemption payments of $2.5 million each that were due in September 2000, December 2000 and March 2001, have not been made as we were not obligated to make them because we did not meet certain balance sheet tests under California law. The unredeemed balance of the Series J Preferred Stock accrues interest at 9.5% per year. Effective upon the closing of this offering, we will be authorized to issue 5,000,000 shares of undesignated preferred stock. The Board of Directors will have the authority to issue the preferred stock in one or more series and to fix the price, rights, preferences,

60

privileges and restrictions thereof, including dividend rights, dividend rates, conversion rights, voting rights, terms of redemption, redemption prices, liquidation preferences and the number of shares constituting a series or the designation of such series, without any further vote or action by our stockholders. The issuance of preferred stock, while providing desirable flexibility in connection with possible acquisitions and other corporate purposes, could have the effect of delaying, deferring or preventing a change in control of Omnicell without further action by the stockholders and may adversely affect the market price of the common stock and the voting and other rights of the holders of common stock. We have no current plans to issue any shares of preferred stock.

REGISTRATION RIGHTS

The holders of approximately 11,714,782 shares of common stock, as of February 28, 2001, and their permitted transferees are entitled to certain rights with respect to the registration of these shares under the Securities Act. Under the terms of agreements between us and the holders, the holders of at least 40% of these shares may require, on two occasions, that we use our best efforts to register these shares for public resale. The holders of these shares may not exercise this right until four months after the effective date of this offering. In addition, if we propose to register any of our securities under the Securities Act, either for our own account or for the account of other security holders exercising registration rights, the holders are entitled to notice of such registration and are entitled to include shares of such common stock therein. The holders of these shares may also require us on no more than four occasions to register all or a portion of these shares on Form S-3 under the Securities Act when use of such form becomes available to us. All such registration rights are subject to conditions and limitations, including the right of the underwriters of an offering to limit the number of shares to be included in such registration. If such holders, by exercising their demand registration rights, cause a large number of securities to be registered and sold in the public market, such sales could have an adverse effect on the market price for our common stock. If we were to initiate a registration and include shares held by such holders pursuant to the exercise of their piggyback registration rights, such sales may have an adverse effect on our ability to raise capital.

ANTI-TAKEOVER PROVISIONS

DELAWARE LAW

Upon the closing of this offering, we will be subject to the provisions of
Section 203 of the Delaware General Corporation Law. In general, the statute prohibits a publicly held Delaware corporation from engaging in any business combination with any interested stockholder for a period of three years following the date that the stockholder became an interested stockholder unless:

- prior to the date, the board of directors of the corporation approved either the business combination or the transaction that resulted in the stockholder becoming an interested stockholder;

- upon consummation of the transaction that resulted in the stockholder's becoming an interested stockholder, the interested stockholder owned at least 85% of the voting stock of the corporation outstanding at the time the transaction commenced, excluding those shares owned by persons who are directors and also officers, and employee stock plans in which employee participants do not have the right to determine confidentially whether shares held subject to the plan will be tendered in a tender or exchange offer; or

- on or subsequent to the date, the business combination is approved by the board of directors and authorized at an annual or special meeting of stockholders, and not by written consent, by the affirmative vote of at least two-thirds of the outstanding voting stock that is not owned by the interested stockholder.

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Section 203 defines "business combination" to include:

- any merger or consolidation involving the corporation and the interested stockholder;

- any sale, transfer, pledge or other disposition involving the interested stockholder of 10% or more of the assets of the corporation;

- subject to exceptions, any transaction that results in the issuance or transfer by the corporation of any stock of the corporation to the interested stockholder; or

- the receipt by the interested stockholder of the benefit of any loans, advances, guarantees, pledges or other financial benefits provided by or through the corporation.

In general, Section 203 defines an interested stockholder as any entity or person beneficially owning 15% or more of the outstanding voting stock of the corporation and any entity or person affiliated with or controlling or controlled by the entity or person.

CHARTER AND BYLAW PROVISIONS

Our Certificate of Incorporation and Bylaws include a number of provisions that may have the effect of deterring or impeding hostile takeovers or changes of control or management. These provisions include:

- our Board of Directors is classified into three classes of directors with staggered three-year terms;

- the authority of our Board of Directors to issue up to 5,000,000 shares of preferred stock and to determine the price and the rights, preferences and privileges of these shares, without stockholder approval;

- all stockholder action must be effected at a duly called meeting of stockholders and not by written consent; and

- the elimination of cumulative voting.

Such provisions may have the effect of delaying or preventing a change of control.

Our Certificate of Incorporation and Bylaws provide that we will indemnify executive officers and directors against losses that they may incur in investigations and legal proceedings resulting from their services to us, which may include services in connection with takeover defense measures. Such provisions may have the effect of preventing changes in our management.

OPTION ACCELERATION

In February 1998, February 2000 and March 2001 our Board of Directors approved resolutions providing that the unvested portion of each officer's stock options under our equity incentive plans becomes fully vested and exercisable if we are acquired and the officer is thereafter terminated without cause, forced to change the principal place of performance of the officer's responsibilities and duties, or placed in a position with a material reduction in the officer's responsibilities and duties.

TRANSFER AGENT AND REGISTRAR

The transfer agent and registrar for our common stock is Equiserve.

NATIONAL MARKET LISTING

We have applied for listing of our common stock on the Nasdaq National Market under the symbol "OMCL."

62

SHARES ELIGIBLE FOR FUTURE SALE

Prior to this offering, there has been no public market for our common stock. Future sales of substantial amounts of our common stock in the public market could adversely affect prevailing market prices from time to time. For a period of 180 days or more following this offering substantial amounts of our common stock will not be freely tradable due to contractual and legal restrictions as described below. Sales of substantial amounts of our common stock in the public market after these restrictions lapse could depress the prevailing market price and limit our ability to raise equity capital in the future.

Upon the closing of this offering and based on shares outstanding as of February 28, 2001, we will have an aggregate of shares of common stock outstanding, assuming no exercise of the underwriters' over-allotment option and no exercise of outstanding options or warrants. Of the outstanding shares, the shares sold in this offering will be freely tradable, except that any shares held by our "affiliates", as that term is defined in Rule 144 promulgated under the Securities Act, may only be sold in compliance with the limitations described below. The remaining shares of common stock held by existing stockholders will be deemed restricted securities as defined under Rule 144. Restricted securities may be sold in the public market only if registered or if they qualify for an exemption from registration under Rules 144, 144(k) or 701 promulgated under the Securities Act, which are summarized below. In accordance with the lock-up agreements described below and subject to the provisions of Rules 144, 144(k) and 701 and a right of repurchase in favor of us applicable to some of our common stock, additional shares will be available for sale in the public market at the following times:

NUMBER OF SHARES                                    DATE
----------------        ------------------------------------------------------------
                        After the date of this prospectus
      5,158,236         180 days from the date of this prospectus
      9,703,115         At various times after 180 days from the date of this
                        prospectus

In general, under Rule 144, as currently in effect, a person, or persons whose shares are aggregated, including an affiliate, who has beneficially owned shares for at least one year is entitled to sell, within any three-month period commencing 90 days after the date of this prospectus, a number of shares that does not exceed the greater of 1% of the then outstanding shares of common stock, which will equal approximately shares immediately after this offering or the average weekly trading volume in the common stock during the four calendar weeks preceding the date on which notice of such sale is filed, subject to certain restrictions. In addition, a person who is not deemed to have been an affiliate of ours at any time during the 90 days preceding a sale and who has beneficially owned the shares proposed to be sold for at least two years would be entitled to sell such shares under Rule 144(k) without regard to the requirements described above. To the extent that shares were acquired from an affiliate of ours, the person's holding period for the purpose of effecting a sale under Rule 144 commences on the date of transfer from the affiliate.

Employees, officers, directors, advisors or consultants who purchased our common stock pursuant to a written compensatory plan or contract are entitled to rely on the resale provisions of Rule 701, which permits non-affiliates to sell their Rule 701 shares without having to comply with the public information, holding period, volume limitation or notice provisions of Rule 144 and permits affiliates to sell their Rule 701 shares without having to comply with Rule 144's holding period restrictions, in each case commencing 90 days after we become subject to the reporting requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934.

LOCK-UP AGREEMENTS

Our directors, officers and stockholders who hold approximately shares in the aggregate, have agreed that they will not offer, sell or agree to sell, directly or indirectly, or otherwise dispose of any

63

shares of common stock without the prior written consent of U.S. Bancorp Piper Jaffray for a period of 180 days from the date of this prospectus. Please see "Underwriting."

We have agreed not to sell or otherwise dispose of any shares of common stock during the 180-day period following the date of the prospectus, except we may issue, and grant options to purchase, shares of common stock under the 1992 Equity Incentive Plan, the 1995 Management Stock Option Plan and the 1999 Equity Incentive Plan. In addition, we may issue shares of common stock in connection with any acquisition of another company if the terms of such issuance provide that such common stock shall not be resold prior to the expiration of the 180-day period referenced in the preceding sentence.

REGISTRATION RIGHTS

Following this offering, some of our stockholders will have registration rights. Please see "Description of Capital Stock-- Registration Rights."

STOCK OPTIONS AND WARRANTS

Options to purchase an aggregate of 3,678,336 shares of our common stock are outstanding as of February 28, 2001 under our 1992 Equity Incentive Plan, our 1995 Management Stock Option Plan and our 1999 Equity Incentive Plan. Following this offering, we expect to register the shares underlying these options in a registration statement that will automatically become effective upon filing. Accordingly, subject to the exercise of such options, shares included in such registration statement will be available for sale in the open market immediately after the 180-day lock-up period expires.

In addition, 102,183 shares of common stock issuable upon the exercise of warrants will be eligible for sale as restricted securities set forth above, one year after the exercise of these warrants.

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UNDERWRITING

Subject to the terms and conditions of an underwriting agreement dated , 2001, the underwriters named below, who are represented by U.S. Bancorp Piper Jaffray Inc., CIBC World Markets Corp., and SG Cowen Securities Corporation have severally and not jointly agreed to purchase from us, the following respective number of shares of our common stock at a public offering price less the underwriting discounts and commissions set forth on the cover page of this prospectus:

                                                              NUMBER OF
UNDERWRITERS                                                   SHARES
------------                                                  ---------
U.S. Bancorp Piper Jaffray Inc..............................
CIBC World Markets Corp.....................................
SG Cowen Securities Corporation.............................
                                                              ---------
        Total...............................................
                                                              =========

The underwriting agreement provides that the obligations of the several underwriters to purchase the shares of common stock offered hereby are subject to certain conditions precedent and that the underwriters will purchase all shares of the common stock offered hereby, other than those covered by the over-allotment option described below, if any of these shares are purchased. In addition, the underwriting agreement provides that, in the event of a default by an underwriter, in certain circumstances the purchase commitments of non-defaulting underwriters may be increased or the underwriting agreement may be terminated.

The underwriters propose to offer the shares of common stock to the public at the public offering price set forth on the cover page of this prospectus and to dealers at a price that represents a concession not in excess of $ per share under the public offering price. The underwriters may allow, and these dealers may re-allow, a concession of not more than $ per share to certain other dealers. After the initial public offering, representatives of the underwriters may change the offering price and other selling terms.

We have granted to the underwriters an option, exercisable not later than 30 days after the date of this prospectus, to purchase up to additional shares of common stock at the public offering price, less the underwriting discounts set forth on the cover page of this prospectus. The underwriters may exercise such option solely to cover over-allotments, if any, made in connection with this offering. To the extent that the underwriters exercise this option, each underwriter will become obligated, subject to conditions, to purchase approximately the same percentage of additional shares of common stock as the number of shares of common stock to be purchased by it in the above table bears to the total number of shares of common stock offered hereby. We will be obligated, pursuant to the option, to sell these additional shares of common stock to the underwriters to the extent the option is exercised. If any additional shares of common stock are purchased, the underwriters will offer the additional shares on the same terms as those on which the other shares are being offered.

The underwriting fee is equal to the public offering price per share of common stock less the amount paid by the underwriters to us per share of common stock. The underwriting fee is currently expected to be approximately % of the initial public offering price. We have agreed to pay the underwriters the following fees, assuming either no exercise or full exercise by the underwriters of the underwriters' over-allotment option:

                                                                             TOTAL FEES
                                                            ---------------------------------------------
                                                             WITHOUT EXERCISE OF    WITH FULL EXERCISE OF
                                            FEE PER SHARE   OVER-ALLOTMENT OPTION   OVER-ALLOTMENT OPTION
                                            -------------   ---------------------   ---------------------
Fees paid by Omnicell.....................      $                  $                       $

65

In addition, we estimate that our share of the total expenses of this offering, excluding underwriting discounts and commissions, will be approximately $ .

We have agreed to indemnify the underwriters against some specified types of liabilities, including liabilities under the Securities Act, and to contribute to payments the underwriters may be required to make in respect of any of these liabilities.

Each of our officers and directors, and substantially all of our stockholders and holders of options and warrants to purchase our stock, have agreed not to offer, sell, contract to sell or otherwise dispose of, or enter into any transaction that is designed to, or could be expected to, result in the disposition of any shares of our common stock or other securities convertible into or exchangeable or exercisable for shares of our common stock or derivatives of our common stock owned by these persons prior to this offering or common stock issuable upon exercise of options or warrants held by these persons for a period of 180 days after the effective date of the registration statement of which this prospectus is a part without the prior written consent of U.S. Bancorp Piper Jaffray. This consent may be given at any time without public notice. We have entered into a similar agreement with the representatives of the underwriters. There are no agreements between the representatives and any of our stockholders or affiliates releasing them from these lock-up agreements prior to the expiration of the 180-day period.

The representatives of the underwriters have advised us that the underwriters do not intend to confirm sales to any account over which they exercise discretionary authority.

In order to facilitate the offering of our common stock, the underwriters may engage in transactions that stabilize, maintain or otherwise affect the market price of our common stock. Specifically, the underwriters may over-allot shares of our common stock in connection with this offering, thus creating a short position in our common stock for their own account. A short position results when an underwriter sells more shares of common stock than that underwriter is committed to purchase. Additionally, to cover these over-allotments or to stabilize the market price of our common stock, the underwriters may bid for, and purchase, shares of our common stock in the open market. Finally, the representatives, on behalf of the underwriters, may also reclaim selling concessions allowed to an underwriter or dealer if the underwriting syndicate repurchases shares distributed by that underwriter or dealer. Any of these activities may maintain the market price of our common stock at a level above that which might otherwise prevail in the open market. These transactions may be effected on the Nasdaq National Market or otherwise. The underwriters are not required to engage in these activities and, if commenced, may end any of these activities at any time.

At our request, the underwriters have reserved for sale, at the initial public offering price, up to shares or % of our common stock being sold in this offering for our vendors, employees, family members of employees, customers and other third parties. The number of shares of our common stock available for sale to the general public will be reduced to the extent these reserved shares are purchased. Any reserved shares that are not purchased by these persons will be offered by the underwriters to the general public on the same basis as the other shares in this offering.

PRICING OF THE OFFERING

Prior to this offering, there has been no public market for our common stock. Consequently, the initial public offering price for our common stock has been determined by negotiations among us and the representatives of the underwriters. Among the primary factors considered in determining the initial public offering price were:

- prevailing market conditions;

- our results of operations in recent periods;

- the present stage of our development;

66

- the market capitalization and stage of development of the other companies that we and the representatives of the underwriters believe to be comparable to our business; and

- estimates of our business potential.

LEGAL MATTERS

The validity of the shares of common stock offered hereby will be passed upon for us by Cooley Godward LLP, Palo Alto, California. Certain legal matters in connection with this offering will be passed upon for the underwriters by Preston Gates & Ellis LLP, Seattle, Washington.

EXPERTS

Ernst & Young LLP, independent auditors, have audited our consolidated financial statements at December 31, 1999 and 2000, and for each of the three years in the period ended December 31, 2000, as set forth in their report. We've included our financial statements in this prospectus and elsewhere in the registration statement in reliance on Ernst & Young LLP's report, given on their authority as experts in auditing and accounting.

The financial statements of the Sure-Med Division of Baxter Healthcare Corporation, an indirect division of Baxter International Inc., as of December 31, 1998 and for the year ended December 31, 1998 included in this prospectus have been so included in reliance on the report (which report contains an explanatory paragraph relating to the restatement of the financial results as described in Note 2 to the financial statements) of PricewaterhouseCoopers LLP, independent accountants, given on the authority of said firm as experts in auditing and accounting.

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WHERE YOU CAN FIND MORE INFORMATION

We have filed with the Securities and Exchange Commission a registration statement on Form S-1 under the Securities Act with respect to the common stock. For further information regarding us and our common stock, please refer to the registration statement and exhibits and schedules filed as part of the registration statement. Each statement in this prospectus referring to a contract, agreement or other document filed as an exhibit to the registration statement is qualified in all respects by the filed exhibit.

You may read and copy all or any portion of the registration statement or any other information that we file at the Securities and Exchange Commission's public reference room at 450 Fifth Street, N.W., Washington, D.C. 20549. You can request copies of these documents, upon payment of a duplicating fee, by writing to the SEC. Please call the Securities and Exchange Commission at 1-800-SEC-0330 for further information on the operation of the public reference room. Our Securities and Exchange Commission filings, including the registration statement, are also available to you on the Securities and Exchange Commission's Web site located at WWW.SEC.GOV.

Upon completion of this offering, we will become subject to the information and reporting requirements of the Securities Exchange Act of 1934, as amended, and in accordance therewith, will file periodic reports, proxy statements and other information with the SEC.

We intend to provide our stockholders with annual reports containing financial statements audited by an independent public accounting firm and to make available to our stockholders quarterly reports containing unaudited financial data for the first three quarters of each year.

68

OMNICELL, INC.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Omnicell, Inc.
  Report of Ernst & Young LLP, Independent Auditors.........   F-2

  Consolidated Balance Sheets as of December 31, 1999 and
    2000....................................................   F-3

  Consolidated Statements of Operations for the years ended
    December 31, 1998, 1999 and 2000........................   F-4

  Consolidated Statement of Redeemable Convertible Preferred
    Stock and Stockholders' Equity (Net Capital Deficiency)
    for the years ended December 31, 1998, 1999 and 2000....   F-5

  Consolidated Statements of Cash Flows for the years ended
    December 31, 1998, 1999 and 2000........................   F-6

  Notes to Consolidated Financial Statements................   F-8

Sure-Med Division of Baxter Healthcare Corporation

  Report of PricewaterhouseCoopers LLP, Independent
    Accountants.............................................  F-29

  Balance Sheet as of December 31, 1998.....................  F-30

  Statement of Operations for the year ended December 31,
    1998....................................................  F-31

  Statement of Cash Flows for the year ended December 31,
    1998....................................................  F-32

  Notes to Financial Statements.............................  F-33

F-1

REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS

The Board of Directors and Stockholders
Omnicell, Inc.

We have audited the accompanying consolidated balance sheets of Omnicell, Inc. as of December 31, 1999 and 2000, and the related consolidated statements of operations, redeemable convertible preferred stock and stockholders' equity (net capital deficiency), and cash flows for each of the three years in the period ended December 31, 2000. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Omnicell, Inc. at December 31, 1999 and 2000, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, 2000, in conformity with accounting principles generally accepted in the United States.

As discussed in Note 18 to the consolidated financial statements, the consolidated statements of operations, redeemable convertible preferred stock and stockholders' equity (net capital deficiency), and cash flows for each of the two years in the period ended December 31, 1999 have been restated.

Ernst & Young LLP

San Jose, California
February 26, 2001,
except for Note 19, as to which the date is , 2001


The foregoing report is in the form that will be signed upon completion of the name change and reverse stock split described in Notes 1 and 19 to the consolidated financial statements.

                                          /s/ Ernst & Young LLP

San Jose, California
March 14, 2001

F-2

OMNICELL, INC.

CONSOLIDATED BALANCE SHEETS

(IN THOUSANDS, EXCEPT SHARE AMOUNTS)

                                                                                       PRO FORMA AT
                                                                   DECEMBER 31,        DECEMBER 31,
                                                              ----------------------   -------------
                                                                1999        2000           2000
                                                              --------   -----------   -------------
                                                                                        (Unaudited)
                           ASSETS
Current assets:
  Cash and cash equivalents.................................  $  2,546    $  9,681       $  2,096
  Short-term investments....................................     4,152       2,286          2,286
  Accounts receivable, net of allowance for doubtful
    accounts of $338 in 1999 and $372 in 2000...............     9,685      11,036         11,036
  Inventories...............................................     9,324      10,414         10,414
  Prepaid expenses and other current assets.................     1,909       2,728          2,728
                                                              --------    --------       --------
    Total current assets....................................    27,616      36,145         28,560
                                                              --------    --------

Property and equipment, net.................................     7,241       4,913          4,913
Intangible assets...........................................       274          --             --
Other assets................................................     1,986       2,847          2,847
                                                              --------    --------       --------
      Total assets..........................................  $ 37,117    $ 43,905       $ 36,320
                                                              ========    ========       ========
  LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED STOCK AND
        STOCKHOLDERS' EQUITY (NET CAPITAL DEFICIENCY)
Current liabilities:
  Accounts payable..........................................  $  2,234    $  4,416       $  4,416
  Accrued liabilities.......................................    17,299      16,065         16,065
  Deferred revenue..........................................     2,268       3,233          3,233
  Deferred gross profit.....................................    28,167      29,898         29,898
  Current portion of notes payable..........................        51          37             37
                                                              --------    --------       --------
    Total current liabilities...............................    50,019      53,649         53,649

Notes payable...............................................     8,440       8,376            112
Other long-term liabilities.................................       812         842            842
Commitments and contingencies
Redeemable convertible preferred stock, no par value;
  1,802,000 shares designated; 1,081,200 and 720,800 shares
  issued and outstanding at December 31, 1999 and 2000,
  respectively (no shares pro forma) (liquidation preference
  of $10,113 at December 31, 2000)..........................    15,166      10,113             --
Stockholders' equity (net capital deficiency):
  Convertible preferred stock, no par value; 18,500,000
    shares authorized (5,000,000 shares authorized pro
    forma), including 1,802,000 shares designated as
    redeemable convertible preferred stock (11,527,848 and
    14,538,376 shares issued and outstanding at
    December 31, 1999 and 2000, respectively)(no shares pro
    forma) (liquidation preference of $63,747 at
    December 31, 2000)......................................    33,854      62,392             --
  Common stock, no par value; 35,000,000 shares authorized
    (50,000,000 shares authorized pro forma); 1,646,382 and
    3,080,140 shares issued and outstanding at December 31,
    1999 and 2000, respectively (14,796,082 shares pro
    forma)..................................................     2,302       9,137         82,321
  Notes receivable from stockholders........................        --      (4,578)        (4,578)
  Accumulated deficit.......................................   (73,478)    (96,030)       (96,030)
  Accumulated other comprehensive income....................         2           4              4
                                                              --------    --------       --------
    Total stockholders' equity (net capital deficiency).....   (37,320)    (29,075)       (18,283)
                                                              --------    --------       --------
      Total liabilities, redeemable convertible preferred
       stock, and stockholders' equity (net capital
       deficiency)..........................................  $ 37,117    $ 43,905       $ 36,320
                                                              ========    ========       ========

See accompanying notes.

F-3

OMNICELL, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

                                                                 YEAR ENDED DECEMBER 31,
                                                              ------------------------------
                                                                1998       1999       2000
                                                              --------   --------   --------
REVENUES:
Product revenues............................................  $34,690    $ 42,184   $ 55,303
Product revenues from related party.........................    9,398       4,163      1,097
Service and other revenues..................................    4,124       7,034      7,810
                                                              -------    --------   --------
    Total revenues..........................................   48,212      53,381     64,210
Cost of product revenues....................................   16,343      28,503     18,280
Cost of service and other revenues..........................    1,801       5,377      7,722
                                                              -------    --------   --------
    Total cost of revenues..................................   18,144      33,880     26,002
                                                              -------    --------   --------
Gross profit................................................   30,068      19,501     38,208

Operating expenses:
  Research and development..................................    5,987       8,745     11,276
  Selling, general, and administrative......................   24,292      35,797     45,320
  Integration...............................................       --         785         --
  Restructuring.............................................       --          --      2,908
                                                              -------    --------   --------
    Total operating expenses................................   30,279      45,327     59,504
                                                              -------    --------   --------
Loss from operations........................................     (211)    (25,826)   (21,296)
Interest income.............................................    1,039         704      1,053
Interest expense............................................       --      (2,471)    (2,209)
                                                              -------    --------   --------
Income (loss) before provision for income taxes.............      828     (27,593)   (22,452)
Provision for income taxes..................................      185         149        100
                                                              -------    --------   --------
Net income (loss)...........................................      643     (27,742)   (22,552)
Preferred stock accretion...................................      (22)         --         --
                                                              -------    --------   --------
Net income (loss) applicable to common
  stockholders..............................................  $   621    $(27,742)  $(22,552)
                                                              =======    ========   ========
Net income (loss) per common share:
  Basic.....................................................  $  0.48    $ (18.86)  $ (13.23)
  Diluted...................................................  $  0.06    $ (18.86)  $ (13.23)
  Pro forma basic and diluted (unaudited)...................                        $  (1.57)
Weighted average common shares outstanding:
  Basic.....................................................    1,302       1,471      1,704
  Diluted...................................................   11,013       1,471      1,704
  Pro forma basic and diluted (unaudited)...................                          14,403

See accompanying notes.

F-4

OMNICELL, INC.
CONSOLIDATED STATEMENT OF REDEEMABLE CONVERTIBLE PREFERRED STOCK AND
STOCKHOLDERS' EQUITY (NET CAPITAL DEFICIENCY)
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)

                                                                   REDEEMABLE
                                                                   CONVERTIBLE             CONVERTIBLE
                                                                 PREFERRED STOCK         PREFERRED STOCK
                                                              ---------------------   ---------------------
                                                                SHARES      AMOUNT      SHARES      AMOUNT
                                                              ----------   --------   ----------   --------
Balance at December 31, 1997................................   1,802,000   $ 25,260   11,527,848   $33,854
  Net income................................................          --         --           --        --
  Change in unrealized loss on short-term investments.......          --         --           --        --
  Total comprehensive income................................
  Exercise of stock options.................................          --         --           --        --
  Employee stock purchase plan..............................          --         --           --        --
  Amortization of deferred compensation.....................          --         --           --        --
  Accretion of redeemable convertible preferred stock.......          --         22           --        --
                                                              ----------   --------   ----------   -------
Balance at December 31, 1998................................   1,802,000     25,282   11,527,848    33,854
  Net loss..................................................          --         --           --        --
  Change in unrealized loss on short-term investments.......          --         --           --        --
  Total comprehensive loss..................................          --         --           --        --
  Exercise of stock options.................................          --         --           --        --
  Employee stock purchase plan..............................          --         --           --        --
  Amortization of deferred compensation.....................          --         --           --        --
  Redemption of redeemable convertible preferred stock......    (720,800)   (10,116)          --        --
                                                              ----------   --------   ----------   -------
Balance at December 31, 1999................................   1,081,200     15,166   11,527,848    33,854
  Net loss..................................................          --         --           --        --
  Change in unrealized gain on short-term investments.......          --         --           --        --
  Total comprehensive loss..................................          --         --           --        --
  Modification of stock option awards.......................          --         --           --        --
  Issuance of Series K convertible preferred stock for cash
    (less issuance costs of $62)............................          --         --    3,010,528    28,538
  Exercise of stock options.................................          --         --           --        --
  Employee stock purchase plan..............................          --         --           --        --
  Issuance of stockholder notes receivable..................          --         --           --        --
  Issuance of warrant in connection with bank credit
    facility................................................          --         --           --        --
  Redemption of redeemable convertible preferred stock......    (360,400)    (5,053)          --        --
                                                              ----------   --------   ----------   -------
Balance at December 31, 2000................................     720,800   $ 10,113   14,538,376   $62,392
                                                              ==========   ========   ==========   =======


                                                                                          NOTES
                                                                   COMMON STOCK         RECEIVABLE
                                                              ----------------------       FROM       DEFERRED STOCK   ACCUMULATED
                                                               SHARES       AMOUNT     STOCKHOLDERS    COMPENSATION      DEFICIT
                                                              ---------   ----------   ------------   --------------   ------------
Balance at December 31, 1997................................  1,281,804   $      807     $    --         $   (28)        $(46,357)
  Net income................................................         --           --          --              --              643
  Change in unrealized loss on short-term investments.......         --           --          --              --               --

  Total comprehensive income................................

  Exercise of stock options.................................     48,923          135          --              --               --
  Employee stock purchase plan..............................     54,506          482          --              --               --
  Amortization of deferred compensation.....................         --           --          --              17               --
  Accretion of redeemable convertible preferred stock.......         --           --          --              --              (22)
                                                              ---------   ----------     -------         -------         --------
Balance at December 31, 1998................................  1,385,233        1,424          --             (11)         (45,736)
  Net loss..................................................         --           --          --              --          (27,742)
  Change in unrealized loss on short-term investments.......         --           --          --              --               --

  Total comprehensive loss..................................         --           --          --              --               --

  Exercise of stock options.................................    200,360          341          --              --               --
  Employee stock purchase plan..............................     60,789          537          --              --               --
  Amortization of deferred compensation.....................         --           --          --              11               --
  Redemption of redeemable convertible preferred stock......         --           --          --              --               --
                                                              ---------   ----------     -------         -------         --------
Balance at December 31, 1999................................  1,646,382        2,302          --              --          (73,478)
  Net loss..................................................         --           --          --              --          (22,552)
  Change in unrealized gain on short-term investments.......         --           --          --              --               --

  Total comprehensive loss..................................         --           --          --              --               --

  Modification of stock option awards.......................         --          728          --              --               --
  Issuance of Series K convertible preferred stock for cash
    (less issuance costs of $62)............................         --           --          --              --               --
  Exercise of stock options.................................  1,251,919        5,146          --              --               --
  Employee stock purchase plan..............................    181,839          883          --              --               --
  Issuance of stockholder notes receivable..................         --           --      (4,578)             --               --
  Issuance of warrant in connection with bank credit
    facility................................................         --           78          --              --               --
  Redemption of redeemable convertible preferred stock......         --           --          --              --               --
                                                              ---------   ----------     -------         -------         --------
Balance at December 31, 2000................................  3,080,140   $    9,137     $(4,578)        $    --         $(96,030)
                                                              =========   ==========     =======         =======         ========

                                                                                   TOTAL
                                                               ACCUMULATED     STOCKHOLDERS'
                                                                  OTHER           EQUITY
                                                              COMPREHENSIVE    (NET CAPITAL
                                                              INCOME (LOSS)     DEFICIENCY)
                                                              --------------   -------------
Balance at December 31, 1997................................      $  (6)         $(11,730)
  Net income................................................         --               643
  Change in unrealized loss on short-term investments.......          4                 4
                                                                                 --------
  Total comprehensive income................................                          647
                                                                                 --------
  Exercise of stock options.................................         --               135
  Employee stock purchase plan..............................         --               482
  Amortization of deferred compensation.....................         --                17
  Accretion of redeemable convertible preferred stock.......         --               (22)
                                                                  -----          --------
Balance at December 31, 1998................................         (2)          (10,471)
  Net loss..................................................         --           (27,742)
  Change in unrealized loss on short-term investments.......          4                 4
                                                                                 --------
  Total comprehensive loss..................................         --           (27,738)
                                                                                 --------
  Exercise of stock options.................................         --               341
  Employee stock purchase plan..............................         --               537
  Amortization of deferred compensation.....................         --                11
  Redemption of redeemable convertible preferred stock......         --                --
                                                                  -----          --------
Balance at December 31, 1999................................          2           (37,320)
  Net loss..................................................         --           (22,552)
  Change in unrealized gain on short-term investments.......          2                 2
                                                                                 --------
  Total comprehensive loss..................................         --           (22,550)
                                                                                 --------
  Modification of stock option awards.......................         --               728
  Issuance of Series K convertible preferred stock for cash
    (less issuance costs of $62)............................         --            28,538
  Exercise of stock options.................................         --             5,146
  Employee stock purchase plan..............................         --               883
  Issuance of stockholder notes receivable..................         --            (4,578)
  Issuance of warrant in connection with bank credit
    facility................................................         --                78
  Redemption of redeemable convertible preferred stock......         --                --
                                                                  -----          --------
Balance at December 31, 2000................................      $   4          $(29,075)
                                                                  =====          ========

See accompanying notes.

F-5

OMNICELL, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(IN THOUSANDS)

                                                                 YEAR ENDED DECEMBER 31,
                                                              ------------------------------
                                                                1998       1999       2000
                                                              --------   --------   --------
OPERATING ACTIVITIES
  Net income (loss).........................................  $    643   $(27,742)  $(22,552)
  Adjustments to reconcile net income (loss) to net cash
    provided by (used in) operating activities:
    Depreciation............................................     1,375      1,894      2,749
    Amortization............................................        --         90         90
    Loss on disposal of capital equipment...................        45          4         --
    Deferred rent...........................................       (50)       (63)       226
    Amortization of deferred compensation...................        17         11         --
    Stock compensation......................................        --         --        728
    Write-off of Sure-Med inventory.........................        --      9,722         --
    Write-off of ADDS investment............................        --        550         --
    Write-off of intangible assets..........................        --         --        182
    Changes in assets and liabilities:
      Accounts receivable...................................     2,066       (453)    (1,351)
      Inventories...........................................      (378)     1,978     (1,090)
      Prepaid expenses and other current assets.............    (1,228)      (741)      (741)
      Other assets..........................................      (405)       588       (769)
      Accounts payable......................................      (345)     1,608      2,182
      Accrued liabilities...................................       208        971     (1,234)
      Deferred revenue......................................       747        313        965
      Deferred gross profit.................................     4,005      7,426      1,731
      Other liabilities.....................................        --     (1,149)      (224)
                                                              --------   --------   --------
    Net cash provided by (used in) operating activities.....     6,700     (4,993)   (19,108)
                                                              --------   --------   --------

INVESTING ACTIVITIES
  Cash paid for Sure-Med acquisition, net of cash
    received................................................        --       (352)        --
  Purchases of short-term investments.......................   (11,517)    (4,153)    (4,055)
  Maturities of short-term investments......................     6,011     10,504      5,921
  Capital expenditures......................................    (1,785)    (6,199)      (511)
                                                              --------   --------   --------
    Net cash provided by (used in) investing activities.....    (7,291)      (200)     1,355
                                                              --------   --------   --------

FINANCING ACTIVITIES
  Proceeds from issuance of common stock....................       617        878      1,453
  Proceeds from issuance of Series K preferred stock........        --         --     28,538
  Redemption of redeemable convertible preferred stock......        --     (5,058)    (5,053)
  Issuance of convertible promissory note...................        --        350         --
  Payment of principle on long-term debt....................        --         --        (50)
                                                              --------   --------   --------
    Net cash provided by (used in) financing activities.....       617     (3,830)    24,888
                                                              --------   --------   --------
Net increase (decrease) in cash and cash equivalents........        26     (9,023)     7,135
Cash and cash equivalents at beginning of period............    11,543     11,569      2,546
                                                              --------   --------   --------
Cash and cash equivalents at end of period..................  $ 11,569   $  2,546   $  9,681
                                                              ========   ========   ========

See accompanying notes.

F-6

OMNICELL, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

(IN THOUSANDS)

                                                                 YEAR ENDED DECEMBER 31,
                                                              ------------------------------
                                                                1998       1999       2000
                                                              --------   --------   --------
SUPPLEMENTAL DISCLOSURES OF NONCASH FINANCING AND INVESTING
  ACTIVITIES
Issuance of note payable in Sure-Med acquisition............  $     --   $  7,914   $     --
Change in unrealized gain (loss) on short-term
  investments...............................................        (4)        (4)         2
Issuance of note payable for leasehold improvements to
  landlord..................................................        --        200         --
Accretion of redeemable convertible preferred stock.........        22         --         --
Redemption of preferred stock offset with receivables.......        --      5,750        553
Issuance of stock purchase warrant..........................        --         --         78
Issuance of notes receivable from stockholders to exercise
  stock options.............................................        --         --     (4,578)

SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid for interest......................................  $     --   $  2,312   $  1,800

See accompanying notes.

F-7

OMNICELL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

DESCRIPTION OF THE COMPANY

The Company was incorporated in the State of California in September 1992 under the name OmniCell Technologies, Inc. In September 1999, the Company changed its name to Omnicell.com and intends to reincorporate in Delaware and change its name to Omnicell, Inc. in April 2001. All references in these financial statements will be to "Omnicell, Inc." or the "Company."

The Company provides an integrated suite of clinical infrastructure and workflow automation solutions for healthcare facilities. These solutions include automation systems, clinical reference tools, an Internet-based procurement application and decision support capabilities. The Company sells and leases its products and related services to a wide range of healthcare facilities such as hospitals, integrated delivery networks and alternate care facilities, which include nursing homes, outpatient surgery centers, catherization labs and clinics.

PRINCIPLES OF CONSOLIDATION

The consolidated financial statements include the Company and its wholly owned subsidiaries, Omnicell HealthCare Canada, Inc. and Omnicell Europe SARL. All significant intercompany accounts and transactions are eliminated in consolidation.

USE OF ESTIMATES

The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that materially affect the amounts reported in the consolidated financial statements. Actual results could differ from these estimates.

REVENUE RECOGNITION

Revenues are derived primarily from sales of pharmacy and supply systems and subsequent service agreements. The Company markets these systems for sale or for lease. Pharmacy and supply system sales, which are accounted for in accordance with American Institute of Certified Public Accountant's Statement of Position 97-2 (SOP 97-2), "Software Revenue Recognition," are recognized upon completion of Omnicell's installation obligation at the customer's site. Revenues from leasing arrangements are recognized in accordance with Statement of Financial Accounting Standards (SFAS) No. 13, "Accounting for Leases," upon completion of the Company's installation obligation and commencement of the noncancelable lease term. Post-installation technical support, such as phone support, on-site service, parts and access to software upgrades, is provided by the Company under separate annual service agreements. Revenues on service agreements are recognized ratably over the related service contract period. Deferred revenue represents amounts received under service agreements for which the services have not yet been performed. Deferred gross profit represents the profit to be earned by the Company, exclusive of installation costs, on pharmacy and supply systems sales for which customer acceptance has occurred but the Company's installation obligation has not yet been fulfilled. Installation costs are recorded to cost of goods sold when incurred.

Revenues from the Company's Internet-based procurement application, introduced in 1999, are recognized ratably over the subscription period. Internet-based procurement application revenues were

F-8

OMNICELL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
not significant in the years ended December 31, 1999 and 2000, and are included in service and other revenues.

FAIR VALUE OF FINANCIAL INSTRUMENTS

The Company has determined the estimated fair value of financial instruments. The amounts reported for cash and cash equivalents, accounts receivable, notes receivable from stockholders, accounts payable, and accrued expenses approximate fair value because of their short maturities. Short-term investments are reported at their estimated fair value based on quoted market prices of comparable instruments. Based on borrowing rates currently available to the Company for loans with similar terms, the carrying value of its debt obligations approximates fair value.

CASH EQUIVALENTS

The Company considers all highly liquid debt instruments with original maturities of 90 days or less to be cash equivalents.

CONCENTRATIONS OF CREDIT RISK AND SIGNIFICANT CUSTOMERS

Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash equivalents, investments, accounts receivable and notes receivable from stockholders. Cash equivalents consist primarily of money market funds and commercial debt securities and are held primarily with two financial institutions. By policy, the Company limits the amounts invested in any type of instrument for investments other than U.S. government treasury instruments. The Company places its investments for safekeeping with an insured creditworthy financial institution.

The Company sells and leases its products and services primarily to hospitals and other healthcare facilities throughout the United States. The majority of leases originated by the Company are sold to unaffiliated finance companies (see Note 3). To date, the Company has had no significant credit losses.

One customer accounted for 20.5% of revenues in 1998. No one customer accounted for over 10.0% of revenues in 1999 or 2000.

One customer accounted for 11.0% of accounts receivable at December 31, 1999. A different customer accounted for 11.0% of accounts receivable at December 31, 2000.

The majority of net revenues are made to customers in North America totaling 99% of total net revenues in 1998, 1999 and 2000.

SHORT-TERM INVESTMENTS

Short-term investments consist primarily of highly liquid debt instruments purchased with original maturities of greater than 90 days but less than twelve months. The Company classifies these securities as available-for-sale. The differences between amortized cost and fair value, representing unrealized holding gains or losses, are recorded as a separate component of stockholders' equity until realized. Any gains and losses on the sale of short-term investments are determined on a specific identification method, and such gains and losses are reflected as a component of net interest income (expense). The Company has not experienced any significant gains or losses on its investments to date.

F-9

OMNICELL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) INVENTORIES

Inventories are stated at the lower of cost (utilizing standard costs, which approximate the first-in, first-out method) or market. The Company routinely assesses its on-hand inventory for timely identification and measurement of obsolete, slow-moving, or otherwise impaired inventory.

PROPERTY AND EQUIPMENT

Property and equipment are stated at cost less accumulated depreciation and amortization. Depreciation and amortization are computed using the straight-line method over the estimated useful lives of the related assets, generally three to five years. Leasehold improvements are amortized over the shorter of the lease term or the estimated useful lives of the improvements, generally four to seven years.

IMPAIRMENT OF LONG-LIVED ASSETS

The Company evaluates its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of any asset to future net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceed the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell.

SOFTWARE DEVELOPMENT COSTS

Development costs related to software incorporated in the Company's pharmacy and supply systems incurred subsequent to the establishment of technological feasibility are capitalized and amortized over the estimated lives of the related products. Technological feasibility is established upon completion of a working model. At December 31, 2000, capitalized software development costs are approximately $900,000. These costs will be amortized over a 3-year period upon commercial introduction and are reported as a component of other assets. There were no capitalized software development costs at December 31, 1999.

ADVERTISING EXPENSES

The Company expenses the costs of advertising as incurred. Advertising expenses for the years ended December 31, 1998, 1999 and 2000 were approximately $11,000, $628,000 and $1.2 million, respectively.

INTEGRATION EXPENSES

Integration expenses relate to expenses incurred to integrate the Sure-Med product line (see Note 2) into the Company's operations. These expenses include charges for employee severance costs, travel, training and relocation expenses.

STOCK-BASED COMPENSATION

Under SFAS No. 123, "Accounting for Stock-Based Compensation," the Company accounts for stock-based awards to employees using the intrinsic value method established by Accounting Principles Board

F-10

OMNICELL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Opinion No. 25 (APB 25), "Accounting for Stock Issued to Employees." Thus, no compensation expense is recognized for options granted with exercise prices equal to the fair value of the Company's common stock on the date of grant.

INCOME TAXES

The Company accounts for income taxes in accordance with SFAS No. 109, "Accounting for Income Taxes." This statement prescribes the use of the liability method whereby deferred tax assets and liabilities are determined based on differences between financial reporting and tax bases of assets and liabilities, and are measured using enacted tax rates and laws that will be in effect when the differences are expected to reverse.

COMPREHENSIVE INCOME

In June 1997, the Financial Accounting Standards Board (FASB) issued SFAS No. 130, "Reporting Comprehensive Income," which establishes standards for reporting and displaying comprehensive income and its components in financial statements. The only items of other comprehensive income (loss) that the Company currently reports are unrealized gains (losses) on short-term investments, which are included in other accumulated comprehensive income (loss) in the consolidated statement of redeemable convertible preferred stock and stockholders' equity (net capital deficiency).

SEGMENT INFORMATION

The Company reports segments in accordance with SFAS No. 131, "Disclosures About Segments of an Enterprise and Related Information." SFAS No. 131 requires the use of a management approach in identifying segments of an enterprise. Prior to 1999, the Company consisted of one operating segment: pharmacy and supply systems. A second operating segment was created in the second half of 1999 with the introduction of the Company's e-commerce business. The Company's chief operating decision maker reviews information pertaining to reportable segments only to the gross profit level. There are no significant intersegment sales or transfers. Assets of the operating segments are not segregated and substantially all of the Company's long-lived assets are located in the United States.

For the years ended December 31, 1999 and 2000, substantially all of the Company's total revenues and gross profit were generated by the pharmacy and supply systems operating segment. The Internet-based e-commerce business operating segment generated no revenues in 1999 and less than one percent of consolidated revenues in 2000. The gross loss generated by the segment was less than three percent of consolidated gross profit in both 1999 and 2000, excluding the $2.9 million restructuring charge recorded in 2000.

STOCK SPLIT

All common stock share and per share amounts have been restated to reflect a 1-for-1.6 reverse stock split.

NET INCOME (LOSS) PER SHARE

In accordance with SFAS No. 128, "Earnings Per Share," basic net income (loss) per share is computed by dividing the net income (loss) applicable to common stockholders for the period by the weighted

F-11

OMNICELL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
average number of common shares outstanding during the period, less shares subject to repurchase. Diluted net income (loss) per share is computed by dividing the net income (loss) applicable to common stockholders for the period by the weighted average number of common and common equivalent shares outstanding during the period. Potentially dilutive securities, composed of incremental common shares issuable upon the exercise of stock options and warrants, and common shares issuable on conversion of preferred stock, were excluded from historical diluted loss per share for the years ended December 31, 1999 and 2000 because of their anti-dilutive effect. The total number of shares excluded from the calculations of diluted net loss per share for the years ended December 31, 1999 and 2000, was 8,404,385 and 12,698,536, respectively.

Under the provisions of SAB No. 98, common shares issued for nominal consideration, if any, would be included in the per share calculations as if they were outstanding for all periods presented. No common shares have been issued for nominal consideration.

Pro forma net loss per share has been computed as described above and also gives effect to common equivalent shares arising from redeemable convertible preferred stock, convertible preferred stock and a convertible note that will automatically convert upon the closing of the initial public offering contemplated by this prospectus using the if-converted method from the original date of issuance.

F-12

OMNICELL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
The calculation of historical and pro forma basic and diluted net income (loss) per common share is as follows:

                                                                 YEAR ENDED DECEMBER 31,
                                                              ------------------------------
                                                                1998       1999       2000
                                                              --------   --------   --------
                                                                (In thousands, except per
                                                                      share amounts)
HISTORICAL:
  Basic:
    Net income (loss).......................................  $   643    $(27,742)  $(22,552)
    Preferred stock accretion...............................      (22)         --         --
                                                              -------    --------   --------
    Net income (loss) applicable to common
      stockholders..........................................  $   621    $(27,742)  $(22,552)
                                                              =======    ========   ========
    Weighted average shares of common stock outstanding.....    1,318       1,477      2,267
    Less: Weighted average shares subject to
      repurchase............................................       16           6        563
                                                              -------    --------   --------
    Weighted average shares outstanding--
      basic.................................................    1,302       1,471      1,704
                                                              =======    ========   ========
    Net income (loss) applicable to common shareholders per
      common share..........................................  $  0.48    $ (18.86)  $ (13.23)
                                                              =======    ========   ========

  Diluted:
    Net income (loss).......................................  $   643    $(27,742)  $(22,552)
                                                              =======    ========   ========
    Weighted average shares outstanding--
      basic.................................................    1,302       1,471      1,704
    Weighted average number of common shares issuable upon
      the conversion of dilutive preferred shares...........    8,528          --         --
    Effect of dilutive securities--stock options............    1,183          --         --
                                                              -------    --------   --------
    Diluted weighted average number of shares outstanding...   11,013       1,471      1,704
                                                              =======    ========   ========
    Net income (loss) per common share......................  $  0.06    $ (18.86)  $ (13.23)
                                                              =======    ========   ========

PRO FORMA BASIC AND DILUTED (UNAUDITED):
  Net loss..................................................                        $(22,552)
                                                                                    ========
  Shares used above.........................................                           1,704
  Adjustment to reflect the weighted average offset of the
    assumed conversion of the convertible note payable, the
    redeemable convertible preferred stock and convertible
    preferred stock.........................................                          12,699
                                                                                    --------
  Weighted average shares used in computing pro forma basic
    and diluted net loss per share..........................                          14,403
                                                                                    ========
  Pro forma basic and diluted net loss per common share.....                        $  (1.57)
                                                                                    ========

UNAUDITED PRO FORMA BALANCE SHEET

The unaudited pro forma balance sheet information at December 31, 2000 reflects the assumed conversion of 180,200 shares of redeemable convertible preferred stock, all of the Company's convertible preferred stock and a convertible note upon completion of the offering by this prospectus. The unaudited pro forma balance sheet also reflects the assumed redemption of 540,600 shares of redeemable convertible preferred stock at a price of $14.03 per share.

F-13

OMNICELL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) RECENTLY ISSUED ACCOUNTING STANDARDS

In March 2000, the Emerging Issues Task Force (EITF) published its consensus on Issue No. 00-2, "Accounting for Web Site Development Costs." This EITF sets forth guidance on whether to capitalize or expense certain development costs. The Company has adopted EITF 00-2 effective January 1, 2000 and capitalized $260,000 of Web site development costs in the year ended December 31, 2000. These costs were written off as a part of the 2000 restructuring activities.

In March, 2000, the FASB issued Interpretation No. 44, "Accounting for Certain Transactions Involving Stock Compensation," an interpretation of APB No. 25. The Interpretation is applied prospectively to all new awards, modifications to outstanding awards, and changes in employee status after July 1, 2000, with the exception of the definition of employee and stock option repricings as to which the effective date is December 15, 1998. The adoption of this Interpretation did not have a significant effect on the Company's results of operations or financial condition.

In December 1999, the Securities and Exchange Commission issued SAB No. 101, "Revenue Recognition in Financial Statements." SAB No. 101 provides guidance on the recognition, presentation and disclosure of revenue in financial statements. The Company has adopted SAB No. 101 for all periods presented.

In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities," as amended by SFAS No. 137 and No. 138, which is effective for years beginning after June 15, 2000. SFAS No. 133, as amended, will require the Company to recognize all derivatives on the balance sheet at fair value. Gains or losses resulting from changes in the values of those derivatives would be accounted for depending on the use of the derivative and whether it qualifies for hedge accounting. SFAS No. 133 will be effective for the Company's financial statements for the year ended December 31, 2001. Management believes that this statement will not have a significant effect on the Company's results of operations or financial condition.

NOTE 2. SURE-MED ACQUISITION

Effective January 29, 1999, the Company acquired substantially all of the assets together with certain specified liabilities and obligations of the Sure-Med product line of Baxter Healthcare in a transaction accounted for as a purchase. Baxter Healthcare designed, marketed and sold Sure-Med pharmacy systems to hospitals and other healthcare facilities. The consolidated financial statements include the operating results of Sure-Med from the date of acquisition.

The original purchase price of $15.1 million consisted of a cash payment of $2.0 million to Baxter Healthcare, a promissory note of $12.7 million, and $400,000 of related acquisition expenses. In December 1999, the purchase price was adjusted downward by $6.4 million through a $1.6 million cash payment from Baxter Healthcare to the Company and a $4.8 million reduction in the note payable to Baxter Healthcare. The Company is obligated to repay the principal amount of the promissory note in eight quarterly installments, commencing on March 31, 2002, or earlier upon the closing of an initial public offering. The promissory note bears interest at a rate of 8.0%. Interest is payable quarterly, commencing on March 31, 1999. Upon the sale or issuance by Omnicell of any shares of capital stock, excluding sales or issuances of common stock or options under the Company's stock option and stock purchase plans and private placements in any single year not exceeding 10.0% of its outstanding paid-in capital, the Company is required to prepay the outstanding principal amount of the promissory note

F-14

OMNICELL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 2. SURE-MED ACQUISITION (CONTINUED)
plus accrued interest to the extent of 50.0% of the net proceeds of such equity issuance. There is an exception that allows up to $30 million of financing raised during 2000 to be excluded as long as 50.0% of the proceeds shall be applied to redeeming the Series J preferred stock. See Note 14.

The purchase price consideration was allocated to the acquired assets and assumed liabilities based on fair values as follows (in thousands):

Inventories.................................................  $16,098
Other assets, primarily residual value of leased systems....    1,820
Identifiable intangible assets..............................      366
Liabilities.................................................   (9,618)
                                                              -------
Total purchase consideration................................  $ 8,666
                                                              =======

Pro forma results of operations, as if the transaction had occurred on January 1, 1999, are not presented as they would not be materially different than actual 1999 results. Pro forma results of operations, as if the transaction had occurred on January 1, 1998, are as follows (in thousands):

Revenue.....................................................  $ 65,590
Net loss....................................................  $(19,867)
Net loss per share..........................................  $ (15.26)

In the fourth quarter of 1999, after sales of the Sure-Med pharmacy systems were determined to be substantially below original forecasts, the Company recorded a $9.7 million charge to cost of revenues to reflect a writedown of Sure-Med product line inventory to estimated net realizable value. In 1999, the Company also recorded $785,000 of integration expenses associated with the integration of the Company and Sure-Med engineering efforts, product lines, and marketing efforts.

The Sure-Med acquisition was entered into with the expectation that significant sales would be generated in 1999 and 2000. The actual sales for 1999 and 2000 were substantially below the levels anticipated in the Company's forecasts. Product integration issues hindered the Company's sales force in its attempt to sell the Sure-Med pharmacy systems. As a result, during the third quarter of fiscal 2000, the Company significantly reduced its Sure-Med pharmacy systems sales and marketing efforts. It also performed a SFAS 121 impairment analysis on the remaining Sure-Med intangible assets and concluded that, based on estimated negative future cash flows, the $182,000 net balance of its intangible assets was impaired and was therefore written-off to expense.

NOTE 3. LEASING ARRANGEMENTS

In addition to direct sales, the Company leases its systems to customers under sales-type leases, which generally have terms of five years. The Company has entered into agreements with four finance companies whereby, concurrent with the customer lease transaction, lease receivables are sold to the finance companies. Under these agreements, the Company is subject to recourse only in the event of the Company's breach or nonperformance.

F-15

OMNICELL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 3. LEASING ARRANGEMENTS (CONTINUED)

In 1999 and 2000, net sales-type lease receivables sold under these agreements totaled approximately $22.3 million and $20.7 million, respectively. The Company records revenue at an amount equal to the cash to be received from the leasing company, which is equivalent to the net present value of the lease streams, utilizing the implicit interest rate under its funding agreements. At December 31, 1999 and 2000, accounts receivable included approximately $2.7 million and $1.5 million, respectively, due from the finance companies for lease receivables sold.

NOTE 4. SHORT-TERM INVESTMENTS

Short-term investments consist of the following (in thousands):

                                             AMORTIZED   UNREALIZED GAIN
                                               COST          (LOSS)        FAIR VALUE
                                             ---------   ---------------   ----------
December 31, 1999:
  Certificates of deposits.................   $2,000        $      --        $2,000
  U.S. commercial debt securities..........    2,150                2         2,152
                                              ------        ---------        ------
                                              $4,150        $       2        $4,152
                                              ======        =========        ======

December 31, 2000:
  Certificates of deposits.................   $2,284        $       2        $2,286
                                              ======        =========        ======

All short-term investments at December 31, 2000 mature in 2001.

NOTE 5. INVENTORIES

Inventories consist of the following (in thousands):

                                                                DECEMBER 31,
                                                             -------------------
                                                               1999       2000
                                                             --------   --------
Raw materials..............................................   $3,650    $ 4,540
Work-in-process............................................      565        340
Finished goods.............................................    5,109      5,534
                                                              ------    -------
  Total....................................................   $9,324    $10,414
                                                              ======    =======

F-16

OMNICELL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 6. PROPERTY AND EQUIPMENT

Property and equipment consist of the following (in thousands):

                                                                 DECEMBER 31,
                                                              -------------------
                                                                1999       2000
                                                              --------   --------
Equipment...................................................  $ 6,642    $ 9,043
Furniture and fixtures......................................      930      1,323
Leasehold improvements......................................    1,120      1,629
Purchased software..........................................    3,592        526
                                                              -------    -------
                                                               12,284     12,521
Accumulated depreciation and amortization...................   (5,043)    (7,608)
                                                              -------    -------
Property and equipment, net.................................  $ 7,241    $ 4,913
                                                              =======    =======

No equipment was leased under capital leases at December 31, 1999 and 2000.

In August 1999, the Company completed a software license transaction with Commerce One, Inc. Purchased software consists primarily of this software licensed on a perpetual basis to enable customer use of the Company's Internet-based procurement application. Maintenance and support will be provided by the licensor at contractual annual rates. The Company will share with the licensor a portion of the transaction fees collected, if any, from product manufacturers when purchases are made from healthcare suppliers on the Company's Internet-based procurement application.

In the third quarter of 2000, the Company wrote-off the $2.0 million remaining balance of the MarketSite software license as part of the restructuring activities.

NOTE 7. OTHER ASSETS

In 1997, the Company provided a loan of $500,000 to a strategic partner that was in a development stage. The note receivable bore interest at 8.5% and was due in September 2000. The note receivable was automatically convertible to equity of the corporation upon the closing of that entity's next financing of at least $1,000,000 or upon default of payment, based on the unpaid principal balance and accrued interest divided by the fair value price per share. In December 1998, upon the closing of a financing by the corporation, the note was converted into 13,052 shares of its Series D convertible preferred stock. At December 31, 1999, the Company determined that there was a permanent decline in the fair value of this asset and recorded a valuation allowance of $550,000 against the entire investment, including accrued interest.

F-17

OMNICELL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 8. ACCRUED LIABILITIES

Accrued liabilities consist of the following (in thousands):

                                                                 DECEMBER 31,
                                                              -------------------
                                                                1999       2000
                                                              --------   --------
Accrued compensation and related benefits...................  $ 2,224    $ 2,139
Accrued license fees........................................    2,523        119
Accrued upgrade costs.......................................    3,960      5,995
Other accrued liabilities...................................    8,592      7,637
Accrued restructuring costs.................................       --        175
                                                              -------    -------
                                                              $17,299    $16,065
                                                              =======    =======

NOTE 9. RESTRUCTURING

The Company recorded restructuring costs of $2.9 million in the third quarter of fiscal 2000 in connection with a strategic change in its e-commerce business to concentrate primarily on its Internet-based procurement application. This resulted in a workforce reduction of approximately 14 positions. The primary components of the restructuring charge were $2.0 million related to a purchased software license, $260,000 related to capitalized software engineering costs, and $517,000 of employee severance costs. The total cash outlays related to these charges were $404,000 in 2000. As of December 31, 2000, activities related to this restructuring were completed.

The following table sets forth the restructuring reserve:

                                                               SEVERANCE
                                                    ASSETS    AND BENEFITS    OTHER      TOTAL
                                                   --------   ------------   --------   --------
                                                                  (in thousands)
Restructuring expense............................  $ 2,290       $ 517         $101     $ 2,908

  Writedown of assets............................   (2,290)         --          (39)     (2,329)
  Cash expenditures..............................       --        (342)         (62)       (404)
                                                   -------       -----         ----     -------
Balance at December 31, 2000.....................  $    --       $ 175         $ --     $   175
                                                   =======       =====         ====     =======

NOTE 10. DEFERRED GROSS PROFIT

Deferred gross profit consists of the following (in thousands):

                                                             1999      2000
                                                            -------   -------
Sales of pharmacy and supply systems, which have been
  accepted but not yet installed..........................  $35,389   $39,672
Cost of sales, excluding installation costs...............   (7,222)   (9,774)
                                                            -------   -------
                                                            $28,167   $29,898
                                                            =======   =======

NOTE 11. LONG-TERM NOTES PAYABLE

In October 1999, the Company executed a convertible promissory note with a private party for $350,000 with interest accruing at 6.02%. No interest payments are due until October 1, 2004, the maturity date

F-18

OMNICELL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 11. LONG-TERM NOTES PAYABLE (CONTINUED)
of the note. If the Company closes an initial public offering of its common stock, the note and accrued interest shall automatically convert to an equivalent number of shares of the Company's common stock at the initial public offering price per share.

In connection with one of the Company's facilities leases, the landlord has advanced $200,000 to the Company for leasehold improvements. The Company has agreed to repay this advance in monthly installments of $4,249. This borrowing arrangement commenced on July 1, 1999, ends June 30, 2004, and bears interest at 10% per annum.

Scheduled debt repayments under the convertible promissory note, facilities lease advance and Baxter promissory note (Note 2) are as follows:

2001........................................................  $   37
2002........................................................   3,998
2003........................................................   4,003
2004........................................................     375
2005 and thereafter.........................................      --
                                                              ------
                                                               8,413
Less: current portion.......................................      37
                                                              ------
                                                              $8,376
                                                              ======

NOTE 12. CREDIT FACILITY

In January 2000, the Company entered into a credit facility with a bank. This facility, as amended in August 2000, provides the Company with advances of up to 75% of eligible receivables, as defined, up to $10.0 million, and expires on April 27, 2001. This line of credit bears interest at the prime rate plus 2.25%. The Company has pledged substantially all of its' assets as collateral for this line of credit. The credit facility requires the Company to comply with a tangible net deficit financial covenant and other specified non-financial covenants. At December 31, 2000, the Company had no borrowings under this credit facility, was eligible to borrow approximately $4.4 million, and was in compliance with the covenants.

Under the terms of the credit facility, on December 31, 2000 the Company issued to the bank a warrant to purchase 26,351 shares of its common stock at $9.50 per share with conversion terms on an initial public offering similar to the conversion terms for the Series K preferred stock (Note 15). The warrant expires on December 31, 2005. The warrant will convert to a warrant to purchase 31,249 shares of common stock at $8.00 per share based on the Series K conversion adjustment and the 1-for-1.6 reverse stock split. This warrant has been valued at $78,000 using the Black-Scholes valuation method. This amount is included in other assets and will be amortized through the credit line's expiration date.

NOTE 13. LEASE COMMITMENTS

The Company leases its Palo Alto, California and Waukegan, Illinois offices and manufacturing facilities under noncancelable operating leases. The leases expire beginning January 2002 through June 2006. The Company has an option to renew the Palo Alto manufacturing facility lease (expires June 2003) and Waukegan facility lease (expires June 2006) for an additional five years. Rent expense for all

F-19

OMNICELL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 13. LEASE COMMITMENTS (CONTINUED)
operating leases was $728,000 (net of sublease income of $64,000), $1,629,000 and $2,120,000 (net of sublease income of $286,000) for the years ended December 31, 1998, 1999 and 2000, respectively.

At December 31, 2000, future minimum annual operating lease payments, net of aggregate future minimum receipts from subleases, were as follows (in thousands):

2001........................................................   $1,278
2002........................................................    1,451
2003........................................................    1,960
2004........................................................    1,600
2005........................................................      299
Thereafter..................................................      152
                                                               ------
  Total minimum lease payments..............................   $6,740
                                                               ======

NOTE 14. REDEEMABLE CONVERTIBLE PREFERRED STOCK

In June 1996, the Company issued 1,802,000 shares of nonvoting Series I redeemable convertible preferred stock to Sun Healthcare for $25,227,000 (net of issuance costs of approximately $60,000) and authorized an equal number of voting shares of Series J redeemable convertible preferred stock. The Series I redeemable convertible preferred stock was converted into Series J redeemable convertible preferred stock on a one-for-one basis in 1996.

At any time after December 31, 1998, the holders of the Series J redeemable convertible preferred stock were entitled to require the Company to redeem for cash the outstanding shares over 30 months at a per share price equal to the original issue price (subject to adjustment for events of dilution) plus interest at 9.5% per annum (accruing beginning on March 8, 1999).

In January 1999, Sun Healthcare exercised its right to redeem its 1,802,000 shares of Series J redeemable convertible preferred stock in ten equal quarterly installments beginning in March 1999. Through December 31, 2000, the Company had redeemed 1,081,200 shares of Series J redeemable convertible preferred stock from Sun Healthcare for $15.2 million plus interest of $2.7 million. Cash of $11.6 million was used to satisfy this redemption, with the balance of $6.3 million paid by offsetting Sun Healthcare's outstanding accounts receivable balances. All payments have been made except the two quarterly redemption payments of $2.5 million each that were due in September 2000 and December 2000, which the Company was not obligated to make because the Company did not meet certain balance sheet tests under California law.

Sun Healthcare has an accounts receivable balance of approximately $260,000 at December 31, 2000. In the past the two parties have offset the Omnicell accounts receivable balance with the redemption payments. At year end, the two parties had not finalized any offsetting agreement.

F-20

OMNICELL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 14. REDEEMABLE CONVERTIBLE PREFERRED STOCK (CONTINUED)

Significant terms of the Series J redeemable convertible preferred stock are as follows:

- Conversion of the Series J preferred stock is automatic upon completion of an initial public offering. In addition to adjustments for events of dilution, if the Company completes an initial public offering at a price greater than $11.78 per share and less than $13.47 per share, the conversion price of the Series J preferred stock will be adjusted to $17.72 per share from the original purchase price of $22.4523 (as converted per the 1-for-1.6 reverse stock split). If the offering price is less than $11.78 per share, the conversion price of the Series J preferred stock will be adjusted to $16.8370 per share.

- Series J preferred stock has voting rights equivalent to the number of shares of common stock into which it is convertible.

- Dividends may be declared at the discretion of the Board of Directors and are noncumulative. To the extent declared, dividends of $1.12 per share, per annum for Series J preferred stock must be paid prior to any dividends on any other preferred stock or common stock. No such dividends have been declared or paid.

- In the event of liquidation, dissolution, or winding up of the Company, prior to any other preferred stockholders, Series J stockholders shall receive $14.03 per share plus all declared but unpaid dividends. Upon completion of this distribution, the holders of the common stock will receive a pro rata distribution of any remaining assets of the Company. At December 31, 2000, the aggregate liquidation preference for redeemable convertible preferred stock was $10,113,000.

NOTE 15. STOCKHOLDERS' EQUITY

CONVERTIBLE PREFERRED STOCK

During the first quarter of 2000, the Company designated and issued 3,010,528 shares of Series K convertible preferred stock at a price of $9.50 per share subject to adjustment for events of dilution as described below. Net proceeds were approximately $28.5 million.

Conversion of the Series K convertible preferred stock is automatic upon completion of an initial public offering in excess of $25 million at an offering price of not less than $8.00 per share. If the Company completes an initial public offering at a price less than $33.78 per share, the conversion price of the Series K convertible preferred stock will adjust to 45% of the initial public offering price, but in no event will it adjust to less than $8.00 per share. This means that if this offering is completed at a price less than $17.78 per share, the resulting conversion price of the Series K convertible preferred stock will be $8.00 per share, and a total of 3,575,000 shares of common stock will be issued on conversion of such preferred stock exclusive of adjustments for events of dilution.

F-21

OMNICELL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 15. STOCKHOLDERS' EQUITY (CONTINUED)
At December 31, 1999 and 2000, convertible preferred stock consisted of the following (in thousands, net of issuance costs):

                                           DECEMBER 31, 1999        DECEMBER 31, 2000
                              SHARES     ----------------------   ----------------------
                            DESIGNATED   OUTSTANDING    AMOUNT    OUTSTANDING    AMOUNT
                            ----------   -----------   --------   -----------   --------
Series A..................       480           480     $   120          480     $   120
Series B..................       321           321         120          321         120
Series C..................     1,700         1,700       1,014        1,700       1,014
Series D..................     1,328         1,310       1,412        1,310       1,412
Series E..................     1,966         1,965       6,458        1,965       6,458
Series F..................     2,000         1,948      11,527        1,948      11,527
Series G..................     1,000            --          --           --          --
Series H..................     4,000         3,804      13,203        3,804      13,203
Series K..................     3,158            --          --        3,011      28,538
                              ------        ------     -------       ------     -------
  Total...................    15,953        11,528     $33,854       14,539     $62,392
                              ======        ======     =======       ======     =======

Significant terms of the convertible preferred stock are as follows:

- Each share of Series A, B, C, D, E, G, H and K preferred stock is convertible into one share of common stock, and each share of Series F preferred stock is convertible into 1.107 shares of common stock (subject to adjustment for events of dilution). Each share will automatically convert upon an underwritten public offering of common stock meeting specified criteria.

- Each share of convertible preferred stock has voting rights equivalent to the number of shares of common stock into which it is convertible. The holders of Series E preferred stock, voting together as a class, are entitled to elect one director of the Company. The holders of Series H preferred stock, voting together as a class, are also entitled to elect one director of the Company. The holders of Series K preferred stock, voting together as a class, are also entitled to elect one director of the Company.

- Dividends may be declared at the discretion of the Board of Directors and are noncumulative. To the extent declared, dividends of $0.02, $0.03, $0.048, $0.085, $0.265, $0.49, $0.49, $0.29, and $0.76 per share, per annum for Series A, B, C, D, E, F, G, H and K preferred stock, respectively, must be paid prior to any dividends on common stock. No such dividends have been declared or paid.

- In the event of liquidation, dissolution, or winding up of the Company, Series A, B, C, D, E, F, G, H and K stockholders shall receive, after required distributions to the redeemable convertible preferred stockholders, $0.25, $0.375, $0.60, $1.085, $3.30, $6.15, $6.15 and $3.68 and $9.50 per share, respectively, plus all declared but unpaid dividends. Upon completion of this distribution, the holders of the common stock will receive a pro rata distribution of any remaining assets of the Company. At December 31, 2000, the aggregate liquidation preference for preferred stock was $63.7 million.

CONVERTIBLE PREFERRED STOCK WARRANTS

In connection with a capital lease financing in 1994, the Company issued a warrant to purchase 18,434 shares of Series D preferred stock at an exercise price of $1.09 per share (or 11,521 shares of common

F-22

OMNICELL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 15. STOCKHOLDERS' EQUITY (CONTINUED)
stock as converted per the 1-for-1.6 reverse stock split at a price of $1.74 per share). The warrant expires three years from the effective date of an initial public offering of the Company's common stock. The value of the warrant was immaterial.

In connection with capital lease financings in 1995, the Company issued warrants to purchase 8,130, 11,382 and 67,934 shares of Series F, G and H preferred stock at $6.15, $6.15 and $3.68 per share, respectively (or 5,081, 7,113 and 42,121 shares of common stock as converted per the 1-for-1.6 reverse stock split at prices of $9.84, $9.84 and $5.89 per share, respectively). The Series F and H warrants expire three years from the effective date of an initial public offering of the Company's common stock. The Series G warrant expires five years from the effective date of an initial public offering of the Company's common stock. The estimated value of these warrants remaining after amortization was expensed in June 1996 when the repayments were made for the borrowings.

NOTES RECEIVABLE FROM STOCKHOLDERS

During 2000, the Company provided all its officers the opportunity to exercise their options to purchase common stock, both vested and unvested, by entering into a full-recourse note receivable with Omnicell. As a result, 1,067,663 options were exercised under note receivable arrangements totaling $4.6 million. These notes bear interest at either 6.2% or 6.71%, compounded annually, with payment of both principal and interest due in 3 years.

Stock options that were exercised prior to vesting have been shown as shares subject to repurchase and total 549,742 shares.

COMMON STOCK

At December 31, 2000, 562,696 shares of common stock are subject to repurchase by the Company at the original issuance price. These repurchase rights generally expire ratably over periods of three to five years.

STOCK OPTION PLANS

The Company has reserved 10,410,000 shares of common stock for issuance under its 1992 Incentive Stock Plan, 1995 Management Option Plan, and 1999 Equity Incentive Plan (the Plans). Under the Plans, incentive and nonqualified stock options or rights to purchase common stock may be granted to employees, directors, and consultants. Incentive options, nonqualified options, and stock purchase rights must be priced to be at least 100%, 85% and 85%, respectively, of the common stock's fair value at the date of grant as determined by the Board of Directors. Options shall become exercisable as determined by the Board of Directors. Sales of stock under stock purchase rights are made pursuant to restricted stock purchase agreements.

In September 1999, the Board of Directors adopted the 1999 Equity Incentive Plan (Incentive Plan) for granting of incentive and nonqualified stock options and rights to purchase common stock to employees, directors, and consultants. Under the Incentive Plan, 5,000,000 shares of common stock are authorized for issuance. Further, all unissued stock under the Company's 1992 Incentive Stock Plan and 1995 Management Stock Option Plan are added to the 5,000,000 shares reserved.

F-23

OMNICELL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 15. STOCKHOLDERS' EQUITY (CONTINUED)
A summary of stock option activity under the Plans follows (shares in thousands):

                                                     NUMBER OF   WEIGHTED AVERAGE
                                                      SHARES      EXERCISE PRICE
                                                     ---------   ----------------
Outstanding at December 31, 1997...................    2,194          $ 4.27
  Granted..........................................      454           10.40
  Exercised........................................      (49)           2.75
  Canceled.........................................     (110)           8.67
                                                      ------

Outstanding at December 31, 1998...................    2,489            5.23
  Granted..........................................    1,203           10.40
  Exercised........................................     (205)           1.12
  Canceled.........................................     (142)           9.89
                                                      ------

Outstanding at December 31, 1999...................    3,345            7.10
  Granted..........................................    2,308            5.62
  Exercised........................................   (1,252)           4.11
  Canceled.........................................     (691)          10.06
                                                      ------

Outstanding at December 31, 2000...................    3,710            6.62
                                                      ======

Subsequent to December 31, 2000, the Company issued options to employees to purchase 166,906 shares of its common stock at $5.60 and $6.40 per share.

Additional information regarding options outstanding as of December 31, 2000 is as follows (shares in thousands):

                                                      WEIGHTED
                                                      AVERAGE
                                                     REMAINING        WEIGHTED                       WEIGHTED
                                        NUMBER      CONTRACTUAL       AVERAGE         NUMBER         AVERAGE
RANGE OF EXERCISE PRICE               OUTSTANDING   LIFE (YEARS)   EXERCISE PRICE   EXERCISABLE   EXERCISE PRICE
-----------------------               -----------   ------------   --------------   -----------   --------------
$0.10 - $1.20......................        584           3.66          $ 0.76            584          $ 0.76
$2.00 - $2.00......................        826           9.67            2.00             15            2.00
$3.20 - $3.20......................         54           8.94            3.20             10            3.20
$6.40 - $6.40......................        263           5.29            6.40            260            6.40
$10.40 - $10.40....................      1,983           8.24           10.40            761           10.40
                                         -----                                         -----
                                         3,710           7.64            6.62          1,630            6.18
                                         =====                                         =====

At December 31, 2000, there were 885,416 shares available for future grant under the Plans, and options to purchase 1,630,000 shares were exercisable. Upon the exercise of certain exercisable options, the Company would have the right to repurchase 3,691,290 shares at the original issuance price. Such a right generally expires over three to five years.

In connection with the grant of certain stock options in December 1995, the Company recorded deferred compensation of $62,000 for the difference between the deemed fair value for accounting purposes and the option price. At December 31, 2000, the deferred compensation has been fully amortized. Such deferred compensation is presented as a reduction to stockholders' equity.

F-24

OMNICELL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 15. STOCKHOLDERS' EQUITY (CONTINUED)
As discussed in Note 1, the Company continues to account for its stock-based awards using the intrinsic value method in accordance with APB 25 and its related interpretations. Accordingly, compensation expense has not been recognized in the consolidated financial statements for employee stock arrangements except for the difference between the deemed fair value for accounting purposes and the exercise price of certain stock options as noted above.

For the year ended December 31, 2000, the Company issued options to independent contractors to purchase 24,063 shares of common stock. The value of the options, using the Black-Scholes option pricing model, was not significant and the options were fully vested at issuance.

For the year ended December 31, 2000, the Company recorded compensation expense of approximately $728,000 in connection with granting certain former employees extended periods (beyond the period specified by the Plans) to exercise their stock options upon termination of employment.

SFAS 123 requires the disclosure of pro forma net income (loss) had the Company adopted the fair value method as of the beginning of 1995. Under SFAS 123, the fair value of stock-based awards to employees is calculated through the use of option pricing models, even though such models were developed to estimate the fair value of freely tradable, fully transferable options without vesting restrictions, which significantly differ from the Company's stock option awards. These models also require subjective assumptions, including future stock price volatility and expected time to exercise, which greatly affects the calculated values. The Company's calculations were made using the Black-Scholes option pricing model with risk-free interest rates of approximately 5.42%, 5.38% and 6.30% in 1998, 1999 and 2000, respectively, and no dividends during the expected term. Volatility assumed was 0 in 1998 and 1999 and 1.7028 in 2000. The Company's calculations are based on a multiple-option valuation approach, and forfeitures are recognized as they occur.

For purposes of pro forma disclosures, the estimated fair value of an option is amortized to expense over the option's vesting period. The Company's pro forma information follows (in thousands):

                                                              YEAR ENDED DECEMBER 31,
                                                           ------------------------------
                                                             1998       1999       2000
                                                           --------   --------   --------
Pro forma net income (loss)..............................   $ 106     $(28,550)  $(28,094)
Pro forma net income (loss) per common share:
  Basic..................................................   $0.08     $ (19.41)  $ (10.28)
  Diluted................................................   $0.01     $ (19.41)  $ (10.28)

1997 EMPLOYEE STOCK PURCHASE PLAN

The Company has an Employee Stock Purchase Plan under which employees can purchase shares of the Company's common stock based on a percentage of their compensation, but not greater than 15% of their earnings, up to a maximum of $25,000 of fair value per year. The purchase price per share must be equal to the lower of 85% of the fair value of the common stock at the beginning or end of the six-month offering period. A total of 174,489 shares of common stock are reserved for issuance under the plan. As of December 31, 2000, 340,463 shares had been issued under this plan.

On April 19, 2000 the Board of Directors amended the 1997 Employee Stock Purchase Plan (Purchase Plan) to become effective simultaneously with the effectiveness of the Company's initial public offering. As amended, eligible employees may purchase stock at 85% of the lower of closing prices for the

F-25

OMNICELL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 15. STOCKHOLDERS' EQUITY (CONTINUED)
common stock at the beginning of a 24-month offering period or the end of each six-month purchase period.

At December 31, 2000, the Company has reserved shares of common stock for issuance as follows (in thousands):

Conversion of outstanding convertible preferred stock.......  11,716
Issuance under the Plans....................................   4,624
Employee stock purchase plan................................     174
Convertible preferred stock warrants........................      70
Warrants to bank............................................      31
                                                              ------
Total.......................................................  16,615
                                                              ======

401(K) PLAN

During 1994, the Company established a 401(k) tax-deferred savings plan, whereby eligible employees may contribute a percentage of their eligible compensation but not greater than 15.0% of their earnings up to the maximum as required by law. Company contributions are discretionary; no such Company contributions have been made since inception of the plan.

NOTE 16. INCOME TAXES

The provision for income taxes consists of the following (in thousands):

                                                                    YEAR ENDED
                                                                   DECEMBER 31,
                                                          ------------------------------
                                                            1998       1999       2000
                                                          --------   --------   --------
Current provision:
  Federal...............................................    $105       $ --       $ --
  State.................................................      50        149        100
  Foreign...............................................      30         --         --
                                                            ----       ----       ----
Total current provision.................................    $185       $149       $100
                                                            ====       ====       ====

The difference between the provision for income taxes and the amount computed by applying the Federal statutory income tax rate (35%) to income before taxes is explained below (in thousands):

                                                        YEAR ENDED DECEMBER 31,
                                                     ------------------------------
                                                       1998       1999       2000
                                                     --------   --------   --------
Tax provision (benefit) at federal statutory
  rate.............................................   $ 290     $(9,658)   $(7,858)
State income tax...................................      50         149        100
Federal alternative minimum taxes..................     105          --         --
Foreign taxes......................................      30          --         --
Unutilized (utilized) net operating losses.........    (290)      9,658      7,858
                                                      -----     -------    -------
Total..............................................   $ 185     $   149    $   100
                                                      =====     =======    =======

F-26

OMNICELL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 16. INCOME TAXES (CONTINUED)
Significant components of the Company's deferred tax assets are as follows at December 31 (in thousands):

                                                            1999       2000
                                                          --------   --------
Deferred tax assets:
  Net operating loss carryforwards......................  $  4,000   $ 13,824
  Tax credit carryforwards..............................     1,257      2,255
  Inventory related items...............................     5,746      6,391
  Reserves and accruals.................................     3,960      2,338
  Deferred revenue......................................    11,769     12,813
  Capitalized research and development costs............       476        473
  Depreciation and amortization.........................       205      1,978
  Other, net............................................     2,298        124
                                                          --------   --------
Total deferred tax assets...............................    29,711     40,196
Valuation allowance.....................................   (29,711)   (40,196)
                                                          --------   --------
Net deferred tax assets.................................  $     --   $     --
                                                          ========   ========

The Company has established a valuation allowance equal to the net deferred tax assets due to the uncertainties regarding the realization of deferred tax assets based on the Company's lack of earnings history.

As of December 31, 2000, the Company had a federal net operating loss carryforward of approximately $38.0 million. The federal net operating loss carryforward will expire beginning in 2009. The Company also had federal and state research and development tax credit carryforwards of approximately $1.4 million and $417,000, respectively. The federal research and development tax credit carryforwards will expire at various dates beginning in year 2007 through 2020, if not utilized. The state research and development tax credit carryforward does not expire.

Utilization of the net operating losses and tax credits may be subject to a substantial annual limitation due to the ownership change limitations provided by the Internal Revenue Code of 1986 and similar state provisions. The annual limitation may result in the expiration of net operating losses and tax credits before utilization.

NOTE 17. RELATED PARTY TRANSACTIONS

The Company recorded revenues of approximately $9.9 million, $5.1 million and $1.9 million in 1998, 1999 and 2000, respectively, from the Series J redeemable convertible preferred stockholder, who was a member of the Company's Board of Directors until August 11, 1999 (of which approximately $302,000 and $263,000 is included in accounts receivable at December 31, 1999 and 2000, respectively). Payment terms are net 45 days.

NOTE 18. RESTATEMENT

After consultation with the Staff of the Securities and Exchange Commission, the Company has adjusted its accounting as to revenue recognition, sales commissions, and accrued liabilities and restated

F-27

OMNICELL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 18. RESTATEMENT (CONTINUED)
its financial statements for each of the two years in the period ended December 31, 1999. The effect of these adjustments is shown below (in thousands):

                                                                  YEARS ENDED
                                                                 DECEMBER 31,
                                                              -------------------
                                                                1998       1999
                                                              --------   --------
Net revenue.................................................   $   --     $  777
Net income (loss)...........................................   $    7     $5,471
Net income (loss) per share (diluted).......................   $   --     $ 3.72

NOTE 19. SUBSEQUENT EVENTS

On March 9, 2001, the Company's Board of Directors took the following actions:

- authorized the filing of a registration statement with the Securities and Exchange Commission to register shares of its common stock in connection with the proposed initial public offering;

- authorized the change of the Company's state of incorporation to Delaware.

- approved an amendment to decrease the number of shares reserved for issuance under the Company's 1992 Equity Incentive Plan and 1995 Management Stock Option Plan by 626,186 shares and to increase the number of shares reserved for issuance under the 1999 Equity Incentive Plan by 626,186 shares.

STOCK OPTION GRANTS

Subsequent to December 31, 2000, the Company approved grants to employees for options to purchase 106,281 shares of its common stock at $5.60 per share in February 2001 and 60,625 shares of its common stock at $6.40 per share in March 2001.

STOCK SPLIT

On , 2001, the Company's stockholders approved a 1-for-1.6 reverse stock split on the Company's common stock. Accordingly, all common stock share and per-share data for all periods presented have been restated to reflect this event.

F-28

REPORT OF INDEPENDENT ACCOUNTANTS

Board of Directors and Stockholders of
Baxter International Inc.

In our opinion, the accompanying balance sheet and the related statements of operations and of cash flows present fairly, in all material respects, the financial position of the Sure-Med Division of Baxter Healthcare Corporation (the Business), an indirect division of Baxter International Inc., at December 31, 1998, and the results of its operations and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America. These financial statements are the responsibility of the Business' management; our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit of these statements in accordance with auditing standards generally accepted in the United States of America, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

As discussed in Note 2, the financial statements as of and for the year ended December 31, 1998 have been restated to correct an error in accounting for revenue recognition and omission of impairment losses.

/s/ PRICEWATERHOUSECOOPERS LLP

July 30, 1999, except as to Notes 2 and 12,
which are as of January 23, 2001

F-29

SURE-MED DIVISION OF BAXTER HEALTHCARE CORPORATION

(AN INDIRECT DIVISION OF BAXTER INTERNATIONAL INC.)

BALANCE SHEET

                                                                  AS OF
                                                               DECEMBER 31,
                                                                   1998
                                                              --------------
                                                              (in thousands)
                                                                (restated)
Current assets
  Accounts receivable, net..................................      $ 1,930
  Inventories, net..........................................        9,474
  Prepaid expenses..........................................        2,046
  Deferred costs associated with installations in process...       25,285
                                                                  -------
    Total current assets....................................       38,735
                                                                  -------
Fixed assets, net...........................................          729
Other assets................................................        1,843
                                                                  -------
    Total assets............................................      $41,307
                                                                  =======
Current liabilities
  Accounts payable..........................................      $ 2,096
  Customer deposits.........................................       10,612
  Other accrued liabilities.................................        1,232
                                                                  -------
    Total current liabilities...............................       13,940
                                                                  -------
Long-term liabilities
  Accrued warranty..........................................          592
                                                                  -------
Investment by parent........................................       26,775
                                                                  -------
    Total liabilities and Investment by Parent..............      $41,307
                                                                  =======

The accompanying notes are an integral part of these financial statements.

F-30

SURE-MED DIVISION OF BAXTER HEALTHCARE CORPORATION

(AN INDIRECT DIVISION OF BAXTER INTERNATIONAL INC.)

STATEMENT OF OPERATIONS

                                                                YEAR ENDED
                                                               DECEMBER 31,
                                                                   1998
                                                              --------------
                                                              (in thousands)
                                                                (restated)
Net revenues................................................      $ 17,378
Costs and expenses
  Cost of goods sold (including related party charges of
    $1,058).................................................        15,790
  Selling and marketing expenses (including related party
    charges of $1,924)......................................         8,741
  General and administrative expenses (including related
    party charges of $1,198)................................         2,245
  Research and development expenses (including related party
    charges of
    $108)...................................................         1,347
  Asset impairment charge...................................         9,765
                                                                  --------
Total costs and expenses....................................        37,888
                                                                  --------
Net loss....................................................      $(20,510)
                                                                  ========

The accompanying notes are an integral part of these financial statements.

F-31

SURE-MED DIVISION OF BAXTER HEALTHCARE CORPORATION

(AN INDIRECT DIVISION OF BAXTER INTERNATIONAL INC.)

STATEMENT OF CASH FLOWS

                                                                YEAR ENDED
                                                               DECEMBER 31,
                                                                   1998
                                                              --------------
                                                              (in thousands)
                                                                (restated)
                                                              --------------
                                                                (brackets
                                                               denote cash
                                                                outflows)
                                                               -----------
Cash flows from operations
  Net loss..................................................     $(20,510)
  Adjustments
    Depreciation and amortization...........................        1,233
    Loss on disposal........................................        9,765
    Changes in balance sheet items
      Accounts receivable, net..............................        3,866
      Inventories...........................................        4,295
      Prepaids..............................................         (504)
      Deferred costs associated with installations in
        process.............................................       (5,683)
      Accounts payable......................................       (1,221)
      Accrued liabilities...................................        4,167
                                                                 --------
  Cash flows from operations................................       (4,592)
                                                                 --------
Cash flows from investing activities
Capitalized software costs..................................       (3,690)
Capital expenditures........................................         (453)
Installed base of equipment leased to customers.............         (659)
                                                                 --------
Cash flows from investing activities........................       (4,802)
                                                                 --------
Cash flows from financing activities
Financing from Parent.......................................        9,394
                                                                 --------
Cash flows from financing activities........................        9,394
                                                                 --------
Change in cash and equivalents..............................           --
                                                                 --------
Cash and equivalents at beginning of year...................           --
                                                                 --------
Cash and equivalents at end of year.........................     $     --
                                                                 ========

The accompanying notes are an integral part of these financial statements.

F-32

SURE-MED DIVISION OF BAXTER HEALTHCARE CORPORATION

(AN INDIRECT DIVISION OF BAXTER INTERNATIONAL INC.)

NOTES TO FINANCIAL STATEMENTS

1. NATURE OF ENTITY AND BASIS OF PRESENTATION

The Sure-Med Division of Baxter Healthcare Corporation (the Business) is a division of Baxter Healthcare Corporation (Baxter), which is in turn a subsidiary of Baxter International Inc. (BII or Parent). The Business is principally engaged in the development, manufacturing, marketing and distribution of an automated distribution system designed to control the dispensing of narcotics, medications and supplies in both hospital and alternate site settings. The Business operates mainly in the domestic market, but does sell some of its products through related parties into certain international markets, principally Canada and Western Europe. Historically, the Business had no separate legal status. The accompanying financial statements have been prepared from the historical accounting records as if the Business had operated as a separate entity.

The financial statements include all of the direct operating expenses of the Business and allocations of certain shared costs from Baxter and BII. Allocations are based on actual usage or other methods that approximate actual usage. Management believes that the allocation methods are reasonable. However, these allocations are not necessarily indicative of the costs and expenses that would have resulted if the Business had been operated as a separate entity. The financial statements also include the push down of the Parent's loss on disposal of the business (Notes 2 and 12).

2. RESTATEMENT OF FINANCIAL RESULTS

In the course of reviewing certain customer contracts and related documents, the Business determined that it had made promises to customers to deliver specified software upgrades at future dates. In several cases, the software promise was determined to be a critical part of the arrangement with the customer. The existence of these software upgrade promises and their significance to the customer arrangements caused the Business to conclude that the software component of its product was more than incidental. Accordingly, the Business has determined that its revenues should be accounted for in accordance with the American Institute of Certified Public Accountant's Statement of Position 97-2 ("SOP 97-2"), "Software Revenue Recognition." The effects of applying SOP 97-2 on the financial statements were to defer revenues previously recorded associated with customer arrangements that included promises to deliver software and those when an installation effort remained as of the balance sheet date. The Business has restated its financial statements as of December 31, 1998 and deferred $8.8 million of revenues previously recognized in 1998. Additionally, the Business needed to adjust opening Investment by Parent for the effects of applying SOP 97-2 to prior periods. The effect on Investment by Parent at December 31, 1997 was a loss of approximately $2.8 million, which relates entirely to the application of SOP 97-2 to the year ended December 31, 1997.

In addition, the Parent determined that an impairment of capitalized software and certain other long-lived assets that arose as a result of the decision to sell the business should be reflected in these financial statements. Therefore, an impairment charge of $9.765 million has been reflected in the restated results of operations of the Business for the year ended December 31, 1998.

F-33

SURE-MED DIVISION OF BAXTER HEALTHCARE CORPORATION

(AN INDIRECT DIVISION OF BAXTER INTERNATIONAL INC.)

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

FINANCIAL STATEMENT PRESENTATION

The preparation of the financial statements in conformity with generally accepted accounting principles (GAAP) requires management to make estimates and assumptions that affect reported amounts and related disclosures. Actual results could differ from those estimates.

REVENUE RECOGNITION

Revenues are derived from the sales of automated distribution systems and subsequent maintenance agreements. The Business markets its systems for sale or for lease. Automated distribution system sales, which are accounted for in accordance with SOP 97-2, are recognized when the system has been shipped, all installation and training services have been provided, no additional performance obligations exist and collection of the resulting receivables are probable. The Business does not provide post-contract customer support. All leasing arrangements are sales-type leases and revenue is recognized when all of the above conditions are met and the non-cancelable lease term has commenced. Revenues from service agreements are recognized ratably over the related contract period.

Upon title transfer to the customer, the cost of inventory is reclassified to deferred costs associated with installations in process. Upon completion of installation and training services and performance of any other obligations, the associated deferred costs are relieved to cost of sales to be matched against the related sales revenue.

CASH

The Business has not maintained any cash accounts and all cash management activities have been performed by Baxter and BII.

ACCOUNTS RECEIVABLE

Accounts receivable are shown net of allowance for doubtful accounts of $278.

INVENTORIES

                                                                  AS OF
                                                               DECEMBER 31,
                                                                   1998
                                                              --------------
                                                              (in thousands)
Raw materials...............................................      $ 2,379
Finished products...........................................        8,673
                                                                  -------
Total gross inventories.....................................       11,052
Inventory reserves..........................................       (1,578)
                                                                  -------
Total net inventories.......................................      $ 9,474
                                                                  =======

Inventories are stated at the lower of cost (first-in, first-out method) or market value. Market value for raw materials is based on replacement costs and, for finished products, on net realizable value.

F-34

SURE-MED DIVISION OF BAXTER HEALTHCARE CORPORATION

(AN INDIRECT DIVISION OF BAXTER INTERNATIONAL INC.)

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) DEFERRED COSTS ASSOCIATED WITH INSTALLATIONS IN PROCESS

Deferred costs associated with installations in process consists of inventory and installation costs related to inventory at customers' locations which is awaiting completion of installation, training or other performance obligations.

FIXED ASSETS

                                                                  AS OF
                                                               DECEMBER 31,
                                                                   1998
                                                              --------------
                                                              (in thousands)
Computer equipment..........................................      $ 1,702
Machinery and equipment.....................................          756
                                                                  -------
Total fixed assets, at cost.................................        2,458
Accumulated depreciation and other write-downs..............       (1,729)
                                                                  -------
Net fixed assets............................................      $   729
                                                                  =======

Fixed assets are carried at cost less accumulated depreciation and other writedowns (Note 2). Expenditures for repairs and maintenance are charged to expense as incurred and were not significant for 1998. Interest costs applicable to the construction of major projects are capitalized when material.

Depreciation is principally calculated on the straight-line method over the estimated useful lives of the related assets, which range from three to five years. Straight-line and accelerated methods of depreciation are used for income tax purposes.

Depreciation expense was $511 in 1998. Capitalized interest was not material in 1998.

LEASE ACCOUNTING

The Business offers lease financing to its customers under the terms of its standard five-year sales-type lease. Leases originated by the business result in the recognition of revenue (present value of lease payments, net of executory costs) and cost of sales (actual cost of automated distribution system), as well as the recording of unearned income (excess of gross receivable plus estimated residual value over the cost of the equipment). Consistent with the Business' revenue recognition policy and concurrent with lease initiation, all leases are automatically included in a pool of leases sold on a non-recourse basis to a third party financial institution under the terms of a rolling lease sale agreement administered by the Parent ("Lease Sale Program"). As a result of this arrangement, all leased receivable balances and associated unearned income amounts are reclassified from their original balance sheet classifications and reflected as net activity within Investment by Parent (Note 11). The Business retains all warranty obligations related to units sold under the Lease Sale Program. The amount of gross leased receivables sold under the Lease Sale Program were $10,870 for the year ended December 31, 1998.

F-35

SURE-MED DIVISION OF BAXTER HEALTHCARE CORPORATION

(AN INDIRECT DIVISION OF BAXTER INTERNATIONAL INC.)

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) WARRANTIES

Estimated future warranty obligations related to products sold or leased are provided by charges to operations in the period of product sale or lease inception. The standard warranty period for products sold or leased is one year and five years, respectively. The cost of warranty obligations is contractually capitated as part of an agreement with a third party.

SEGMENT INFORMATION

BII adopted Statement of Financial Accounting Standards No. 131, "Disclosures about Segments of an Enterprise and Related Information" (SFAS No. 131) in 1998. This statement establishes standards for the reporting of information about operating segments in annual and interim financial statements. Operating segments are defined as components of an enterprise for which separate financial information is available that is evaluated regularly by the chief operating decision maker(s) in deciding how to allocate resources and in assessing performance. SFAS No. 131 also requires disclosures about products and services, geographic areas and major customers. The adoption of SFAS No. 131 did not affect results of operations, financial position or the disclosure of segment information. Refer to Note 10 for the Business' segment information.

4. TRANSACTIONS WITH RELATED PARTIES

A portion of the operations of the Business involves transactions with subsidiaries and divisions of BII.

A division of Baxter provides accounting, administrative and other services related to the business' sales-type leases with its customers. The Business is charged for such services at a rate which management believes approximates the market rate. As discussed in Note 3, Baxter sells substantially all of the Business' lease receivables to an independent third party.

In addition, the corporate headquarters of BII and the divisional headquarters of Baxter provide to the Business certain other accounting, tax, and administrative services. All significant expenses relating to such services are included in the financial statements of the Business.

The financial statements of the Business include expenses of $4,288 in 1998 for services provided by related parties.

5. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT

CONCENTRATIONS OF CREDIT RISK

In the normal course of business, the company provides credit to customers in the health-care industry, performs credit evaluations of these customers and maintains reserves for potential credit losses which, when realized, have been within the range of management's allowance for doubtful accounts.

The carrying values of financial instruments approximate their fair values.

F-36

SURE-MED DIVISION OF BAXTER HEALTHCARE CORPORATION

(AN INDIRECT DIVISION OF BAXTER INTERNATIONAL INC.)

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

6. CUSTOMER DEPOSITS AND OTHER ACCRUED LIABILITIES

                                                                  AS OF
                                                               DECEMBER 31,
                                                                   1998
                                                              --------------
                                                              (in thousands)
Customer deposits...........................................      $10,612
                                                                  =======
Other current accrued liabilities:
  Employee compensation and withholdings....................          647
  Other.....................................................          585
                                                                  -------
Total.......................................................      $ 1,232
                                                                  =======

Customer deposits represents cash received from customers related to sales for which revenue is not yet eligible for recognition under the Business' revenue recognition policy.

7. STOCK-BASED COMPENSATION PLANS

Certain employees of the Business participate in stock-based compensation plans sponsored by BII. Such plans principally include fixed stock option plans and an employee stock purchase plan. BII applies APB Opinion No. 25, "Accounting for Stock Issued to Employees," and related interpretations in accounting for its plans. Accordingly, no compensation cost has been recognized by BII for its fixed stock option plans and its stock purchase plan. These plans are the sole responsibility of BII and, accordingly, no information is presented herein.

8. RETIREMENT AND OTHER BENEFIT PROGRAMS

Substantially all of the employees of the Business are eligible to participate in BII's contributory defined contribution plan, non-contributory defined benefit pension plans and certain other postretirement benefit plans. These plans are the sole responsibility of BII and, accordingly, no information is presented herein related to those plans. Total expense recognized by the Business relating to these plans was $329 in 1998.

9. INCOME TAXES

The results of the Business' operations are included in the consolidated tax return of BII. These financial statements do not reflect income tax benefit for 1998 or recent prior years in which losses were incurred. As instructed by its parent, the Business calculates its taxes as if it were filing its own return. On a separate return basis, the losses incurred in recent years through December 31, 1998 would have given rise to net operating loss carryforwards and related deferred tax assets. Due to the uncertainty of ultimate utilization of those carryforwards on a separate-return basis, the Business would have recorded valuation allowances for the full amounts of those deferred tax assets. The tax effects of other temporary differences that give rise to deferred tax assets and liabilities at December 31, 1998 were not material.

The Business, on a stand-alone basis, would have a net operating loss carryforward for federal income tax purposes of approximately $48,000 at December 31, 1998. However, since the Business has been included in the consolidated tax filings of BII, its prior losses have been utilized in the BII consolidated

F-37

SURE-MED DIVISION OF BAXTER HEALTHCARE CORPORATION

(AN INDIRECT DIVISION OF BAXTER INTERNATIONAL INC.)

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

9. INCOME TAXES (CONTINUED) tax returns. As such, should the Business actually file separate tax returns in the future, no net operating losses would be available.

10. SEGMENT INFORMATION

The Business operates in one segment, the pharmacy automation market, the activities and products of which are described in Note 1.

GEOGRAPHIC INFORMATION

The following geographic area data include net sales based on product shipment destination.

                                                                1998
                                                              --------
Net Sales
United States...............................................  $16,276
Other countries.............................................    1,102
                                                              -------
Consolidated totals.........................................  $17,378
                                                              =======

11. INVESTMENT BY PARENT

Investment by Parent represents Baxter's ownership interest in the recorded net assets of the Business. All cash transactions with Baxter and BII are reflected in this amount. In addition, all intercompany expenses charged from the Parent are not expected to be settled and, therefore, while recorded as expenses in the appropriate period, have been considered additional contributions from the Parent. The Business has not been charged interest on any investments made by the Parent other than those amounts capitalized into fixed assets as disclosed in Note 2. A summary of the activity is as follows:

Balance at December 31, 1997................................  $ 38,485
Net loss....................................................   (20,510)
Leased receivable transfers, net of unearned income (Note
  3)........................................................    (8,910)
Other net intercompany activity.............................    17,710
                                                              --------
Balance at December 31, 1998................................  $ 26,775
                                                              ========

12. SUBSEQUENT EVENTS

In January 1999, Baxter finalized the terms of its sale of certain assets of the Business to Omnicell Technologies (Omnicell) for proceeds that were finalized in December of 1999 of $2.1 million in cash and Omnicell's note payable of approximately $8.0 million.

F-38

SHARES

OMNICELL, INC.

COMMON STOCK

[LOGO]


PROSPECTUS

Until , 2001, all dealers that effect transactions in these securities, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the dealers' obligation to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.

U.S. BANCORP PIPER JAFFRAY

CIBC WORLD MARKETS

SG COWEN

, 2001


PART II
INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

The following table sets forth all expenses, other than the underwriting discounts and commissions, payable by the registrant in connection with the sale of the common stock being registered. All the amounts shown are estimates except for the SEC registration fee and the NASD filing fee.

SEC registration fee........................................  $   17,250
Nasdaq National Market listing fee..........................      17,500
NASD filing fee.............................................       7,400
Printing and engraving expenses.............................     250,000
Legal fees and expenses.....................................     600,000
Accounting fees and expenses................................     550,000
Transfer agent and registrar fees...........................      50,000
Miscellaneous...............................................     107,850
                                                              ----------
Total.......................................................  $1,600,000
                                                              ==========

We intend to pay all expenses of registration, issuance and distribution.

ITEM 14. INDEMNIFICATION OF OFFICERS AND DIRECTORS.

Section 145 of the Delaware General Corporation Law (the DGCL) authorizes a court to award, or a corporation's board of directors to grant indemnity to directors and officers in terms sufficiently broad to permit such indemnification under certain circumstances for liabilities, including reimbursement for expenses incurred, arising under the Securities Act.

As permitted by the DGCL, our Certificate of Incorporation, which will become effective prior to the closing of this offering, includes a provision that eliminates the personal liability of our directors for monetary damages for breach of fiduciary duty as a director, except for liability (1) for any breach of the director's duty of loyalty to us or our stockholders; (2) for acts or omissions not in good faith or that involve intentional misconduct or knowing violation of law; (3) under Section 174 of the DGCL regarding unlawful dividends and stock purchases; or (4) for any transaction from which the director derived an improper personal benefit.

As permitted by the DGCL, our Certificate of Incorporation and/or our Bylaws, which will become effective prior to the closing of this offering, provide that (1) we are required to indemnify our directors and officers to the fullest extent permitted by the DGCL, subject to certain very limited exceptions; (2) we are permitted to indemnify our other employees to the extent that we indemnify our officers and directors, unless otherwise required by law, our Certificate of Incorporation, our Bylaws or agreements; (3) we are required to advance expenses, as incurred, to our directors and officers in connection with a legal proceeding to the fullest extent permitted by the DGCL, subject to certain very limited exceptions; and (4) the rights conferred in our Bylaws are not exclusive.

Prior to the closing of this offering, we intend to enter into indemnity agreements with each of our current directors and officers to give such directors and officers additional contractual assurances regarding the scope of the indemnification set forth in our Certificate of Incorporation and our Bylaws and to provide additional procedural protections. At present, there is no pending litigation or proceeding involving a director, officer or employee of Omnicell.com regarding which indemnification is sought, nor are we aware or any threatened litigation that may result in claims for indemnification.

With approval by the board of directors, we expect to obtain directors' and officers' liability insurance. Reference is made to the underwriting agreement contained in Exhibit 1.1 hereto, which contains provisions indemnifying our officers and directors against certain liabilities.

II-1


ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.

(a) The Company has issued or sold the following securities within the past three years:

- an aggregate of 3,010,528 shares of Series K convertible preferred stock at $9.50 per share in January and March 2000 to 25 accredited investors, including 105,264 shares sold to Commerce One.

- an aggregate of 26,315 shares of common stock issuable upon exercise of a warrant issued to a financial institution.

(b) As of December 31, 2000, the Company has issued:

- an aggregate of 1,651,198 shares of common stock upon exercise of options under the 1992 Equity Incentive Plan;

- an aggregate of 1,122,839 shares of common stock upon exercise of options under the 1995 Management Stock Option Plan;

- an aggregate of 544,741 shares of common stock upon exercise of options under the 1997 Employee Stock Purchase Plan; and

- an aggregate of 238,308 shares of common stock under the 1999 Equity Incentive Plan.

(c) There were no underwritten offerings employed in connection with the transaction set forth in Item 15(a).

The issuances described in Item 15(a) were deemed to be exempt from registration under the Securities Act in reliance upon Section 4(2) thereof as transactions by an issuer not involving any public offering. The issuances described in Item 15(b) were deemed to be exempt from registration under the Securities Act in reliance upon Rule 701 promulgated thereunder in that they were offered and sold either pursuant to written compensatory benefit plans or pursuant to a written contract relating to compensation, as provided by Rule 701. In addition, such issuances were deemed to be exempt from registration under Section 4(2) of the Securities Act as transactions by an issuer not involving any public offering. The recipients of securities in each such transaction represented their intentions to acquire the securities for investment only and not with a view to or for sale in connection with any distribution thereof and appropriate legends where affixed to the securities issued in such transactions. All recipients had adequate access, through their relationships with the Company, to information about the Registrant.

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

(a) Exhibits.

      EXHIBIT
      NUMBER                             DESCRIPTION OF DOCUMENT
      -------                            -----------------------
1.1*                   Form of Underwriting Agreement.
3.1                    Amended and Restated Articles of Incorporation of the
                       registrant.
3.2                    Certificate of Amendment of Amended and Restated Articles of
                       Incorporation of the registrant.
3.3                    Certificate of Incorporation of the registrant to be
                       effective upon reincorporation in Delaware.
3.4                    Amended and Restated Certificate of Incorporation of the
                       registrant to be filed following the closing of the
                       offering.
3.5                    Bylaws of the registrant.
3.6                    Bylaws of the registrant to be effective upon
                       reincorporation in Delaware.
4.1*                   Form of Common Stock Certificate.

II-2


       EXHIBIT
       NUMBER                             DESCRIPTION OF DOCUMENT
       -------                            -----------------------
 4.2                    Amended and Restated Investor Rights Agreement, dated
                        January 20, 2000.
 4.3                    Warrant Agreement, dated September 30, 1993, between the
                        registrant and Comdisco, Inc.
 4.4                    Warrant Agreement, dated January 23, 1995, between the
                        registrant and Comdisco, Inc.
 4.5                    Warrant Agreement, dated July 7, 1995, between the
                        registrant and Comdisco, Inc.
 4.6                    Warrant Agreement, dated September 29, 1995, between the
                        registrant and Comdisco, Inc.
 4.7                    Convertible Promissory Note, dated October 1, 1999.
 5.1*                   Opinion of Cooley Godward LLP, counsel to the registrant.
10.1                    Real Property Lease, dated September 24, 1999, between W.F.
                        Baton & Co., Inc. and Omnicell.com, as amended.
10.2                    Real Property Lease, effective July 1, 1999, between the
                        registrant and Amli Commercial Properties Limited
                        Partnership.
10.3                    Real Property Lease, dated April 3, 1996, between O'Donnell
                        Palo Alto Associates and the registrant.
10.4                    Real Property Lease, dated March 25, 1994, between W.F.
                        Batton & Co., Inc. and the registrant, as amended.
10.5                    Master Assignment Agreement and Master Sales Agreement,
                        dated September 29, 1994, between Americorp Financial, Inc.
                        and the registrant, as amended.
10.6                    Group Purchasing Agreement, effective June 1, 1997, between
                        Premier Purchasing Partners, L.P., and the registrant.
10.7                    Letter Agreement, dated June 27, 1997, between the
                        University Health System Consortium Services Corporation and
                        the registrant.
10.8                    Federal Supply Schedule Contract No. V797P-3406k, effective
                        August 7, 1997, between the Department of Veterans Affairs
                        and the registrant.
10.9                    Asset Purchase Agreement dated December 18, 1998, between
                        the registrant and Baxter Healthcare Corporation, as
                        amended.
10.10                   Loan and Security Agreement and Standby Facility Agreement,
                        dated January 27, 2000, between Silicon Valley Bank and the
                        registrant.
10.11**                 Vertical Hosted License Agreement, dated August 21, 1999,
                        between the registrant and Commerce One, Inc., as amended.
10.12                   Form of Director and Officer Indemnification Agreement.
10.13                   1992 Equity Incentive Plan, as amended.
10.14                   1995 Management Stock Option Plan.
10.15                   1997 Employee Stock Purchase Plan, as amended.
10.16                   1999 Equity Incentive Plan, as amended.
10.17                   Program Agreement, dated June 7, 1999, between General
                        Electric Company and the registrant.
10.18                   Employment Agreement, dated December 13, 1993, between the
                        registrant and Sheldon D. Asher.
21.1                    Subsidiaries of the registrant.
23.1                    Consent of Ernst & Young LLP, Independent Auditors.
23.2                    Consent of PricewaterhouseCoopers LLP, Independent
                        Accountants.
23.3*                   Consent of Cooley Godward LLP. Reference is made to
                        Exhibit 5.1.

II-3


       EXHIBIT
       NUMBER                             DESCRIPTION OF DOCUMENT
       -------                            -----------------------
24.1                    Powers of Attorney. Reference is made to Page II-5.


* To be filed by amendment.

** Confidential treatment requested.

(b) Financial Statement Schedules.

Schedule II--Valuation and Qualifying Accounts

All other schedules for which provision is made in the applicable accounting regulation of the Securities and Exchange Commission are not required under the related instructions or are inapplicable and therefore have been omitted.

ITEM 17. UNDERTAKINGS.

The Registrant hereby undertakes to provide the Underwriters at the closing specified in the Underwriting Agreement, certificates in such denominations and registered in such names as required by the Underwriters to permit prompt delivery to each purchaser.

Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers, and controlling persons of the Registrant pursuant to the provisions described in Item 14 or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer, or controlling person of the Registrant in the successful defense of any action, suit, or proceeding) is asserted by such director, officer, or controlling person in connection with the securities being registered hereunder, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.

The Registrant hereby undertakes that:

(1) For purposes of determining any liability under the Securities Act, the information omitted from the form of Prospectus filed as part of this Registration Statement in reliance upon Rule 430A and contained in a form of Prospectus filed by the Registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be a part of this Registration Statement as of the time it was declared effective.

(2) For the purpose of determining any liability under the Securities Act, each post-effective amendment that contains a form of Prospectus shall be deemed to be a new Registration Statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

II-4


SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the Registrant has caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Palo Alto, State of California, on the 14th day of March, 2001.

OMNICELL, INC.

By:             /s/ SHELDON D. ASHER
     -----------------------------------------
                  Sheldon D. Asher
       PRESIDENT AND CHIEF EXECUTIVE OFFICER

POWER OF ATTORNEY

Each person whose signature appears below constitutes and appoints Sheldon D. Asher and Robert Y. Newell, IV his true and lawful attorney-in-fact and agent, each acting alone, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capabilities, to sign any or all amendments (including post-effective amendments) to this Registration Statement on From S-1, and to any registration statement filed under Securities and Exchange Commission Rule 462, and to file the same, with all exhibits thereto, and all documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney-in-fact and agent, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agent, or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed below by the following persons in the capacities and on the dates indicated.

             SIGNATURES                                    TITLE                       DATE
             ----------                                    -----                       ----
        /s/ SHELDON D. ASHER               President and Chief Executive Officer
------------------------------------         and Director (PRINCIPAL EXECUTIVE    March 14, 2001
          Sheldon D. Asher                   OFFICER)

      /s/ ROBERT Y. NEWELL, IV             Vice President and Chief Financial
------------------------------------         Officer (PRINCIPAL FINANCIAL AND     March 14, 2001
        Robert Y. Newell, IV                 ACCOUNTING OFFICER)

        /s/ RANDALL A. LIPPS
------------------------------------       Chairman of the Board and Director     March 14, 2001
          Randall A. Lipps

        /s/ GORDON V. CLEMONS
------------------------------------       Director                               March 14, 2001
          Gordon V. Clemons

    /s/ CHRISTOPHER J. DUNN, M.D.
------------------------------------       Director                               March 14, 2001
      Christopher J. Dunn, M.D.

II-5


             SIGNATURES                                    TITLE                       DATE
             ----------                                    -----                       ----
      /s/ FREDERICK J. DOTZLER
------------------------------------       Director                               March 14, 2001
        Frederick J. Dotzler

         /s/ RANDALL A. HACK
------------------------------------       Director                               March 14, 2001
           Randall A. Hack

      /s/ BENJAMIN A. HOROWITZ
------------------------------------       Director                               March 14, 2001
        Benjamin A. Horowitz

         /s/ KEVIN L. ROBERG
------------------------------------       Director                               March 14, 2001
           Kevin L. Roberg

       /s/ JOHN D. STOBO, JR.
------------------------------------       Director                               March 14, 2001
         John D. Stobo, Jr.

     /s/ WILLIAM H. YOUNGER, JR.
------------------------------------       Director                               March 14, 2001
       William H. Younger, Jr.

II-6


SCHEDULE II
OMNICELL, INC.
VALUATION AND QUALIFYING ACCOUNTS

                                                                ADDITIONS
                                                         -----------------------
                                           BALANCE AT    CHARGED TO   CHARGED TO                BALANCE
                                          BEGINNING OF   COSTS AND      OTHER                    END OF
DESCRIPTION                                  PERIOD       EXPENSES     ACCOUNTS    DEDUCTIONS    PERIOD
-----------                               ------------   ----------   ----------   ----------   --------
Year ended December 31, 1998 allowance
  for doubtful accounts.................    $218,368       $60,000           --           --    $278,368
Year ended December 31, 1999 allowance
  for doubtful accounts.................     278,368        60,000           --           --     338,368
Year ended December 31, 2000 allowance
  for doubtful accounts.................     338,368        60,000           --      (26,432)    371,936

S-1

EXHIBIT INDEX

EXHIBIT
NUMBER                               DESCRIPTION OF DOCUMENT
-------            ------------------------------------------------------------
 1.1*              Form of Underwriting Agreement.

 3.1               Amended and Restated Articles of Incorporation of the
                   registrant.

 3.2               Certificate of Amendment of Amended and Restated Articles of
                   Incorporation of the registrant.

 3.3               Certificate of Incorporation of the registrant to be
                   effective upon reincorporation in Delaware.

 3.4               Amended and Restated Certificate of Incorporation of the
                   registrant to be filed following the closing of the
                   offering.

 3.5               Bylaws of the registrant.

 3.6               Bylaws of the registrant to be effective upon
                   reincorporation in Delaware.

 4.1*              Form of Common Stock Certificate.

 4.2               Amended and Restated Investor Rights Agreement dated
                   January 20, 2000.

 4.3               Warrant Agreement, dated September 30, 1993, between the
                   registrant and Comdisco, Inc.

 4.4               Warrant Agreement, dated January 23, 1995, between the
                   registrant and Comdisco, Inc.

 4.5               Warrant Agreement, dated July 7, 1995, between the
                   registrant and Comdisco, Inc.

 4.6               Warrant Agreement, dated September 29, 1995, between the
                   registrant and Comdisco, Inc.

 4.7               Convertible Promissory Note, dated October 1, 1999.

 5.1*              Opinion of Cooley Godward LLP, counsel to the registrant.

10.1               Real Property Lease, dated September 24, 1999, between W.F.
                   Batton & Co., Inc. and the registrant, as amended.

10.2               Real Property Lease, effective July 1, 1999, between the
                   registrant and Amli Commercial Properties Limited
                   Partnership.

10.3               Real Property Lease, dated April 3, 1996, between O'Donnell
                   Palo Alto Associates and the registrant.

10.4               Real Property Lease, dated March 25, 1994, between W.F.
                   Batton & Co., Inc. and the registrant, as amended.

10.5               Master Assignment Agreement and Master Sales Agreement,
                   dated September 29, 1994, between Americorp Financial, Inc.
                   and the registrant, as amended.

10.6               Group Purchasing Agreement, effective June 1, 1997, between
                   Premier Purchasing Partners, L.P., and the registrant.

10.7               Letter Agreement, dated June 27, 1997, between the
                   University Health System Consortium Services Corporation and
                   the registrant.

10.8               Federal Supply Schedule Contract No. V797P-3406k, effective
                   August 7, 1997, between the Department of Veterans Affairs
                   and the registrant.

10.9               Asset Purchase Agreement dated December 18, 1998, between
                   the registrant and Baxter Healthcare Corporation, as
                   amended.

10.10              Loan and Security Agreement and Standby Facility Agreement,
                   dated January 27, 2000, between Silicon Valley Bank and the
                   registrant.

10.11**            Vertical Hosted License Agreement, dated August 21, 1999,
                   between the registrant and Commerce One, as amended.


EXHIBIT
NUMBER                               DESCRIPTION OF DOCUMENT
-------            ------------------------------------------------------------
10.12              Form of Director and Officer Indemnification Agreement.

10.13              1992 Equity Incentive Plan, as amended.

10.14              1995 Management Stock Option Plan.

10.15              1997 Employee Stock Purchase Plan, as amended.

10.16              1999 Equity Incentive Plan, as amended.

10.17              Program Agreement, dated June 7, 1999, between General
                   Electric Company and Omnicell.com.

10.18              Employment Agreement, dated December 13, 1993, between the
                   registrant and Sheldon D. Asher.

21.1               Subsidiaries of the registrant.

23.1               Consent of Ernst & Young LLP, Independent Auditors.

23.2               Consent of PricewaterhouseCoopers LLP, Independent
                   Accountants.

23.3*              Consent of Cooley Godward LLP. Reference is made to
                   Exhibit 5.1.

24.1               Powers of Attorney. Reference is made to Page II-5.


* To be filed by amendment.

** Confidential treatment requested.


AMENDED AND RESTATED

ARTICLES OF INCORPORATION

OF

OMNICELL.COM

Randall Lipps and Robert J. Brigham certify that:

1. They are the Chairman of the Board and Assistant Secretary, respectively, of OmniCell.com, a California corporation.

2. The Articles of Incorporation of the Corporation are amended and restated in full to read as follows:

"I

The name of the Corporation is OmniCell.com.

II

The purpose of the Corporation is to engage in any lawful act or activity for which a corporation may be organized under the General Corporation Law of California other than the banking business, the trust company business or the practice of a profession permitted to be incorporated by the California Corporations Code.

III

The Corporation is authorized to issue two classes of shares to be designated respectively Common Stock and Preferred Stock. The total number of shares of Common Stock the Corporation shall have authority to issue is 35,000,000 and the total number of shares of Preferred Stock the Corporation shall have authority to issue is 18,500,000. The Preferred Stock may be issued from time to time in one or more series. The Board of Directors is authorized to fix the number of shares of any series of Preferred Stock and, subject to the rights of existing shareholders set forth in Article IV, Section 6, to determine or alter the rights, preferences, privileges, and restrictions granted to or imposed upon any wholly unissued series of Preferred Stock and, within the limits and restrictions stated in any resolution or resolutions of the Board of Directors originally fixing the number of shares constituting any series of Preferred Stock, to increase or decrease (but not below the number of shares of any such series then outstanding) the number of shares of any such series subsequent to the issue of shares of that series (subject to the provisions of
Section 6 of Article IV hereof).

The Common Stock shall be divided into two series, to be designated, respectively, Class A Voting Common Stock, consisting of 32,500,000 shares ("Class A Common"), and Class B Non-voting Common Stock, consisting of 2,500,000 shares ("Class B Common").


The first series of Preferred Stock shall be designated Series A Preferred Stock ("Series A Preferred") and shall consist of 480,000 shares. The second series of Preferred Stock shall be designated Series B Preferred Stock ("Series B Preferred") and shall consist of 320,666 shares. The third series of Preferred Stock shall be designated Series C Preferred Stock ("Series C Preferred") and shall consist of 1,700,000 shares. The fourth series of Preferred Stock shall be designated Series D Preferred Stock ("Series D Preferred") and shall consist of 1,328,000 shares. The fifth series of Preferred Stock shall be designated Series E Preferred Stock ("Series E Preferred") and shall consist of 1,966,000 shares. The sixth series of Preferred Stock shall be designated Series F Preferred Stock ("Series F Preferred") and shall consist of 2,000,000 shares. The seventh series of Preferred Stock shall be designated Series G Preferred Stock ("Series G Preferred") and shall consist of 1,000,000 shares. The eighth series of Preferred Stock shall be designated Series H Preferred Stock ("Series H Preferred") and shall consist of 4,000,000 shares. The ninth series of Preferred Stock shall be designated Series J Preferred Stock ("Series J Preferred") and shall consist of 1,802,000 shares. The tenth series of Preferred Stock shall be designated Series K Preferred Stock ("Series K Preferred") and shall consist of 2,105,263 shares. The Series A Preferred, the Series B Preferred, the Series C Preferred, the Series D Preferred, the Series E Preferred, the Series F Preferred, Series G Preferred, Series H Preferred, Series J Preferred and Series K Preferred shall be referred to as the "Preferred."

IV

The relative rights, preferences, privileges and restrictions granted to or imposed on the respective classes of the shares of capital stock or the holders thereof are as follows:

1. DIVIDENDS.

(a) The holders of the Series J Preferred shall be entitled to receive in any fiscal year, when and as declared by the Board of Directors, out of any assets legally available therefore, dividends in cash at an annual rate of $1.12 per share (as adjusted for any stock dividends, combinations, consolidations or splits with respect to such shares). The right to such dividends shall not be cumulative and no right shall accrue to holders of Series J Preferred by reason of the fact that dividends on such shares were not declared in any prior year, nor shall any undeclared dividends bear or accrue interest. Such dividends shall be prior and in preference to any declaration or payment of any dividend, (payable other than in common stock) on the Series A Preferred, Series B Preferred, Series C Preferred, Series D Preferred, Series E Preferred, Series F Preferred, Series G Preferred, Series H Preferred, Series K Preferred, or Common Stock. No dividend may be paid on the Series A Preferred, the Series B Preferred, the Series C Preferred, the Series D Preferred, the Series E Preferred, the Series F Preferred, the Series G Preferred, the Series H Preferred, Series K Preferred or the Common Stock unless and until any and all dividends have been paid to the Series J Preferred.

(b) After payment of all required dividends required to the holders of Series J Preferred, the holders of outstanding Series A Preferred, Series B Preferred, Series C Preferred, Series D Preferred, Series E Preferred, Series F Preferred, Series G Preferred, Series H Preferred, and Series K Preferred shall be entitled to receive in any fiscal year, when and as


declared by the Board of Directors, out of any assets at the time legally available therefor, dividends in cash at an annual rate of $0.02 per share of Series A Preferred, $0.03 per share of Series B Preferred, $0.048 per share of Series C Preferred, $0.085 per share of Series D Preferred, $0.265 per share of Series E Preferred, $0.49 per share of Series F Preferred, $0.49 per share of Series G Preferred, $0.29 per share of Series H Preferred, and $0.76 per share of Series K Preferred (as adjusted for any stock dividends, combinations, consolidations or splits with respect to such shares). Such dividends may be payable quarterly or otherwise as the Board of Directors may from time to time determine. The right to such dividends shall not be cumulative and no right shall accrue to holders of such Preferred by reason of the fact that dividends on such shares were not declared in any prior year, nor shall any undeclared dividends bear or accrue interest.

(c) Any partial payment of such dividends to the holders of the Series A Preferred, Series B Preferred, Series C Preferred, Series D Preferred, Series E Preferred, Series F Preferred, Series G Preferred, Series H Preferred and Series K Preferred shall be made in proportion to the amount each such holder would be entitled to receive as set forth above if such amounts were paid in full. Dividends other than dividends payable solely in Common Stock may be declared or paid upon shares of Common Stock in any fiscal year of the Corporation only if dividends at the annual rates set forth above shall have been paid or declared and set apart upon all shares of Preferred for such fiscal year. No dividend shall be declared or paid with respect to the Common Stock unless at the same time an equivalent dividend is declared or paid with respect to the Preferred on an as-if-converted to Common Stock basis. Any declared but unpaid dividends on the Preferred shall be paid upon the conversion of such shares into Common Stock either (at the option of the Corporation) by payment of cash or by the issuance of additional shares of Common Stock based upon the fair market value of the Common Stock at the time of conversion, as determined by the Board of Directors. No dividend payable in Common Stock shall be declared or paid with respect to any series of Preferred unless at the same time a similar dividend is declared or paid to all series of Preferred on an as-if-converted to Common Stock basis, such that the holders of no series of Preferred shall hold a greater proportion of the Corporation's Common Stock following such dividend (on an as-if converted basis) than immediately prior to such dividend.

2. LIQUIDATION PREFERENCE. In the event of any liquidation, dissolution, or winding up of the Corporation, either voluntary or involuntary, distributions to the shareholders of the Corporation shall be made in the following manner:

(a) Holders of the Series J Preferred shall be entitled to receive, prior and in preference to any distribution of any of the assets or surplus funds of the Corporation to the holders of the Series A Preferred, Series B Preferred, Series C Preferred, Series D Preferred, Series E Preferred, Series F Preferred, Series G Preferred, Series H Preferred, Series K Preferred or Common Stock by reason of their ownership thereof, the amount of $14.03274 per share (as adjusted for any stock dividends, combinations, consolidations or splits with respect to such shares), plus all accrued or declared but unpaid dividends on such share for each share of Series J Preferred then held by them. If the assets and funds thus distributed among the holders of Series J Preferred shall be insufficient to permit the payment to such holders of the full aforesaid preferential amount, then the entire assets and funds of the Corporation legally available for distribution shall be distributed among the holders of Series J Preferred in proportion to the full preferential amount each such holder is otherwise entitled to receive.


(b) Subject to the payment in full of the liquidation preferences with respect to the Series J Preferred as provided in Section 2(a) above, the holders of the Series A Preferred, Series B Preferred, Series C Preferred, Series D Preferred, Series E Preferred, Series F Preferred, Series G Preferred, Series H Preferred and Series K Preferred shall be entitled to receive, prior and in preference to any distribution of any of the assets or surplus funds of the Corporation to the holders of the Common Stock by reason of their ownership of such stock, the amount of $0.25 per share for each share of Series A Preferred then held by them, $0.375 per share for each share of Series B Preferred then held by them, $0.60 per share for each share of Series C Preferred then held by them, $1.085 per share for each share of Series D Preferred then held by them, $3.30 per share of Series E Preferred then held by them, $6.15 per share of Series F Preferred then held by them, $6.15 per share of Series G Preferred then held by them, $3.68 per share of Series H Preferred then held by them, and, for the holders of Series K Preferred, the greater of
(i) $9.50 per share of Series K Preferred then held by them and (ii) the amount per share of Series K Preferred they would have received if they had converted their Series K Preferred into Common Stock immediately prior to the liquidation, adjusted for any stock dividends, combinations, consolidations, or splits with respect to such shares and, in addition, an amount equal to all declared but unpaid dividends on the Series A Preferred, Series B Preferred, Series C Preferred, Series D Preferred, Series E Preferred, Series F Preferred, Series G Preferred, Series H Preferred and Series K Preferred. If the assets and funds thus distributed among the holders of Preferred shall be insufficient to permit the payment to such holders of the full aforesaid preferential amount, then the entire assets and funds of the Corporation remaining after payment in full of the liquidation preference set forth in Section 2(a) and legally available for distribution shall be distributed among the holders of Preferred in proportion to the full preferential amount each such holder is otherwise entitled to receive. After payment has been made to the holders of Preferred of the full amounts to which they shall be entitled as aforesaid, the holders of the Common Stock shall be entitled to receive ratably on a per-share basis all the remaining assets.

(c) For purposes of this Section 2, a merger or consolidation of the Corporation with or into any other corporation or corporations, or the merger of any other corporation or corporations into the Corporation, in which the shareholders of the Corporation receive distributions in cash or securities of another corporation or corporations as a result of such consolidation or merger, any transaction or series of related transactions to which the Company is a party in which excess of fifty percent (50%) of the Company's voting power is transferred, or a sale of all or substantially all of the assets of the Corporation (collectively, a "Change in Control"), shall be treated as a liquidation, dissolution or winding up of the Corporation.

Any securities to be delivered to the holders of the Preferred pursuant to this subsection (c) shall be valued as follows:

(i) Securities not subject to investment letter or other similar restrictions on free marketability:


(A) If traded on a securities exchange or the Nasdaq National Market System, the value shall be deemed to be the average of the closing prices of the securities on such exchange or system over the 30-day period ending three (3) days prior to the closing;

(B) If actively traded over-the-counter, the value shall be deemed to be the average of the closing bid prices over the 30-day period ending three (3) days prior to the closing; and

(C) If there is no active public market, the value shall be the fair market value thereof, as determined in good faith by the Board of Directors of the Corporation.

(ii) The method of valuation of securities subject to investment letter or other restrictions on free marketability shall be to make an appropriate discount from the market value determined as above in (i)(A),(B) or (C) to reflect the approximate fair market value thereof, as determined in good faith by the Board of Directors of the Corporation.

The Corporation shall give each holder of record of shares of Preferred written notice of an impending transaction described in this subsection 2(c) not later than twenty (20) days prior to the shareholders meeting called to approve such transaction, or twenty (20) days prior to the closing of such transaction, whichever is earlier, and shall also notify such holders in writing of the final approval of such transaction. The first of such notices shall describe the material terms and conditions of the impending transaction and the provisions of this section 2(c) and the Corporation shall thereafter give such holders prompt notice of any material changes. The transaction shall in no event take place sooner than twenty (20) days after the Corporation has given the first notice provided for herein or sooner than ten (10) days after the corporation has given notice of any material changes provided for herein; provided, however, that such periods may be shortened upon the written consent of the holders of shares of Preferred Stock which is entitled to such notice rights or similar notice rights and which represents at least a majority of the voting power of all then outstanding shares of such shares of Preferred Stock.

(d) As authorized by Section 402.5(c) of the California Corporations Code, the provisions of Sections 502 and 503 of the California Corporations Code shall not apply with respect to repurchase by the Corporation of shares of Common Stock issued to or held by employees or consultants of the Corporation or its subsidiaries upon termination of their employment or services pursuant to agreement providing for the right of said repurchase.

3. VOTING RIGHTS.

(a) Except as otherwise required by law or by Section 3(b) hereof, the holder of each share of Common Stock issued and outstanding shall have one vote and each holder of shares of Preferred shall be entitled to the number of votes equal to the number of shares of Common Stock into which such shares of Preferred could be converted at the record date for determination of the shareholders entitled to vote on such matters, or, if no such record date is established, at the date such vote is taken or any written consent of shareholders is solicited, such


votes to be counted together with all other shares of stock of the Corporation having general voting power and not separately as a class except as otherwise provided herein or by law. Fractional votes by the holders of Preferred shall not, however, be permitted and any fractional voting rights shall (after aggregating all shares into which shares of the Preferred held by each holder could be converted) be rounded to the nearest whole number. Holders of Common Stock and the Preferred shall be entitled to notice of any shareholders' meeting in accordance with the Bylaws of the Corporation.

(b) Notwithstanding Section 3(a) above, the Class B Common shall not have any voting rights except as required by law.

(c) At each annual or special meeting called for the purpose of electing directors, the holders of Series E Preferred, voting together as a class, shall be entitled to elect one (1) director of the Corporation, the holders of Series H Preferred, voting together as a class, shall be entitled to elect one (1) director of the Corporation and the holders of Series K Preferred, voting together as a class, shall be entitled to elect one (1) director of the Corporation. Subject to the restrictions of Section 3(b) above, all remaining directors shall be elected by the holders of the Common Stock and the Preferred Stock (on an as-converted basis) voting together as a single class. In the case of a vacancy in the office of director elected by the holders of (i) Series E Preferred, (ii) Series H Preferred, or (iii) Series K Preferred, a successor shall be elected to hold office for the unexpired term of such director by the affirmative vote of the majority of the shares of such holders of (i) Series E Preferred, (ii) Series H Preferred, or (iii) Series K Preferred, respectively. In the case of any vacancies in the office of the remaining directors elected by holders of the Common Stock and the Preferred Stock (on an as-converted basis), voting together as a class, any successor shall be elected to hold office for the unexpired term of such director by the affirmative vote of the majority of the shares of such holders of Common and Preferred Stock. Subject to Section 303 of the California Corporations Code, any director who shall have been elected by holders of (i) Series E Preferred, (ii) Series H Preferred, (iii) Series K Preferred, or (iv) Common Stock and Preferred Stock, may be removed during the aforesaid term of office, either for or without cause by, and only by, the affirmative vote of the holders of a majority of (i) Series E Preferred, (ii) Series H Preferred, (iii) Series K Preferred, or (iv) Common Stock and Preferred Stock, respectively, given at a special meeting of the shareholders duly called or by an action by written consent for that purpose, and any such vacancy thereby created may be filled by the vote of the holders of a majority of (i) Series E Preferred, (ii) Series H Preferred, (iii) Series K Preferred, or (iv) Common Stock and Preferred Stock, respectively, at such meeting or in such consent.

4. CONVERSION. The holders of the Preferred have conversion rights as follows (the "Conversion Rights"):

(a) RIGHT TO CONVERT. Each share of Series A Preferred, Series B Preferred, Series C Preferred, Series D Preferred, Series E Preferred, Series F Preferred, Series G Preferred, Series H Preferred, Series J Preferred and Series K Preferred shall be convertible, at the option of the holder thereof, at any time after the date of issuance of such share at the office of the Corporation or any transfer agent for the Preferred, into such number of fully paid and


nonassessable shares of Class A Common as is determined by dividing the Conversion Price for such series of Preferred (determined as hereinafter provided) in effect at the time of the conversion into the "Conversion Value" per share of such series of Preferred. The number of shares of Class A Common into which each series of Preferred is convertible is hereinafter referred to as the "Conversion Rate" for such series. The Conversion Price per share of (i) Series A Preferred shall be $0.25, (ii) Series B Preferred shall be $0.375,
(iii) Series C Preferred shall be $0.60, (iv) Series D Preferred shall be $1.085, (v) Series E Preferred shall be $3.30, (vi) Series F Preferred shall be $5.555874, (vii) Series G Preferred shall be $6.15, (viii) Series H Preferred shall be $3.68, (ix) Series J Preferred shall be $14.03274, and (x) Series K Preferred shall be $9.50. The Conversion Value per share of (i) Series A Preferred shall be $0.25, (ii) Series B Preferred shall be $0.375, (iii) Series C Preferred shall be $0.60, (iv) Series D Preferred shall be $1.085, (v) Series E Preferred shall be $3.30, (vi) Series F Preferred shall be $6.15, (vii) Series G Preferred shall be $6.15, (viii) Series H Preferred shall be $3.68, (ix) Series J Preferred shall be $14.03274, and (x) Series K Preferred shall be $9.50. The Conversion Price for each series of Preferred shall be subject to adjustment as hereinafter provided.

(b) AUTOMATIC CONVERSION. Each share of Preferred shall automatically be converted into shares of Class A Common at the then effective Conversion Price upon the closing of a firm commitment underwritten public offering pursuant to an effective registration statement under the Securities Act of 1933, as amended, covering the offer and sale of Common Stock for the account of the Corporation to the public (an "Initial Public Offering") at a price per share (prior to deduction of underwriter commissions and offering expenses) of not less than $7.36 per share (appropriately adjusted for any stock dividends, stock splits, combinations, recapitalizations or similar events) and an aggregate offering price to the public of not less than $10,000,000 (prior to deduction of underwriter commissions and offering expenses).

(c) MECHANICS OF CONVERSION. No fractional shares of Common Stock shall be issued upon conversion of shares of Preferred. In lieu of any fractional shares to which the holder would otherwise be entitled, the Corporation shall pay cash equal to such fraction multiplied by the then effective Conversion Price. Before any holder of Preferred shall be entitled to convert the same into full shares of Common Stock and to receive certificates therefor, he shall surrender the certificate or certificates therefor, duly endorsed, at the office of the Corporation or of any transfer agent for the Preferred, and shall give written notice to the Corporation at such office that he elects to convert the same; provided, however, that in the event of an automatic conversion pursuant to Section 4(b), the outstanding shares of Preferred shall be converted automatically without any further action by the holders of such shares and whether or not the certificates representing such shares are surrendered to the Corporation or its transfer agent, and provided further that the Corporation shall not be obligated to issue certificates evidencing the shares of Common Stock issuable upon such automatic conversion unless the certificates evidencing such shares of Preferred are either delivered to the Corporation or its transfer agent as provided above, or the holder notifies the Corporation or its transfer agent that such certificates have been lost, stolen or destroyed and executes an agreement reasonably satisfactory to the Corporation to indemnify the Corporation from any loss incurred by it in connection with the theft, loss or destruction of such certificates. The Corporation shall, as soon as practicable after delivery of such certificates, or such agreement and indemnification in the


case of a lost certificate, issue and deliver at such office to such holder of Preferred, a certificate or certificates for the number of shares of Common Stock to which he shall be entitled as aforesaid and a check payable to the holder in the amount of any cash amounts payable as the result of a conversion into fractional shares of Common Stock. Such conversion shall be deemed to have been made immediately prior to the close of business on the date of such surrender of the shares of Preferred to be converted, or in the case of automatic conversion on the date of closing of the offering, and the person or persons entitled to receive the shares of Common Stock issuable upon such conversion shall be treated for all purposes as the record holder or holders of such shares of Common Stock on such date.

(d) ADJUSTMENTS TO CONVERSION PRICE FOR DILUTIVE ISSUES.

(i) SPECIAL DEFINITIONS. For purposes of this Section
4(d), the following definitions shall apply:

(1) "OPTIONS" shall mean rights, options or warrants to subscribe for, purchase or otherwise acquire either Common Stock or Convertible Securities.

(2) "ORIGINAL ISSUE DATE" shall mean June 11, 1996.

(3) "CONVERTIBLE SECURITIES" shall mean any evidences of indebtedness, shares (other than the Common Stock) or other securities convertible into or exchangeable for Common Stock.

(4) "ADDITIONAL SHARES OF COMMON STOCK" shall mean all shares of Common Stock issued (or, pursuant to Section 4(d)(ii), deemed to be issued) by the Corporation after the Original Issue Date, other than shares of Common Stock issued or issuable at any time:

(A) upon conversion of the shares of Preferred authorized herein;

(B) (i) to officers, directors, and employees of, and consultants to, the Corporation to be designated pursuant to plans and arrangements approved by the Board of Directors; and (ii) to lending or leasing institutions approved by the Board of Directors, provided that the aggregate of (i) and (ii) do not exceed more that 4,058,821 shares (net of shares repurchased and Options expiring unexercised), appropriately adjusted for stock splits, combinations, stock dividends, recapitalizations, or similar events (provided that any shares repurchased by the Corporation from employees, officers, directors and consultants pursuant to the terms of stock repurchase agreements approved by the Board of Directors, or Options which terminate unexercised, shall not, unless reissued, be counted as issued for purposes of this calculation);

(C) as a dividend or distribution on Preferred or any event for which adjustment is made pursuant to Section 4(e) hereof;


(D) by way of dividend or other distribution on shares of Common Stock excluded from the definition of Additional Shares of Common Stock by the foregoing clauses (A), (B), or (C).

(ii) DEEMED ISSUE OF ADDITIONAL SHARES OF COMMON STOCK. In the event the Corporation at any time or from time to time after the Original Issue Date shall issue any Options or Convertible Securities or shall fix a record date for the determination of holders of any class of securities entitled to receive any such Options or Convertible Securities, then the maximum number of shares (as set forth in the instrument relating thereto assuming the satisfaction of any conditions to exercisability, including without limitation, the passage of time and without regard to any provisions contained therein for a subsequent adjustment of such number) of Common Stock issuable upon the exercise of such Options or, in the case of Convertible Securities and Options therefor, the conversion or exchange of such Convertible Securities, shall be deemed to be Additional Shares of Common Stock issued as of the time of such issue or, in case such a record date shall have been fixed, as of the close of business on such record date, provided that Additional Shares of Common Stock shall not be deemed to have been issued unless the consideration per share (determined pursuant to Section 4(d)(iv) hereof) of such Additional Shares of Common Stock would be less than the Conversion Price for such series in effect on the date of and immediately prior to such issue, or such record date, as the case may be, and provided further that in any such case in which Additional Shares of Common Stock are deemed to be issued:

(1) no further adjustment in the Conversion Price shall be made upon the subsequent issue of Convertible Securities or shares of Common Stock upon the exercise of such Options or conversion or exchange of such Convertible Securities;

(2) if such Options or Convertible Securities by their terms provide, with the passage of time or otherwise, for any increase or decrease in the consideration payable to the Corporation, or in the number of shares of Common Stock issuable, upon the exercise, conversion or exchange thereof, the Conversion Price computed upon the original issue thereof (or upon the occurrence of a record date with respect thereto), and any subsequent adjustments based thereon, shall, upon any such increase or decrease becoming effective, be recomputed to reflect such increase or decrease insofar as it affects such Options or the rights of conversion or exchange under such Convertible Securities;

(3) upon the expiration of any such Options or any rights of conversion or exchange under such Convertible Securities which shall not have been exercised, the Conversion Price computed upon the original issue thereof (or upon the occurrence of a record date with respect thereto), and any subsequent adjustments based thereon, shall, upon such expiration, be recomputed as if,

(A) in the case of Convertible Securities or Options for Common Stock, the only Additional Shares of Common Stock issued were shares of Common Stock, if any, actually issued upon the exercise of such Options or the conversion or exchange of such Convertible Securities and the consideration received therefor was the consideration


actually received by the Corporation for the issue of all such Options, whether or not exercised, plus the consideration actually received by the Corporation upon such exercise, or for the issue of all such Convertible Securities which were actually converted or exchanged, plus the additional consideration, if any, actually received by the Corporation upon such conversion or exchange, and

(B) in the case of Options for Convertible Securities, only the Convertible Securities, if any, actually issued upon the exercise thereof were issued at the time of issue of such Options, and the consideration received by the Corporation for the Additional Shares of Common Stock deemed to have been then issued was the consideration actually received by the Corporation for the issue of all such Options, whether or not exercised, plus the consideration deemed to have been received by the Corporation upon the issue of the Convertible Securities with respect to which such Options were actually exercised;

(4) no readjustment pursuant to clause (2) or (3) above shall have the effect of increasing the Conversion Price to an amount which exceeds the lower of (i) the Conversion Price on the original adjustment date, or (ii) the Conversion Price that would have resulted from any issuance of Additional Shares of Common Stock between the original adjustment date and such readjustment date; and

(5) in the case of any Options which expire by their terms not more than 90 days after the date of issue thereof, no adjustment of the Conversion Price shall be made until the expiration or exercise of all such Options.

(iii) ADJUSTMENT OF CONVERSION PRICE UPON ISSUANCE OF ADDITIONAL SHARES OF COMMON STOCK.

(1) SERIES E PREFERRED, SERIES F PREFERRED AND SERIES H PREFERRED, SERIES J PREFERRED AND SERIES K PREFERRED.
In the event the Corporation shall issue Additional Shares of Common Stock (including Additional Shares of Common Stock deemed to be issued pursuant to
Section 4(d)(ii)) after the Original Issue Date without consideration or for consideration per share less than the Conversion Price for (i) the Series E Preferred, (ii) the Series F Preferred, (iii) the Series H Preferred, (iv) the Series J Preferred, and/or (v) Series K Preferred, in effect on the date of and immediately prior to such issue, then and in such event, the Conversion Price for the (i) Series E Preferred, (ii) Series F Preferred,
(iii) Series H Preferred, (iv) Series J Preferred, and/or (v) Series K Preferred, if the applicable consideration per share is less than the Conversion Price then in effect for such series of Series Preferred, shall be reduced, concurrently with such issue, to a price determined by multiplying such Conversion Price by a fraction, the numerator of which shall be the number of shares of Common Stock outstanding immediately prior to such issue (including all shares of Common Stock issuable upon conversion of the outstanding shares of Preferred and all shares of Common Stock reserved for future issuance by the Board of Directors of the Corporation) plus the number of shares of Common Stock which the aggregate consideration received by the Corporation for the total number of Additional Shares of Common Stock so issued would purchase at such Conversion Price; and the denominator of which shall be the number of shares of Common Stock outstanding immediately


prior to such issue (including all shares of Common Stock issuable upon conversion of the outstanding shares of Preferred and all shares of Common Stock reserved for future issuance by the Board of Directors of the Corporation) plus the number of such Additional Shares of Common Stock so issued. In the event the Conversion Price for the Series K Preferred shall be adjusted as a result of this Section 4(d)(iii), the Minimum Price (as defined below) shall also be adjusted by the same fraction used to adjust the Conversion Price for the Series K Preferred.

(2) SERIES G PREFERRED. In the event the Corporation shall issue Additional Shares of Common Stock (including Additional Shares of Common Stock deemed to be issued pursuant to Section 4(d)(ii)) after the Original Issue Date and on or prior to September 30, 1995 (the "Trigger Date"), without consideration or for consideration per share less than the Conversion Price for the Series G Preferred in effect on the date of and immediately prior to such issue, then and in such event, the Conversion Price for the Series G Preferred shall be reduced, concurrently with such issue, to a price equal to the amount of consideration received by the Corporation per share in such issuance. In the event this Corporation shall issue Additional Shares of Common Stock (including Additional Shares of Common Stock deemed to be issued pursuant to Section 4(d)(ii)) after the Trigger Date without consideration or for consideration per share less than the Conversion Price of the Series G Preferred in effect on the date of and immediately prior to such issue, then in such event, the Conversion Price of Series G Preferred shall be reduced, concurrently with such issue, to a price determined by multiplying such Conversion Price by a fraction, the numerator of which shall be the number of shares of Common Stock outstanding immediately prior to such issue (including all shares of Common Stock issuable upon conversion of the outstanding Preferred Stock and all shares of Common Stock received for future issuance by the Board of Directors of the Corporation) plus the number of shares of Common Stock which the aggregate consideration received by the Corporation for the total number of Additional Shares of Common Stock so issued would purchase at such Conversion Price; and the denominator of which shall be the number of shares of Common Stock outstanding immediately prior to such issue (including all shares of Common Stock issuable upon conversion of the outstanding Preferred Stock and all shares of Common Stock reserved for future issuance by the Board of Directors of the Corporation) plus the number of such Additional Shares of Common Stock so issued.

(3) SERIES J PREFERRED. In the event the Corporation shall undertake an Initial Public Offering at certain per share prices set forth below (appropriately adjusted for any stock dividends, stock splits, combinations, recapitalizations or similar events), the Series J Preferred will undergo a Conversion Price adjustment. If the price per share to the public in the Initial Public Offering is equal to or less than $11.22 and higher than $9.82, the Conversion Price will be adjusted to $12.38345 per share. If the price per share to the public in the Initial Public Offering is equal to or less than $9.82 and higher than $8.42, the Conversion Price will be adjusted to $11.69611 per share. If the price per share to the public in the Initial Public Offering is equal to or less than $8.42 and higher than $7.02, the Conversion Price will be adjusted to $11.07622 per share. If the price per share to the public in the Initial Public Offering is equal to or less than $7.02, the Conversion Price will be adjusted to $10.52310 per share.


(4) SERIES K PREFERRED. In the event of (i) an Initial Public Offering, (ii) a liquidation, dissolution, or winding up of the Corporation, either voluntary or involuntary or (iii) a Change of Control (collectively, a "Liquidity Event"), during the time periods and at the per share prices set forth below (appropriately adjusted for any stock dividends, stock splits, combinations, recapitalizations or similar events), the Series K Preferred will undergo a Conversion Price adjustment. If the price per share (on an if-as-converted to Common Stock basis) in the Liquidity Event (the "Liquidity Price") is less than $21.11 per share, and the Liquidity Event occurs prior to the first anniversary of the first issuance date of the Series K Preferred (the "Series K Issuance Date"), the Conversion Price for the Series K Preferred will be adjusted to forty-five percent (45%) of the Liquidity Price. If the Liquidity Price is less than $27.14 per share and the Liquidity Event occurs after the first anniversary and prior to the second anniversary of the Series K Issuance Date, the Conversion Price will be adjusted to thirty-five percent (35%) of the Liquidity Price. If the Liquidity Price is less than $38.00 per share and the Liquidity Event occurs after the second anniversary of the Series K Issuance Date, the Conversion Price will be adjusted to twenty-five percent (25%) of the Liquidity Price. Notwithstanding the foregoing, in no event shall the minimum Conversion price per share of the Series K Preferred be adjusted below $5.00 per share (appropriately adjusted under Section 4(d)(iii)(1) and for any stock dividends, stock splits, combinations, recapitalizations or similar events) (the "Minimum Price").

(iv) DETERMINATION OF CONSIDERATION. For purposes of this Section 4(d), the consideration received by the Corporation for the issue of any Additional Shares of Common Stock shall be computed as follows:

(1) CASH AND PROPERTY. Such consideration shall:

(A) insofar as it consists of cash, be computed at the aggregate amount of cash received by the Corporation excluding amounts paid or payable for accrued interest or accrued dividends;

(B) insofar as it consists of property other than cash, be computed at the fair value thereof at the time of such issue, as determined in good faith by the Board irrespective of any accounting treatment; and

(C) in the event Additional Shares of Common Stock are issued together with other shares or securities or other assets of the Corporation for consideration which covers both, be the proportion of such consideration so received, computed as provided in clauses (A) and (B) above, as determined in good faith by the Board.

(2) OPTIONS AND CONVERTIBLE SECURITIES. The consideration per share received by the Corporation for Additional Shares of Common Stock deemed to have been issued pursuant to Section 4(d)(ii), relating to Options and Convertible Securities, shall be determined by dividing


(x) the total amount, if any, received or receivable by the Corporation as consideration for the issue of such Options or Convertible Securities, plus the minimum aggregate amount of additional consideration (as set forth in the instruments relating thereto, without regard to any provision contained therein for a subsequent adjustment of such consideration) payable to the Corporation upon the exercise of such Options or the conversion or exchange of such Convertible Securities, or in the case of Options for Convertible Securities, the exercise of such Options for Convertible Securities and the conversion or exchange of such Convertible Securities by

(y) the maximum number of shares of Common Stock (as set forth in the instruments relating thereto, without regard to any provision contained therein for a subsequent adjustment of such number) issuable upon the exercise of such Options or the conversion or exchange of such Convertible Securities.

(e) ADJUSTMENTS TO CONVERSION PRICE.

(i) ADJUSTMENTS FOR STOCK DIVIDENDS, SUBDIVISIONS, COMBINATIONS OR CONSOLIDATION OF COMMON STOCK. In the event the outstanding shares of Common Stock shall be, after the Original Issue Date, subdivided (by stock split or otherwise) into a greater number of shares of Common Stock, or the Corporation shall declare or pay any dividend on the Common Stock payable in Common Stock, the Conversion Price for each series then in effect shall, concurrently with the effectiveness of such subdivision or stock dividend, be proportionately decreased based on the ratio of (i) the number of shares of Common Stock outstanding immediately prior to such subdivision or stock dividend to (ii) the number of shares of Common Stock outstanding immediately after such subdivision or stock dividend. In the event the outstanding shares of Common Stock shall, after the Original Issue Date, be combined or consolidated, by reclassification or otherwise, into a lesser number of shares of Common Stock, the Conversion Price for each series then in effect shall, concurrently with the effectiveness of such combination or consolidation, be proportionately increased on the same basis as set forth above.

(ii) ADJUSTMENTS FOR OTHER DISTRIBUTIONS. In the event the Corporation at any time or from time to time, after the Original Issue Date, makes, or fixes a record date for the determination of holders of Common Stock entitled to receive any distribution payable in securities of the Corporation other than shares of Common Stock and other than as otherwise adjusted in this Section 4 or as otherwise provided in Section 2, then and in each such event provision shall be made so that the holders of Preferred shall receive upon conversion thereof, in addition to the number of shares of Common Stock receivable thereupon, the amount of securities of the Corporation which they would have received had their shares of Preferred been converted into Common Stock on the date of such event and had they thereafter, during the period from the date of such event to and including the date of conversion, retained such securities receivable by them as aforesaid during such period, subject to all other adjustments called for during such period under this
Section 4 with respect to the rights of the holders of the Preferred.


(iii) ADJUSTMENTS FOR RECLASSIFICATION, EXCHANGE AND SUBSTITUTION. If the Common Stock issuable upon conversion of shares of Preferred shall, after the Original Issue Date, be changed into the same or a different number of shares of any other class or classes of stock, whether by capital reorganization, reclassification or otherwise (other than a subdivision or combination of shares provided for above), the Conversion Price then in effect shall, concurrently with the effectiveness of such reorganization or reclassification, be proportionately adjusted such that the shares of Preferred shall be convertible into, in lieu of the number of shares of Common Stock which the holders would otherwise have been entitled to receive, a number of shares of such other class or classes of stock equivalent to the number of shares of Common Stock that would have been subject to receipt by the holders upon conversion of the Preferred immediately before that change.

(f) NO IMPAIRMENT. Except as permitted by Section 6, the Corporation will not, by amendment of its Articles of Incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed hereunder by the Corporation but will at all times in good faith assist in the carrying out of all the provisions of this Section 4 and in the taking of all such action as may be necessary or appropriate in order to protect the Conversion Rights of the holders of Preferred against impairment, including setting aside and reserving for future issuance upon conversion of the outstanding shares of Preferred the number of shares of Common Stock issuable upon such conversion.

(g) CERTIFICATE AS TO ADJUSTMENTS. Upon the occurrence of each adjustment or readjustment of the Conversion Price for a series of Preferred pursuant to this Section 4, the Corporation at its expense shall promptly compute such adjustment or readjustment in accordance with the terms hereof and furnish to each holder of such series of Preferred a certificate setting forth such adjustment or readjustment and showing in detail the facts upon which such adjustment or readjustment is based. The Corporation shall, upon the written request at any time of any holder of such series of Preferred, furnish or cause to be furnished to such holder a like certificate setting forth (i) such adjustments and readjustments, (ii) the Conversion Price in effect at the time for such series, and (iii) the number of shares of Common Stock and the amount, if any, of other property which at the time would be received upon the conversion of such series of Preferred.

(h) NOTICES OF RECORD DATE. In the event that the Corporation shall propose at any time:

(i) to declare any dividend or distribution upon its Common Stock, whether in cash, property, stock or other securities, whether or not a regular cash dividend and whether or not out of earnings or earned surplus;

(ii) to offer for subscription pro rata to the holders of any class or series of its stock any additional shares of stock of any class or series or any other similar rights;


(iii) to effect any reclassification or recapitalization of its Common Stock outstanding which results in a change in the Common Stock; or

(iv) to merge or consolidate with or into any other corporation, or sell, lease or convey all or substantially all its property or business, or to liquidate, dissolve or wind up;

Then, in connection with each such event, the Corporation shall send to the holders of the Preferred:

(1) at least 20 days' prior written notice of the date on which a record shall be taken for such dividend, distribution or subscription rights (and specifying the date on which the holders of Common Stock shall be entitled thereto) or for determining rights to vote on the matters referred to in (iii) and (iv) above; and

(2) in the case of the matters referred to in (iii) and (iv) above, at least 20 days' prior written notice of the date when the same shall take place and specifying the date on which the holders of Common Stock shall be entitled to exchange their Common Stock for securities or other property deliverable upon the occurrence of such event or the record date for the determination of such holders if such record date is earlier.

Each such written notice shall be delivered personally or given by first class mail, postage prepaid, addressed to the holders of the Preferred at the address for each such holder as shown on the books of the Corporation.

5. REDEMPTION OF SERIES J PREFERRED.

(a) At the option of the holder thereof to be exercised not less than sixty (60) days prior to the date of first redemption, the Corporation shall redeem, from any source of funds legally available therefor, the Series J Preferred in ten equal quarterly installments beginning not earlier than December 31, 1998, and continuing thereafter on the same day of the month, on a quarterly basis, (each a "Series J Redemption Date") until the remaining Series J Preferred outstanding shall be redeemed. The Corporation shall effect such redemptions on the applicable Series J Preferred Redemption by paying in cash in exchange for the shares of Series J Preferred to be redeemed a sum equal to $14.03274 per share of Series J Preferred (as adjusted for any stock dividends, combinations or splits or other adjustments pursuant to Section 4 with respect to such shares) plus all declared but unpaid dividends on such shares (the "Series J Redemption Price").

(b) The Corporation shall also pay interest on the outstanding balance due with respect to the Series J Redemption Price, to begin accruing on the first Series J Redemption Date, at 9 1/2% per annum and to be payable with each subsequent installment ("Series J Interest Payment"). The Series J Interest Payment for each quarter shall be calculated as the number of Series J Preferred then outstanding times the Series J Redemption Price times 1/4 times .095.


(c) At least 10 but not more than 20 days prior to each Series J Redemption Date written notice shall be mailed, first class postage prepaid, to the holder of record (at the close of business on the business day next preceding the day on which notice is given) of the Series J Preferred to be redeemed, at the address last shown on the records of the Corporation for such holder, notifying such holder of the redemption to be effected, specifying the number of shares to be redeemed from such holder, the Series J Redemption Date, the Series J Redemption Price, the place at which payment may be obtained and calling upon such holder to surrender to the Corporation, in the manner and at the place designated, his certificate or certificates representing the shares to be redeemed (the "Redemption Notice"). On or after the Redemption Date, such holder shall surrender to the Corporation the certificate or certificates representing such shares, in the manner and at the place designated in the Redemption Notice, and thereupon the Series J Redemption Price of such shares shall be payable to the order of the person whose name appears on such certificate or certificates as the owner thereof and each surrendered certificate shall be canceled. In the event less than all the shares represented by any such certificate are redeemed, a new certificate shall promptly be issued representing the unredeemed shares.

(d) From and after the Series J Redemption Date, unless there shall have been a default in payment of the Redemption Price, all rights of the holder of shares of Series J Preferred designated for redemption in the Redemption Notice as holder of Series J Preferred shall cease with respect to such shares, and such shares shall not thereafter be transferred on the books of the Corporation or be deemed to be outstanding for any purpose whatsoever. If the funds of the Corporation legally available for redemption of shares of Series J Preferred on any Redemption Date are insufficient to redeem the total number of shares of Series J Preferred to be redeemed on such date and pay the Series J Redemption Price, those funds which are legally available will be used to redeem the maximum possible number of such shares to be redeemed. The shares of Series J Preferred not redeemed shall remain outstanding and shall be entitled to all the rights and preferences provided herein. The Series J Redemption Prices to the extent not paid when due shall accrue interest in accordance with the terms hereof every quarter until paid. At any time thereafter when additional funds of the Corporation are legally available for the redemption of shares of Series J Preferred such funds will immediately be used to redeem the balance of the shares which the Corporation has become obliged to redeem on any Redemption Date, but which it has not redeemed, and pay any amounts owed for Series J Redemption Prices and Interest Payments.

(e) On or prior to each Redemption Date, the Corporation shall deposit the Series J Preferred Redemption Price of all shares of Series J Preferred designated for redemption in the Redemption Notice and not yet redeemed plus the Series J Interest Payment due with respect thereto or so much thereof as is then legally available in accordance with Section 5(d), with a bank or trust corporation having aggregate capital and surplus in excess of $100,000,000 as a trust fund for the benefit of the holder of the shares designated for redemption and not yet redeemed, with irrevocable instructions and authority to the bank or trust corporation to pay the Series J Redemption Price for such shares to their respective holders on or after the Redemption Date upon receipt of notification from the Corporation that such holder has surrendered his share certificate to the Corporation pursuant to Section (c) above. For each


Series J Redemption Date, unless otherwise provided in Section 5(d) above, the deposit shall constitute full payment of the shares to their holders, and from and after Series J Redemption Date the shares so called for redemption shall be redeemed and shall be deemed to be no longer outstanding, and the holder thereof shall cease to be shareholder with respect thereto except the rights to receive from the bank or trust corporation payment of the Series J Redemption Price of the shares, without interest, upon surrender of their certificates therefor. Such instructions shall also provide that any moneys deposited by the Corporation pursuant to this Section 5(e) for the redemption of shares thereafter converted into shares of the Corporation's Common Stock hereof prior to the Redemption Date shall be returned to the Corporation forthwith upon such conversion. The balance of any moneys deposited by the Corporation pursuant to this Section 5(e) remaining unclaimed at the expiration of two (2) years following each Series J Redemption Date shall thereafter be returned to the Corporation upon its request expressed in a resolution of its Board of Directors.

6. COVENANTS. In addition to any other rights provided by law, so long as any shares of Preferred shall be outstanding, the Corporation shall not, without first obtaining the affirmative vote or written consent of the holders of not less than a majority of the outstanding shares of a series of Preferred:

(a) amend or repeal any provision of, or add any provision to, the Corporation's Articles of Incorporation if such action would materially and adversely directly alter or change the preferences, rights, or privileges of such series of Preferred;

(b) increase or decrease the authorized number of shares of such series of Preferred;

(c) authorize, issue, or enter into any agreement providing for the issuance of any capital stock or other equity security which is senior to such series of Preferred with respect to the payment of dividends, redemption, or distribution upon liquidation; or

(d) redeem, purchase, or otherwise acquire any of the Corporation's capital stock or other equity securities other than (i) shares of Common Stock repurchased at cost from terminated employees or consultants pursuant to contractual arrangements, or (ii) shares of Preferred redeemed pursuant to the terms of the Articles of Incorporation of the Corporation.

In addition to any other rights provided by law, so long as any shares of Preferred shall be outstanding, the Corporation shall not, without first obtaining the affirmative vote or written consent of the holders of a majority of the outstanding shares of Preferred, voting together as a single class (including the Series J Preferred):

(a) sell or convey all or substantially all of its property or business or merge into or consolidate with any other corporation if immediately after such merger or consolidation the shareholders of the Corporation shall hold less than 50% of the voting power of the surviving corporation; or


(b) liquidate, dissolve, or effect a recapitalization or reorganization of the Corporation.

V

The liability of the directors of the Corporation for monetary damages shall be eliminated to the fullest extent permissible under California law. The Corporation is also authorized, to the fullest extent permissible under California law, to indemnify its agents (as defined in Section 317 of the California Corporations Code), whether by bylaw, agreement or otherwise, for breach of duty to the Corporation and its shareholders in excess of that expressly permitted by Section 317 and to advance defense expenses to its agents in connection with such matters as they are incurred. If, after the effective date of this Article, California law is amended in a manner which permits a corporation to limit the monetary or other liability of its directors or to authorize indemnification of, or advancement of such defense expenses to, its directors or other persons, in any such case to a greater extent than is permitted on such effective date, the references in this Article to "California law" shall to that extent be deemed to refer to California law as so amended."

3. The foregoing Amendment and Restatement of Articles of Incorporation has been duly approved by the Board of Directors.

4. The foregoing Amendment and Restatement of Articles of Incorporation has been duly approved by the required vote of shareholders in accordance with
Section 902 and Section 903 of the Corporations Code.

5. The total number of outstanding shares of Common Stock of the Corporation is 2,605,135, and the total number of outstanding shares of (i) Series A Preferred is 480,000, (ii) Series B Preferred is 320,666, (iii) Series C Preferred is 1,700,000, (iv) Series D Preferred is 1,309,484, (v) Series E Preferred is 1,965,262, (vi) Series F Preferred is 1,948,090, (vii) Series G Preferred is zero, (viii) Series H Preferred is 3,804,346 (ix) Series I Preferred Stock is zero and (x) Series J Preferred is 1,081,200. The number of shares voting in favor of Amendment and Restatement equaled or exceeded the vote required. The percentage vote required was (i) more than 50% of the Common Stock voting as a class and (ii) more than 50% of the Preferred Stock voting together as a class."


We further declare under penalty of perjury that the matters set forth in the foregoing certificate are true and correct of our own knowledge.

Executed at Palo Alto, California, this 5th day of January 2000.

By: /s/ Randall Lipps
   -------------------------------------
         Randall Lipps
         Chairman of the Board

By:
Robert J. Brigham Assistant Secretary

We further declare under penalty of perjury that the matters set forth in the foregoing certificate are true and correct of our own knowledge.

Executed at Palo Alto, California, this 5th day of January 2000.

By:

Randall Lipps Chairman of the Board

By:   /s/ Robert J. Brigham
   -------------------------------------
         Robert J. Brigham


         Assistant Secretary


CERTIFICATE OF AMENDMENT OF

AMENDED AND RESTATED ARTICLES OF INCORPORATION OF

OMNICELL.COM

Randall Lipps and Robert J. Brigham certify that:

1. They are the Chairman of the Board and Assistant Secretary, respectively, of OMNICELL.COM, a California corporation.

2. Article III of the Amended and Restated Articles of Incorporation of this corporation is amended to read in full as follows:

"III

The Corporation is authorized to issue two classes of shares to be designated respectively Common Stock and Preferred Stock. The total number of shares of Common Stock the Corporation shall have authority to issue is 35,000,000 and the total number of shares of Preferred Stock the Corporation shall have authority to issue is 18,500,000. The Preferred Stock may be issued from time to time in one or more series. The Board of Directors is authorized to fix the number of shares of any series of Preferred Stock and, subject to the rights of existing shareholders set forth in Article IV, Section 6, to determine or alter the rights, preferences, privileges, and restrictions granted to or imposed upon any wholly unissued series of Preferred Stock and, within the limits and restrictions stated in any resolution or resolutions of the Board of Directors originally fixing the number of shares constituting any series of Preferred Stock, to increase or decrease (but not below the number of shares of any such series then outstanding) the number of shares of any such series subsequent to the issue of shares of that series (subject to the provisions of Section 6 of Article IV hereof).

The Common Stock shall be divided into two series, to be designated, respectively, Class A Voting Common Stock, consisting of 32,500,000 shares ("Class A Common"), and Class B Non-voting Common Stock, consisting of 2,500,000 shares ("Class B Common").

The first series of Preferred Stock shall be designated Series A Preferred Stock ("Series A Preferred") and shall consist of 480,000 shares. The second series of Preferred Stock shall be designated Series B Preferred Stock ("Series B Preferred") and shall consist of 320,666 shares. The third series of Preferred Stock shall be designated Series C Preferred Stock ("Series C Preferred") and shall consist of 1,700,000 shares. The fourth series of Preferred Stock shall be designated Series D Preferred Stock ("Series D Preferred") and shall consist of 1,328,000 shares. The fifth series of Preferred Stock shall be designated Series E Preferred Stock ("Series E Preferred") and shall consist of 1,966,000 shares. The sixth series of Preferred Stock shall be designated Series F Preferred Stock


("Series F Preferred") and shall consist of 2,000,000 shares. The seventh series of Preferred Stock shall be designated Series G Preferred Stock ("Series G Preferred") and shall consist of 1,000,000 shares. The eighth series of Preferred Stock shall be designated Series H Preferred Stock ("Series H Preferred") and shall consist of 4,000,000 shares. The ninth series of Preferred Stock shall be designated Series J Preferred Stock ("Series J Preferred") and shall consist of 1,802,000 shares. The tenth series of Preferred Stock shall be designated Series K Preferred Stock ("Series K Preferred") and shall consist of 3,157,895 shares. The Series A Preferred, the Series B Preferred, the Series C Preferred, the Series D Preferred, the Series E Preferred, the Series F Preferred, Series G Preferred, Series H Preferred, Series J Preferred and Series K Preferred shall be referred to as the "Preferred". "

3. The foregoing Amendment and Restatement of Articles of Incorporation has been duly approved by the Board of Directors.

4. The foregoing Amendment and Restatement of Articles of Incorporation has been duly approved by the required vote of shareholders in accordance with
Section 902 and Section 903 of the Corporations Code.

5. The total number of outstanding shares of Common Stock of the Corporation is 2,605,135, and the total number of outstanding shares of (i) Series A Preferred is 480,000, (ii) Series B Preferred is 320,666, (iii) Series C Preferred is 1,700,000, (iv) Series D Preferred is 1,309,484, (v) Series E Preferred is 1,965,262, (vi) Series F Preferred is 1,948,090, (vii) Series G Preferred is zero, (viii) Series H Preferred is 3,804,346, (ix) Series I Preferred Stock is zero, (x) Series J Preferred is 1,081,200 and (xi) Series K Preferred is 2,105,263. The number of shares voting in favor of Amendment and Restatement equaled or exceeded the vote required. The percentage vote required was (i) more than 50% of the Common Stock voting as a class and (ii) more than 50% of the Preferred Stock voting together as a class."


We further declare under penalty of perjury that the matters set forth in the foregoing certificate are true and correct of our own knowledge.

Executed at Palo Alto, California, this 3 day of MARCH 2000.

By:   /s/ Randall Lipps
   ---------------------------
         Randall Lipps
         Chairman of the Board

By:   /s/ Robert J. Brigham
   ---------------------------
         Robert J. Brigham
         Assistant Secretary


EXHIBIT 3.3

CERTIFICATE OF INCORPORATION OF

OMNICELL MERGER CORPORATION

The undersigned, a natural person (the "Sole Incorporator"), for the purpose of organizing a corporation to conduct the business and promote the purposes hereinafter stated, under the provisions and subject to the requirements of the laws of the State of Delaware hereby certifies that:

I.

The name of this corporation is Omnicell Merger Corporation.

II.

The address of the registered office of the corporation in the State of Delaware is 1013 Centre Road, City of Wilmington, 19805, County of New Castle and the name of the registered agent of the corporation in the State of Delaware at such address is Corporation Service Company.

III.

The purpose of the Corporation is to engage in any lawful act or activity for which a corporation may be organized under the General Corporation Law of California other than the banking business, the trust company business or the practice of a profession permitted to be incorporated by the California Corporations Code.

IV.

The Corporation is authorized to issue two classes of shares to be designated respectively Common Stock and Preferred Stock. The total number of shares of Common Stock the Corporation shall have authority to issue is 50,000,000, each having a par value of one-tenth of one cent ($.001) and the total number of shares of Preferred Stock the Corporation shall have authority to issue is 18,500,000, each having a par value of one-tenth of one cent ($.001).

The Preferred Stock may be issued from time to time in one or more series. The Board of Directors is authorized to fix the number of shares of any series of Preferred Stock and, subject to the rights of existing shareholders set forth in Article V, Section 6, to determine or alter the rights, preferences, privileges, and restrictions granted to or imposed upon any wholly unissued series of Preferred Stock and, within the limits and restrictions stated in any resolution or resolutions of the Board of Directors originally fixing the number of shares constituting any series of Preferred Stock, to increase or decrease (but not below the number of shares of any such series then outstanding) the number of shares of any such series subsequent to the issue of shares of that series (subject to the provisions of Section 6 of Article V hereof).


The Common Stock shall be divided into two series, to be designated, respectively, Class A Voting Common Stock, consisting of 47,500,000 shares ("Class A Common"), and Class B Non-voting Common Stock, consisting of 2,500,000 shares ("Class B Common").

The first series of Preferred Stock shall be designated Series A Preferred Stock ("Series A Preferred") and shall consist of 480,000 shares. The second series of Preferred Stock shall be designated Series B Preferred Stock ("Series B Preferred") and shall consist of 320,666 shares. The third series of Preferred Stock shall be designated Series C Preferred Stock ("Series C Preferred") and shall consist of 1,700,000 shares. The fourth series of Preferred Stock shall be designated Series D Preferred Stock ("Series D Preferred") and shall consist of 1,328,000 shares. The fifth series of Preferred Stock shall be designated Series E Preferred Stock ("Series E Preferred") and shall consist of 1,966,000 shares. The sixth series of Preferred Stock shall be designated Series F Preferred Stock ("Series F Preferred") and shall consist of 2,000,000 shares. The seventh series of Preferred Stock shall be designated Series G Preferred Stock ("Series G Preferred") and shall consist of 1,000,000 shares. The eighth series of Preferred Stock shall be designated Series H Preferred Stock ("Series H Preferred") and shall consist of 4,000,000 shares. The ninth series of Preferred Stock shall be designated Series J Preferred Stock ("Series J Preferred") and shall consist of 1,802,000 shares. The tenth series of Preferred Stock shall be designated Series K Preferred Stock ("Series K Preferred") and shall consist of 3,157,895 shares. The eleventh series of Preferred Stock shall be designated Series L Preferred Stock ("Series L Preferred") and shall consist of 526,316 shares. The remaining 219,123 shares of Preferred Stock are not yet designated. The Series A Preferred, the Series B Preferred, the Series C Preferred, the Series D Preferred, the Series E Preferred, the Series F Preferred, Series G Preferred, Series H Preferred, Series J Preferred, Series K Preferred and Series L Preferred shall be referred to as the "Preferred."

V.

The relative rights, preferences, privileges and restrictions granted to or imposed on the respective classes of the shares of capital stock or the holders thereof are as follows:

1. DIVIDENDS.

(a) The holders of the Series J Preferred shall be entitled to receive in any fiscal year, when and as declared by the Board of Directors, out of any assets legally available therefore, dividends in cash at an annual rate of $1.12 per share (as adjusted for any stock dividends, combinations, consolidations or splits with respect to such shares). The right to such dividends shall not be cumulative and no right shall accrue to holders of Series J Preferred by reason of the fact that dividends on such shares were not declared in any prior year, nor shall any undeclared dividends bear or accrue interest. Such dividends shall be prior and in preference to any declaration or payment of any dividend, (payable other than in common stock) on the Series A Preferred, Series B Preferred, Series C Preferred, Series D Preferred, Series E Preferred, Series F Preferred, Series G Preferred, Series H Preferred, Series K Preferred, Series L Preferred, or Common Stock. No dividend may be paid on the Series A Preferred, the Series B Preferred, the Series C Preferred, the Series D Preferred, the Series E Preferred, the Series F Preferred, the Series G Preferred, the Series H Preferred, the Series K Preferred, the Series L Preferred or the Common Stock unless and until any and all dividends have been paid to the Series J Preferred.

2

(b) After payment of all required dividends required to the holders of Series J Preferred, the holders of outstanding Series A Preferred, Series B Preferred, Series C Preferred, Series D Preferred, Series E Preferred, Series F Preferred, Series G Preferred, Series H Preferred, Series K Preferred, and Series L Preferred shall be entitled to receive in any fiscal year, when and as declared by the Board of Directors, out of any assets at the time legally available therefor, dividends in cash at an annual rate of $0.02 per share of Series A Preferred, $0.03 per share of Series B Preferred, $0.048 per share of Series C Preferred, $0.085 per share of Series D Preferred, $0.265 per share of Series E Preferred, $0.49 per share of Series F Preferred, $0.49 per share of Series G Preferred, $0.29 per share of Series H Preferred, $0.76 per share of Series K Preferred, and $0.76 per share of Series L Preferred (as adjusted for any stock dividends, combinations, consolidations or splits with respect to such shares). Such dividends may be payable quarterly or otherwise as the Board of Directors may from time to time determine. The right to such dividends shall not be cumulative and no right shall accrue to holders of such Preferred by reason of the fact that dividends on such shares were not declared in any prior year, nor shall any undeclared dividends bear or accrue interest.

(c) Any partial payment of such dividends to the holders of the Series A Preferred, Series B Preferred, Series C Preferred, Series D Preferred, Series E Preferred, Series F Preferred, Series G Preferred, Series H Preferred, Series K Preferred and Series L Preferred shall be made in proportion to the amount each such holder would be entitled to receive as set forth above if such amounts were paid in full. Dividends other than dividends payable solely in Common Stock may be declared or paid upon shares of Common Stock in any fiscal year of the Corporation only if dividends at the annual rates set forth above shall have been paid or declared and set apart upon all shares of Preferred for such fiscal year. No dividend shall be declared or paid with respect to the Common Stock unless at the same time an equivalent dividend is declared or paid with respect to the Preferred on an as-if-converted to Common Stock basis. Any declared but unpaid dividends on the Preferred shall be paid upon the conversion of such shares into Common Stock either (at the option of the Corporation) by payment of cash or by the issuance of additional shares of Common Stock based upon the fair market value of the Common Stock at the time of conversion, as determined by the Board of Directors. No dividend payable in Common Stock shall be declared or paid with respect to any series of Preferred unless at the same time a similar dividend is declared or paid to all series of Preferred on an as-if-converted to Common Stock basis, such that the holders of no series of Preferred shall hold a greater proportion of the Corporation's Common Stock following such dividend (on an as-if converted basis) than immediately prior to such dividend.

2. LIQUIDATION PREFERENCE. In the event of any liquidation, dissolution, or winding up of the Corporation, either voluntary or involuntary, distributions to the shareholders of the Corporation shall be made in the following manner:

(a) Holders of the Series J Preferred shall be entitled to receive, prior and in preference to any distribution of any of the assets or surplus funds of the Corporation to the holders of the Series A Preferred, Series B Preferred, Series C Preferred, Series D Preferred, Series E Preferred, Series F Preferred, Series G Preferred, Series H Preferred, Series K Preferred, Series L Preferred or Common Stock by reason of their ownership thereof, the amount of $14.03274 per share (as adjusted for any stock dividends, combinations, consolidations or splits with respect to such shares), plus all accrued or declared but unpaid dividends on such share for each share of Series J Preferred then held by them. If the assets and funds thus distributed among the holders of Series J Preferred shall be insufficient to permit the payment to such

3

holders of the full aforesaid preferential amount, then the entire assets and funds of the Corporation legally available for distribution shall be distributed among the holders of Series J Preferred in proportion to the full preferential amount each such holder is otherwise entitled to receive.

(b) Subject to the payment in full of the liquidation preferences with respect to the Series J Preferred as provided in Section 2(a) above, the holders of the Series A Preferred, Series B Preferred, Series C Preferred, Series D Preferred, Series E Preferred, Series F Preferred, Series G Preferred, Series H Preferred, Series K Preferred and Series L Preferred shall be entitled to receive, prior and in preference to any distribution of any of the assets or surplus funds of the Corporation to the holders of the Common Stock by reason of their ownership of such stock, the amount of $0.25 per share for each share of Series A Preferred then held by them, $0.375 per share for each share of Series B Preferred then held by them, $0.60 per share for each share of Series C Preferred then held by them, $1.085 per share for each share of Series D Preferred then held by them, $3.30 per share of Series E Preferred then held by them, $6.15 per share of Series F Preferred then held by them, $6.15 per share of Series G Preferred then held by them, $3.68 per share of Series H Preferred then held by them, for the holders of Series K Preferred, the greater of (i) $9.50 per share of Series K Preferred, then held by such holder and (ii) the amount per share of Series K Preferred, that such holder would have received if they had converted their Series K Preferred shares into Common Stock immediately prior to the liquidation, and for the holders of Series L Preferred, $9.50 per share of Series L Preferred then held by them, adjusted for any stock dividends, combinations, consolidations, or splits with respect to such shares and, in addition, an amount equal to all declared but unpaid dividends on the Series A Preferred, Series B Preferred, Series C Preferred, Series D Preferred, Series E Preferred, Series F Preferred, Series G Preferred, Series H Preferred Series K Preferred and Series L Preferred. If the assets and funds thus distributed among the holders of Preferred shall be insufficient to permit the payment to such holders of the full aforesaid preferential amount, then the entire assets and funds of the Corporation remaining after payment in full of the liquidation preference set forth in Section 2(a) and legally available for distribution shall be distributed among the holders of Preferred in proportion to the full preferential amount each such holder is otherwise entitled to receive. After payment has been made to the holders of Preferred of the full amounts to which they shall be entitled as aforesaid, the holders of the Common Stock shall be entitled to receive ratably on a per-share basis all the remaining assets.

(c) For purposes of this Section 2, a merger or consolidation of the Corporation with or into any other corporation or corporations, or the merger of any other corporation or corporations into the Corporation, in which the shareholders of the Corporation receive distributions in cash or securities of another corporation or corporations as a result of such consolidation or merger, any transaction or series of related transactions to which the Company is a party in which excess of fifty percent (50%) of the Company's voting power is transferred, or a sale of all or substantially all of the assets of the Corporation (collectively, a "Change in Control"), shall be treated as a liquidation, dissolution or winding up of the Corporation.

Any securities to be delivered to the holders of the Preferred pursuant to this subsection (c) shall be valued as follows:

(i) Securities not subject to investment letter or other similar restrictions on free marketability:

4

(A) If traded on a securities exchange or the Nasdaq National Market System, the value shall be deemed to be the average of the closing prices of the securities on such exchange or system over the 30-day period ending three (3) days prior to the closing;

(B) If actively traded over-the-counter, the value shall be deemed to be the average of the closing bid prices over the 30-day period ending three (3) days prior to the closing; and

(C) If there is no active public market, the value shall be the fair market value thereof, as determined in good faith by the Board of Directors of the Corporation.

(ii) The method of valuation of securities subject to investment letter or other restrictions on free marketability shall be to make an appropriate discount from the market value determined as above in
(i)(A),(B) or (C) to reflect the approximate fair market value thereof, as determined in good faith by the Board of Directors of the Corporation.

The Corporation shall give each holder of record of shares of Preferred written notice of an impending transaction described in this subsection 2(c) not later than twenty (20) days prior to the shareholders meeting called to approve such transaction, or twenty (20) days prior to the closing of such transaction, whichever is earlier, and shall also notify such holders in writing of the final approval of such transaction. The first of such notices shall describe the material terms and conditions of the impending transaction and the provisions of this section 2(c) and the Corporation shall thereafter give such holders prompt notice of any material changes. The transaction shall in no event take place sooner than twenty (20) days after the Corporation has given the first notice provided for herein or sooner than ten (10) days after the corporation has given notice of any material changes provided for herein; provided, however, that such periods may be shortened upon the written consent of the holders of shares of Preferred Stock which is entitled to such notice rights or similar notice rights and which represents at least a majority of the voting power of all then outstanding shares of such shares of Preferred Stock.

(d) As authorized by Section 402.5(c) of the California Corporations Code, the provisions of Sections 502 and 503 of the California Corporations Code shall not apply with respect to repurchase by the Corporation of shares of Common Stock issued to or held by employees or consultants of the Corporation or its subsidiaries upon termination of their employment or services pursuant to agreement providing for the right of said repurchase.

3. VOTING RIGHTS.

(a) Except as otherwise required by law or by Section 3(b) hereof, the holder of each share of Common Stock issued and outstanding shall have one vote and each holder of shares of Preferred shall be entitled to the number of votes equal to the number of shares of Common Stock into which such shares of Preferred could be converted at the record date for determination of the shareholders entitled to vote on such matters, or, if no such record date is established, at the date such vote is taken or any written consent of shareholders is solicited, such votes to be counted together with all other shares of stock of the Corporation having general voting power and not separately as a class except as otherwise provided herein or by law.

5

Fractional votes by the holders of Preferred shall not, however, be permitted and any fractional voting rights shall (after aggregating all shares into which shares of the Preferred held by each holder could be converted) be rounded to the nearest whole number. Holders of Common Stock and the Preferred shall be entitled to notice of any shareholders' meeting in accordance with the Bylaws of the Corporation.

(b) Notwithstanding Section 3(a) above, the Class B Common shall not have any voting rights except as required by law.

(c) At each annual or special meeting called for the purpose of electing directors, the holders of Series E Preferred, voting together as a class, shall be entitled to elect one (1) director of the Corporation, the holders of Series H Preferred, voting together as a class, shall be entitled to elect one (1) director of the Corporation and the holders of Series K Preferred, voting together as a class, shall be entitled to elect one (1) director of the Corporation. Subject to the restrictions of
Section 3(b) above, all remaining directors shall be elected by the holders of the Common Stock and the Preferred Stock (on an as-converted basis) voting together as a single class. In the case of a vacancy in the office of director elected by the holders of (i) Series E Preferred, (ii) Series H Preferred, or (iii) Series K Preferred, a successor shall be elected to hold office for the unexpired term of such director by the affirmative vote of the majority of the shares of such holders of (i) Series E Preferred, (ii) Series H Preferred, or (iii) Series K Preferred, respectively. In the case of any vacancies in the office of the remaining directors elected by holders of the Common Stock and the Preferred Stock (on an as-converted basis), voting together as a class, any successor shall be elected to hold office for the unexpired term of such director by the affirmative vote of the majority of the shares of such holders of Common and Preferred Stock. Subject to Section 303 of the California Corporations Code, any director who shall have been elected by holders of (i) Series E Preferred, (ii) Series H Preferred, (iii) Series K Preferred, or (iv) Common Stock and Preferred Stock, may be removed during the aforesaid term of office, either for or without cause by, and only by, the affirmative vote of the holders of a majority of (i) Series E Preferred, (ii) Series H Preferred, (iii) Series K Preferred, or (iv) Common Stock and Preferred Stock, respectively, given at a special meeting of the shareholders duly called or by an action by written consent for that purpose, and any such vacancy thereby created may be filled by the vote of the holders of a majority of (i) Series E Preferred, (ii) Series H Preferred, (iii) Series K Preferred, or (iv) Common Stock and Preferred Stock, respectively, at such meeting or in such consent.

4. CONVERSION. The holders of the Preferred have conversion rights as follows (the "Conversion Rights"):

(a) RIGHT TO CONVERT. Each share of Series A Preferred, Series B Preferred, Series C Preferred, Series D Preferred, Series E Preferred, Series F Preferred, Series G Preferred, Series H Preferred, Series J Preferred, Series K Preferred and Series L Preferred shall be convertible, at the option of the holder thereof, at any time after the date of issuance of such share at the office of the Corporation or any transfer agent for the Preferred, into such number of fully paid and nonassessable shares of Class A Common as is determined by dividing the Conversion Price for such series of Preferred (determined as hereinafter provided) in effect at the time of the conversion into the "Conversion Value" per share of such series of Preferred. The number of shares of Class A Common into which each series of Preferred is convertible is

6

hereinafter referred to as the "Conversion Rate" for such series. The Conversion Price per share of (i) Series A Preferred shall be $0.25, (ii) Series B Preferred shall be $0.375, (iii) Series C Preferred shall be $0.60,
(iv) Series D Preferred shall be $1.085, (v) Series E Preferred shall be $3.30, (vi) Series F Preferred shall be $5.555874, (vii) Series G Preferred shall be $6.15, (viii) Series H Preferred shall be $3.68, (ix) Series J Preferred shall be $14.03274, (x) Series K Preferred shall be $9.50, and (xi) Series L Preferred shall be $9.50. The Conversion Value per share of (i) Series A Preferred shall be $0.25, (ii) Series B Preferred shall be $0.375,
(iii) Series C Preferred shall be $0.60, (iv) Series D Preferred shall be $1.085, (v) Series E Preferred shall be $3.30, (vi) Series F Preferred shall be $6.15, (vii) Series G Preferred shall be $6.15, (viii) Series H Preferred shall be $3.68, (ix) Series J Preferred shall be $14.03274, (x) Series K Preferred shall be $9.50, and (xi) Series L Preferred shall be $9.50. The Conversion Price for each series of Preferred shall be subject to adjustment as hereinafter provided.

(b) AUTOMATIC CONVERSION. Each share of Preferred shall automatically be converted into shares of Class A Common at the then effective Conversion Price upon the closing of a firm commitment underwritten public offering pursuant to an effective registration statement under the Securities Act of 1933, as amended, covering the offer and sale of Common Stock for the account of the Corporation to the public (an "Initial Public Offering") at a price per share (prior to deduction of underwriter commissions and offering expenses) of not less than $7.36 per share (appropriately adjusted for any stock dividends, stock splits, combinations, recapitalizations or similar events) and an aggregate offering price to the public of not less than $10,000,000 (prior to deduction of underwriter commissions and offering expenses).

(c) MECHANICS OF CONVERSION. No fractional shares of Common Stock shall be issued upon conversion of shares of Preferred. In lieu of any fractional shares to which the holder would otherwise be entitled, the Corporation shall pay cash equal to such fraction multiplied by the then effective Conversion Price. Before any holder of Preferred shall be entitled to convert the same into full shares of Common Stock and to receive certificates therefor, he shall surrender the certificate or certificates therefor, duly endorsed, at the office of the Corporation or of any transfer agent for the Preferred, and shall give written notice to the Corporation at such office that he elects to convert the same; provided, however, that in the event of an automatic conversion pursuant to Section 4(b), the outstanding shares of Preferred shall be converted automatically without any further action by the holders of such shares and whether or not the certificates representing such shares are surrendered to the Corporation or its transfer agent, and provided further that the Corporation shall not be obligated to issue certificates evidencing the shares of Common Stock issuable upon such automatic conversion unless the certificates evidencing such shares of Preferred are either delivered to the Corporation or its transfer agent as provided above, or the holder notifies the Corporation or its transfer agent that such certificates have been lost, stolen or destroyed and executes an agreement reasonably satisfactory to the Corporation to indemnify the Corporation from any loss incurred by it in connection with the theft, loss or destruction of such certificates. The Corporation shall, as soon as practicable after delivery of such certificates, or such agreement and indemnification in the case of a lost certificate, issue and deliver at such office to such holder of Preferred, a certificate or certificates for the number of shares of Common Stock to which he shall be entitled as aforesaid and a check payable to the holder in the amount of any cash amounts payable as the result of a conversion into fractional shares of Common Stock. Such conversion shall be deemed to have been made immediately prior to the close of business on the date of such surrender of the

7.


shares of Preferred to be converted, or in the case of automatic conversion on the date of closing of the offering, and the person or persons entitled to receive the shares of Common Stock issuable upon such conversion shall be treated for all purposes as the record holder or holders of such shares of Common Stock on such date.

(d) ADJUSTMENTS TO CONVERSION PRICE FOR DILUTIVE ISSUES.

(i) SPECIAL DEFINITIONS. For purposes of this
Section 4(d), the following definitions shall apply:

(1) "OPTIONS" shall mean rights, options or warrants to subscribe for, purchase or otherwise acquire either Common Stock or Convertible Securities.

(2) "ORIGINAL ISSUE DATE" shall mean June 11, 1996.

(3) "CONVERTIBLE SECURITIES" shall mean any evidences of indebtedness, shares (other than the Common Stock) or other securities convertible into or exchangeable for Common Stock.

(4) "ADDITIONAL SHARES OF COMMON STOCK" shall mean all shares of Common Stock issued (or, pursuant to Section
4(d)(ii), deemed to be issued) by the Corporation after the Original Issue Date, other than shares of Common Stock issued or issuable at any time:

(A) upon conversion of the shares of Preferred authorized herein;

(B) (i) to officers, directors, and employees of, and consultants to, the Corporation to be designated pursuant to plans and arrangements approved by the Board of Directors; and
(ii) to lending or leasing institutions approved by the Board of Directors, provided that the aggregate of (i) and (ii) do not exceed more that 4,058,821 shares (net of shares repurchased and Options expiring unexercised), appropriately adjusted for stock splits, combinations, stock dividends, recapitalizations, or similar events (provided that any shares repurchased by the Corporation from employees, officers, directors and consultants pursuant to the terms of stock repurchase agreements approved by the Board of Directors, or Options which terminate unexercised, shall not, unless reissued, be counted as issued for purposes of this calculation);

(C) as a dividend or distribution on Preferred or any event for which adjustment is made pursuant to Section 4(e) hereof;

(D) by way of dividend or other distribution on shares of Common Stock excluded from the definition of Additional Shares of Common Stock by the foregoing clauses (A), (B), or (C).

(ii) DEEMED ISSUE OF ADDITIONAL SHARES OF COMMON STOCK. In the event the Corporation at any time or from time to time after the Original Issue Date shall issue any Options or Convertible Securities or shall fix a record date for the determination of holders

8.


of any class of securities entitled to receive any such Options or Convertible Securities, then the maximum number of shares (as set forth in the instrument relating thereto assuming the satisfaction of any conditions to exercisability, including without limitation, the passage of time and without regard to any provisions contained therein for a subsequent adjustment of such number) of Common Stock issuable upon the exercise of such Options or, in the case of Convertible Securities and Options therefor, the conversion or exchange of such Convertible Securities, shall be deemed to be Additional Shares of Common Stock issued as of the time of such issue or, in case such a record date shall have been fixed, as of the close of business on such record date, provided that Additional Shares of Common Stock shall not be deemed to have been issued unless the consideration per share (determined pursuant to Section 4(d)(iv) hereof) of such Additional Shares of Common Stock would be less than the Conversion Price for such series in effect on the date of and immediately prior to such issue, or such record date, as the case may be, and provided further that in any such case in which Additional Shares of Common Stock are deemed to be issued:

(1) no further adjustment in the Conversion Price shall be made upon the subsequent issue of Convertible Securities or shares of Common Stock upon the exercise of such Options or conversion or exchange of such Convertible Securities;

(2) if such Options or Convertible Securities by their terms provide, with the passage of time or otherwise, for any increase or decrease in the consideration payable to the Corporation, or in the number of shares of Common Stock issuable, upon the exercise, conversion or exchange thereof, the Conversion Price computed upon the original issue thereof (or upon the occurrence of a record date with respect thereto), and any subsequent adjustments based thereon, shall, upon any such increase or decrease becoming effective, be recomputed to reflect such increase or decrease insofar as it affects such Options or the rights of conversion or exchange under such Convertible Securities;

(3) upon the expiration of any such Options or any rights of conversion or exchange under such Convertible Securities which shall not have been exercised, the Conversion Price computed upon the original issue thereof (or upon the occurrence of a record date with respect thereto), and any subsequent adjustments based thereon, shall, upon such expiration, be recomputed as if,

(A) in the case of Convertible Securities or Options for Common Stock, the only Additional Shares of Common Stock issued were shares of Common Stock, if any, actually issued upon the exercise of such Options or the conversion or exchange of such Convertible Securities and the consideration received therefor was the consideration actually received by the Corporation for the issue of all such Options, whether or not exercised, plus the consideration actually received by the Corporation upon such exercise, or for the issue of all such Convertible Securities which were actually converted or exchanged, plus the additional consideration, if any, actually received by the Corporation upon such conversion or exchange, and

(B) in the case of Options for Convertible Securities, only the Convertible Securities, if any, actually issued upon the exercise thereof were issued at the time of issue of such Options, and the consideration received by the Corporation for the

9.


Additional Shares of Common Stock deemed to have been then issued was the consideration actually received by the Corporation for the issue of all such Options, whether or not exercised, plus the consideration deemed to have been received by the Corporation upon the issue of the Convertible Securities with respect to which such Options were actually exercised;

(4) no readjustment pursuant to clause
(2) or (3) above shall have the effect of increasing the Conversion Price to an amount which exceeds the lower of (i) the Conversion Price on the original adjustment date, or (ii) the Conversion Price that would have resulted from any issuance of Additional Shares of Common Stock between the original adjustment date and such readjustment date; and

(5) in the case of any Options which expire by their terms not more than 90 days after the date of issue thereof, no adjustment of the Conversion Price shall be made until the expiration or exercise of all such Options.

(iii) ADJUSTMENT OF CONVERSION PRICE UPON ISSUANCE OF ADDITIONAL SHARES OF COMMON STOCK.

(1) SERIES E PREFERRED, SERIES F PREFERRED AND SERIES H PREFERRED, SERIES J PREFERRED SERIES K PREFERRED AND
SERIES L PREFERRED. In the event the Corporation shall issue Additional Shares of Common Stock (including Additional Shares of Common Stock deemed to be issued pursuant to Section 4(d)(ii)) after the Original Issue Date without consideration or for consideration per share less than the Conversion Price for (i) the Series E Preferred, (ii) the Series F Preferred, (iii) the Series H Preferred, (iv) the Series J Preferred, (v) Series K Preferred, and/or (vi) Series L Preferred in effect on the date of and immediately prior to such issue, then and in such event, the Conversion Price for the (i) Series E Preferred, (ii) Series F Preferred, (iii) Series H Preferred, (iv) Series J Preferred, (v) Series K Preferred, and/or (vi) Series L Preferred if the applicable consideration per share is less than the Conversion Price then in effect for such series of Series Preferred, shall be reduced, concurrently with such issue, to a price determined by multiplying such Conversion Price by a fraction, the numerator of which shall be the number of shares of Common Stock outstanding immediately prior to such issue (including all shares of Common Stock issuable upon conversion of the outstanding shares of Preferred and all shares of Common Stock reserved for future issuance by the Board of Directors of the Corporation) plus the number of shares of Common Stock which the aggregate consideration received by the Corporation for the total number of Additional Shares of Common Stock so issued would purchase at such Conversion Price; and the denominator of which shall be the number of shares of Common Stock outstanding immediately prior to such issue (including all shares of Common Stock issuable upon conversion of the outstanding shares of Preferred and all shares of Common Stock reserved for future issuance by the Board of Directors of the Corporation) plus the number of such Additional Shares of Common Stock so issued. In the event the Conversion Price for the Series K Preferred shall be adjusted as a result of this Section 4(d)(iii), the Minimum Price (as defined below) shall also be adjusted by the same fraction used to adjust the Conversion Price for the Series K Preferred.

(2) SERIES G PREFERRED. In the event the Corporation shall issue Additional Shares of Common Stock (including Additional Shares of Common Stock deemed to be issued pursuant to Section
4(d)(ii)) after the Original Issue Date and on or prior to

10.


September 30, 1995 (the "Trigger Date"), without consideration or for consideration per share less than the Conversion Price for the Series G Preferred in effect on the date of and immediately prior to such issue, then and in such event, the Conversion Price for the Series G Preferred shall be reduced, concurrently with such issue, to a price equal to the amount of consideration received by the Corporation per share in such issuance. In the event this Corporation shall issue Additional Shares of Common Stock (including Additional Shares of Common Stock deemed to be issued pursuant to
Section 4(d)(ii)) after the Trigger Date without consideration or for consideration per share less than the Conversion Price of the Series G Preferred in effect on the date of and immediately prior to such issue, then in such event, the Conversion Price of Series G Preferred shall be reduced, concurrently with such issue, to a price determined by multiplying such Conversion Price by a fraction, the numerator of which shall be the number of shares of Common Stock outstanding immediately prior to such issue (including all shares of Common Stock issuable upon conversion of the outstanding Preferred Stock and all shares of Common Stock received for future issuance by the Board of Directors of the Corporation) plus the number of shares of Common Stock which the aggregate consideration received by the Corporation for the total number of Additional Shares of Common Stock so issued would purchase at such Conversion Price; and the denominator of which shall be the number of shares of Common Stock outstanding immediately prior to such issue (including all shares of Common Stock issuable upon conversion of the outstanding Preferred Stock and all shares of Common Stock reserved for future issuance by the Board of Directors of the Corporation) plus the number of such Additional Shares of Common Stock so issued.

(3) SERIES J PREFERRED. In the event the Corporation shall undertake an Initial Public Offering at certain per share prices set forth below (appropriately adjusted for any stock dividends, stock splits, combinations, recapitalizations or similar events), the Series J Preferred will undergo a Conversion Price adjustment. If the price per share to the public in the Initial Public Offering is equal to or less than $11.22 and higher than $9.82, the Conversion Price will be adjusted to $12.38345 per share. If the price per share to the public in the Initial Public Offering is equal to or less than $9.82 and higher than $8.42, the Conversion Price will be adjusted to $11.69611 per share. If the price per share to the public in the Initial Public Offering is equal to or less than $8.42 and higher than $7.02, the Conversion Price will be adjusted to $11.07622 per share. If the price per share to the public in the Initial Public Offering is equal to or less than $7.02, the Conversion Price will be adjusted to $10.52310 per share.

(4) SERIES K PREFERRED. In the event of
(i) an Initial Public Offering, (ii) a liquidation, dissolution, or winding up of the Corporation, either voluntary or involuntary or (iii) a Change of Control (collectively, a "Liquidity Event"), during the time periods and at the per share prices set forth below (appropriately adjusted for any stock dividends, stock splits, combinations, recapitalizations or similar events), the Series K Preferred will undergo a Conversion Price adjustment. If the price per share (on an if-as-converted to Common Stock basis) in the Liquidity Event (the "Liquidity Price") is less than $21.11 per share, and the Liquidity Event occurs prior to the first anniversary of the first issuance date of the Series K Preferred (the "Series K Issuance Date"), the Conversion Price for the Series K Preferred will be adjusted to forty-five percent (45%) of the Liquidity Price. If the Liquidity Price is less than $27.14 per share and the Liquidity Event occurs after the first anniversary and prior to the second anniversary of the Series K Issuance Date, the Conversion Price will be adjusted to thirty-five percent (35%) of the Liquidity Price. If the Liquidity Price is less than

11.


$38.00 per share and the Liquidity Event occurs after the second anniversary of the Series K Issuance Date, the Conversion Price will be adjusted to twenty-five percent (25%) of the Liquidity Price. Notwithstanding the foregoing, in no event shall the minimum Conversion price per share of the Series K Preferred be adjusted below $5.00 per share (appropriately adjusted under Section 4(d)(iii)(1) and for any stock dividends, stock splits, combinations, recapitalizations or similar events) (the "Minimum Price").

(iv) DETERMINATION OF CONSIDERATION. For purposes of this Section 4(d), the consideration received by the Corporation for the issue of any Additional Shares of Common Stock shall be computed as follows:

(1) CASH AND PROPERTY. Such consideration shall:

(A) insofar as it consists of cash, be computed at the aggregate amount of cash received by the Corporation excluding amounts paid or payable for accrued interest or accrued dividends;

(B) insofar as it consists of property other than cash, be computed at the fair value thereof at the time of such issue, as determined in good faith by the Board irrespective of any accounting treatment; and

(C) in the event Additional Shares of Common Stock are issued together with other shares or securities or other assets of the Corporation for consideration which covers both, be the proportion of such consideration so received, computed as provided in clauses (A) and (B) above, as determined in good faith by the Board.

(2) OPTIONS AND CONVERTIBLE SECURITIES. The consideration per share received by the Corporation for Additional Shares of Common Stock deemed to have been issued pursuant to Section 4(d)(ii), relating to Options and Convertible Securities, shall be determined by dividing

(x) the total amount, if any, received or receivable by the Corporation as consideration for the issue of such Options or Convertible Securities, plus the minimum aggregate amount of additional consideration (as set forth in the instruments relating thereto, without regard to any provision contained therein for a subsequent adjustment of such consideration) payable to the Corporation upon the exercise of such Options or the conversion or exchange of such Convertible Securities, or in the case of Options for Convertible Securities, the exercise of such Options for Convertible Securities and the conversion or exchange of such Convertible Securities by

(y) the maximum number of shares of Common Stock (as set forth in the instruments relating thereto, without regard to any provision contained therein for a subsequent adjustment of such number) issuable upon the exercise of such Options or the conversion or exchange of such Convertible Securities.

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(e) ADJUSTMENTS TO CONVERSION PRICE.

(i) ADJUSTMENTS FOR STOCK DIVIDENDS, SUBDIVISIONS, COMBINATIONS OR CONSOLIDATION OF COMMON STOCK. In the event the outstanding shares of Common Stock shall be, after the Original Issue Date, subdivided (by stock split or otherwise) into a greater number of shares of Common Stock, or the Corporation shall declare or pay any dividend on the Common Stock payable in Common Stock, the Conversion Price for each series then in effect shall, concurrently with the effectiveness of such subdivision or stock dividend, be proportionately decreased based on the ratio of (i) the number of shares of Common Stock outstanding immediately prior to such subdivision or stock dividend to (ii) the number of shares of Common Stock outstanding immediately after such subdivision or stock dividend. In the event the outstanding shares of Common Stock shall, after the Original Issue Date, be combined or consolidated, by reclassification or otherwise, into a lesser number of shares of Common Stock, the Conversion Price for each series then in effect shall, concurrently with the effectiveness of such combination or consolidation, be proportionately increased on the same basis as set forth above.

(ii) ADJUSTMENTS FOR OTHER DISTRIBUTIONS. In the event the Corporation at any time or from time to time, after the Original Issue Date, makes, or fixes a record date for the determination of holders of Common Stock entitled to receive any distribution payable in securities of the Corporation other than shares of Common Stock and other than as otherwise adjusted in this Section 4 or as otherwise provided in
Section 2, then and in each such event provision shall be made so that the holders of Preferred shall receive upon conversion thereof, in addition to the number of shares of Common Stock receivable thereupon, the amount of securities of the Corporation which they would have received had their shares of Preferred been converted into Common Stock on the date of such event and had they thereafter, during the period from the date of such event to and including the date of conversion, retained such securities receivable by them as aforesaid during such period, subject to all other adjustments called for during such period under this Section 4 with respect to the rights of the holders of the Preferred.

(iii) ADJUSTMENTS FOR RECLASSIFICATION, EXCHANGE AND SUBSTITUTION. If the Common Stock issuable upon conversion of shares of Preferred shall, after the Original Issue Date, be changed into the same or a different number of shares of any other class or classes of stock, whether by capital reorganization, reclassification or otherwise (other than a subdivision or combination of shares provided for above), the Conversion Price then in effect shall, concurrently with the effectiveness of such reorganization or reclassification, be proportionately adjusted such that the shares of Preferred shall be convertible into, in lieu of the number of shares of Common Stock which the holders would otherwise have been entitled to receive, a number of shares of such other class or classes of stock equivalent to the number of shares of Common Stock that would have been subject to receipt by the holders upon conversion of the Preferred immediately before that change.

(f) NO IMPAIRMENT. Except as permitted by Section 6, the Corporation will not, by amendment of its Articles of Incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the

13.


terms to be observed or performed hereunder by the Corporation but will at all times in good faith assist in the carrying out of all the provisions of this Section 4 and in the taking of all such action as may be necessary or appropriate in order to protect the Conversion Rights of the holders of Preferred against impairment, including setting aside and reserving for future issuance upon conversion of the outstanding shares of Preferred the number of shares of Common Stock issuable upon such conversion.

(g) CERTIFICATE AS TO ADJUSTMENTS. Upon the occurrence of each adjustment or readjustment of the Conversion Price for a series of Preferred pursuant to this Section 4, the Corporation at its expense shall promptly compute such adjustment or readjustment in accordance with the terms hereof and furnish to each holder of such series of Preferred a certificate setting forth such adjustment or readjustment and showing in detail the facts upon which such adjustment or readjustment is based. The Corporation shall, upon the written request at any time of any holder of such series of Preferred, furnish or cause to be furnished to such holder a like certificate setting forth (i) such adjustments and readjustments, (ii) the Conversion Price in effect at the time for such series, and (iii) the number of shares of Common Stock and the amount, if any, of other property which at the time would be received upon the conversion of such series of Preferred.

(h) NOTICES OF RECORD DATE. In the event that the Corporation shall propose at any time:

(i) to declare any dividend or distribution upon its Common Stock, whether in cash, property, stock or other securities, whether or not a regular cash dividend and whether or not out of earnings or earned surplus;

(ii) to offer for subscription pro rata to the holders of any class or series of its stock any additional shares of stock of any class or series or any other similar rights;

(iii) to effect any reclassification or recapitalization of its Common Stock outstanding which results in a change in the Common Stock; or

(iv) to merge or consolidate with or into any other corporation, or sell, lease or convey all or substantially all its property or business, or to liquidate, dissolve or wind up;

Then, in connection with each such event, the Corporation shall send to the holders of the Preferred:

(1) at least 20 days' prior written notice of the date on which a record shall be taken for such dividend, distribution or subscription rights (and specifying the date on which the holders of Common Stock shall be entitled thereto) or for determining rights to vote on the matters referred to in (iii) and (iv) above; and

(2) in the case of the matters referred to in (iii) and (iv) above, at least 20 days' prior written notice of the date when the same shall take place and specifying the date on which the holders of Common Stock shall be entitled to exchange their

14.


Common Stock for securities or other property deliverable upon the occurrence of such event or the record date for the determination of such holders if such record date is earlier.

Each such written notice shall be delivered personally or given by first class mail, postage prepaid, addressed to the holders of the Preferred at the address for each such holder as shown on the books of the Corporation.

5. REDEMPTION OF SERIES J PREFERRED.

(a) At the option of the holder thereof to be exercised not less than sixty (60) days prior to the date of first redemption, the Corporation shall redeem, from any source of funds legally available therefor, the Series J Preferred in ten equal quarterly installments beginning not earlier than December 31, 1998, and continuing thereafter on the same day of the month, on a quarterly basis, (each a "Series J Redemption Date") until the remaining Series J Preferred outstanding shall be redeemed. The Corporation shall effect such redemptions on the applicable Series J Preferred Redemption by paying in cash in exchange for the shares of Series J Preferred to be redeemed a sum equal to $14.03274 per share of Series J Preferred (as adjusted for any stock dividends, combinations or splits or other adjustments pursuant to Section 4 with respect to such shares) plus all declared but unpaid dividends on such shares (the "Series J Redemption Price").

(b) The Corporation shall also pay interest on the outstanding balance due with respect to the Series J Redemption Price, to begin accruing on the first Series J Redemption Date, at 9 1/2% per annUM and to be payable with each subsequent installment ("Series J Interest Payment"). The Series J Interest Payment for each quarter shall be calculated as the number of Series J Preferred then outstanding times the Series J Redemption Price times 1/4 times .095.

(c) At least 10 but not more than 20 days prior to each Series J Redemption Date written notice shall be mailed, first class postage prepaid, to the holder of record (at the close of business on the business day next preceding the day on which notice is given) of the Series J Preferred to be redeemed, at the address last shown on the records of the Corporation for such holder, notifying such holder of the redemption to be effected, specifying the number of shares to be redeemed from such holder, the Series J Redemption Date, the Series J Redemption Price, the place at which payment may be obtained and calling upon such holder to surrender to the Corporation, in the manner and at the place designated, his certificate or certificates representing the shares to be redeemed (the "Redemption Notice"). On or after the Redemption Date, such holder shall surrender to the Corporation the certificate or certificates representing such shares, in the manner and at the place designated in the Redemption Notice, and thereupon the Series J Redemption Price of such shares shall be payable to the order of the person whose name appears on such certificate or certificates as the owner thereof and each surrendered certificate shall be canceled. In the event less than all the shares represented by any such certificate are redeemed, a new certificate shall promptly be issued representing the unredeemed shares.

(d) From and after the Series J Redemption Date, unless there shall have been a default in payment of the Redemption Price, all rights of the holder of shares of Series J Preferred designated for redemption in the Redemption Notice as holder of Series J Preferred

15.


shall cease with respect to such shares, and such shares shall not thereafter be transferred on the books of the Corporation or be deemed to be outstanding for any purpose whatsoever. If the funds of the Corporation legally available for redemption of shares of Series J Preferred on any Redemption Date are insufficient to redeem the total number of shares of Series J Preferred to be redeemed on such date and pay the Series J Redemption Price, those funds which are legally available will be used to redeem the maximum possible number of such shares to be redeemed. The shares of Series J Preferred not redeemed shall remain outstanding and shall be entitled to all the rights and preferences provided herein. The Series J Redemption Prices to the extent not paid when due shall accrue interest in accordance with the terms hereof every quarter until paid. At any time thereafter when additional funds of the Corporation are legally available for the redemption of shares of Series J Preferred such funds will immediately be used to redeem the balance of the shares which the Corporation has become obliged to redeem on any Redemption Date, but which it has not redeemed, and pay any amounts owed for Series J Redemption Prices and Interest Payments.

(e) On or prior to each Redemption Date, the Corporation shall deposit the Series J Preferred Redemption Price of all shares of Series J Preferred designated for redemption in the Redemption Notice and not yet redeemed plus the Series J Interest Payment due with respect thereto or so much thereof as is then legally available in accordance with Section 5(d), with a bank or trust corporation having aggregate capital and surplus in excess of $100,000,000 as a trust fund for the benefit of the holder of the shares designated for redemption and not yet redeemed, with irrevocable instructions and authority to the bank or trust corporation to pay the Series J Redemption Price for such shares to their respective holders on or after the Redemption Date upon receipt of notification from the Corporation that such holder has surrendered his share certificate to the Corporation pursuant to Section (c) above. For each Series J Redemption Date, unless otherwise provided in Section 5(d) above, the deposit shall constitute full payment of the shares to their holders, and from and after Series J Redemption Date the shares so called for redemption shall be redeemed and shall be deemed to be no longer outstanding, and the holder thereof shall cease to be shareholder with respect thereto except the rights to receive from the bank or trust corporation payment of the Series J Redemption Price of the shares, without interest, upon surrender of their certificates therefor. Such instructions shall also provide that any moneys deposited by the Corporation pursuant to this Section 5(e) for the redemption of shares thereafter converted into shares of the Corporation's Common Stock hereof prior to the Redemption Date shall be returned to the Corporation forthwith upon such conversion. The balance of any moneys deposited by the Corporation pursuant to this Section 5(e) remaining unclaimed at the expiration of two (2) years following each Series J Redemption Date shall thereafter be returned to the Corporation upon its request expressed in a resolution of its Board of Directors.

6. COVENANTS. In addition to any other rights provided by law, so long as any shares of Preferred shall be outstanding, the Corporation shall not, without first obtaining the affirmative vote or written consent of the holders of not less than a majority of the outstanding shares of a series of Preferred:

(a) amend or repeal any provision of, or add any provision to, the Corporation's Articles of Incorporation if such action would materially and adversely directly alter or change the preferences, rights, or privileges of such series of Preferred;

16.


(b) increase or decrease the authorized number of shares of such series of Preferred;

(c) authorize, issue, or enter into any agreement providing for the issuance of any capital stock or other equity security which is senior to such series of Preferred with respect to the payment of dividends, redemption, or distribution upon liquidation; or

(d) redeem, purchase, or otherwise acquire any of the Corporation's capital stock or other equity securities other than (i) shares of Common Stock repurchased at cost from terminated employees or consultants pursuant to contractual arrangements, or (ii) shares of Preferred redeemed pursuant to the terms of the Articles of Incorporation of the Corporation.

In addition to any other rights provided by law, so long as any shares of Preferred shall be outstanding, the Corporation shall not, without first obtaining the affirmative vote or written consent of the holders of a majority of the outstanding shares of Preferred, voting together as a single class (including the Series J Preferred):

(a) sell or convey all or substantially all of its property or business or merge into or consolidate with any other corporation if immediately after such merger or consolidation the shareholders of the Corporation shall hold less than 50% of the voting power of the surviving corporation; or

(b) liquidate, dissolve, or effect a recapitalization or reorganization of the Corporation.

VI.

For the management of the business and for the conduct of the affairs of the corporation, and in further definition, limitation and regulation of the powers of the corporation, of its directors and of its stockholders or any class thereof, as the case may be, it is further provided that:

A.

1. The management of the business and the conduct of the affairs of the corporation shall be vested in its Board of Directors. The number of directors which shall constitute the whole Board of Directors shall be fixed exclusively by one or more resolutions adopted by the Board of Directors.

2. BOARD OF DIRECTORS

a. Subject to the rights of the holders of any series of Preferred Stock to elect additional directors under specified circumstances, following the closing of the initial public offering pursuant to an effective registration statement under the Securities Act of 1933, as amended (the "1933 Act"), covering the offer and sale of Common Stock to the public (the "Initial Public Offering"), the directors shall be divided into three classes designated as Class I, Class II and Class III, respectively. Directors shall be assigned to each class in accordance with

17.


a resolution or resolutions adopted by the Board of Directors. At the first annual meeting of stockholders following the closing of the Initial Public Offering, the term of office of the Class I directors shall expire and Class I directors shall be elected for a full term of three years. At the second annual meeting of stockholders following the Initial Public Offering, the term of office of the Class II directors shall expire and Class II directors shall be elected for a full term of three years. At the third annual meeting of stockholders following the Initial Public Offering, the term of office of the Class III directors shall expire and Class III directors shall be elected for a full term of three years. At each succeeding annual meeting of stockholders, directors shall be elected for a full term of three years to succeed the directors of the class whose terms expire at such annual meeting. During such time or times that the corporation is subject to Section 2115(b) of the California General Corporation Law ("CGCL"), this Section A.2.a of this Article VI shall become effective and be applicable only when the corporation is a "listed" corporation within the meaning of Section 301.5 of the CGCL.

b. In the event that the corporation is unable to have a classified board under applicable law, Section 301.5 of the CGCL,
Section A. 2. a. of this Article VI shall not apply and all directors shall be elected at each annual meeting of stockholders to hold office until the next annual meeting.

c. No stockholder entitled to vote at an election for directors may cumulate votes to which such stockholder is entitled, unless, at the time of such election, the corporation (i) is subject to
Section 2115(b) of the CGCL AND (ii) is not or ceases to be a "listed" corporation under Section 301.5 of the CGCL. During this time, every stockholder entitled to vote at an election for directors may cumulate such stockholder's votes and give one candidate a number of votes equal to the number of directors to be elected multiplied by the number of votes to which such stockholder's shares are otherwise entitled, or distribute the stockholder's votes on the same principle among as many candidates as such stockholder thinks fit. No stockholder, however, shall be entitled to so cumulate such stockholder's votes unless (i) the names of such candidate or candidates have been placed in nomination prior to the voting and (ii) the stockholder has given notice at the meeting, prior to the voting, of such stockholder's intention to cumulate such stockholder's votes. If any stockholder has given proper notice to cumulate votes, all stockholders may cumulate their votes for any candidates who have been properly placed in nomination. Under cumulative voting, the candidates receiving the highest number of votes, up to the number of directors to be elected, are elected.

Notwithstanding the foregoing provisions of this section, each director shall serve until his successor is duly elected and qualified or until his death, resignation or removal. No decrease in the number of directors constituting the Board of Directors shall shorten the term of any incumbent director.

3. REMOVAL OF DIRECTORS

a. During such time or times that the corporation is subject to Section 2115(b) of the CGCL, the Board of Directors or any individual director may be removed from office at any time without cause by the affirmative vote of the holders of at least a majority of the outstanding shares entitled to vote on such removal; provided, however, that unless the entire Board is removed, no individual director may be removed when the votes cast against such

18.


director's removal, or not consenting in writing to such removal, would be sufficient to elect that director if voted cumulatively at an election which the same total number of votes were cast (or, if such action is taken by written consent, all shares entitled to vote were voted) and the entire number of directors authorized at the time of such director's most recent election were then being elected.

b. At any time or times that the corporation is not subject to Section 2115(b) of the CGCL and subject to any limitations imposed by law, Section A. 3. a. above shall no longer apply and removal shall be as provided in Section 141(k) of the DGCL.

4. VACANCIES

a. Subject to the rights of the holders of any series of Preferred Stock, any vacancies on the Board of Directors resulting from death, resignation, disqualification, removal or other causes and any newly created directorships resulting from any increase in the number of directors, shall, unless the Board of Directors determines by resolution that any such vacancies or newly created directorships shall be filled by the stockholders, except as otherwise provided by law, be filled only by the affirmative vote of a majority of the directors then in office, even though less than a quorum of the Board of Directors, and not by the stockholders. Any director elected in accordance with the preceding sentence shall hold office for the remainder of the full term of the director for which the vacancy was created or occurred and until such director's successor shall have been elected and qualified.

b. If at the time of filling any vacancy or any newly created directorship, the directors then in office shall constitute less than a majority of the whole board (as constituted immediately prior to any such increase), the Delaware Court of Chancery may, upon application of any stockholder or stockholders holding at least ten percent (10%) of the total number of the shares at the time outstanding having the right to vote for such directors, summarily order an election to be held to fill any such vacancies or newly created directorships, or to replace the directors chosen by the directors then in offices as aforesaid, which election shall be governed by Section 211 of the DGCL.

c. At any time or times that the corporation is subject to Section 2115(b) of the CGCL, if, after the filling of any vacancy by the directors then in office who have been elected by stockholders shall constitute less than a majority of the directors then in office, then

(i) Any holder or holders of an aggregate of five percent (5%) or more of the total number of shares at the time outstanding having the right to vote for those directors may call a special meeting of stockholders; or

(ii) The Superior Court of the proper county shall, upon application of such stockholder or stockholders, summarily order a special meeting of stockholders, to be held to elect the entire board, all in accordance with Section 305(c) of the CGCL. The term of office of any director shall terminate upon that election of a successor.

19.


B.

1. Subject to paragraph (h) of Section 43 of the Bylaws, the Bylaws may be altered or amended or new Bylaws adopted by the affirmative vote of at least sixty-six and two-thirds percent (66-2/3%) of the voting power of all of the then-outstanding shares of the voting stock of the corporation entitled to vote. The Board of Directors shall also have the power to adopt, amend, or repeal Bylaws.

2. The directors of the corporation need not be elected by written ballot unless the Bylaws so provide.

3. No action shall be taken by the stockholders of the corporation except at an annual or special meeting of stockholders called in accordance with the Bylaws or by written consent of stockholders in accordance with the Bylaws prior to the closing of the Initial Public Offering and following the closing of the Initial Public Offering no action shall be taken by the stockholders by written consent.

4. Advance notice of stockholder nominations for the election of directors and of business to be brought by stockholders before any meeting of the stockholders of the corporation shall be given in the manner provided in the Bylaws of the corporation.

VII.

A. The liability of the directors for monetary damages shall be eliminated to the fullest extent under applicable law.

B. This corporation is authorized to provide indemnification of agents (as defined in Section 317 of the CGCL) for breach of duty to the corporation and its shareholders through bylaw provisions or through agreements with the agents, or through shareholder resolutions, or otherwise, in excess of the indemnification otherwise permitted by Section 317 of the CGCL, subject, at any time or times the corporation is subject to Section 2115(b) to the limits on such excess indemnification set forth in Section 204 of the CGCL.

C. Any repeal or modification of this Article VII shall be prospective and shall not affect the rights under this Article VII in effect at the time of the alleged occurrence of any act or omission to act giving rise to liability or indemnification.

VIII.

A. The corporation reserves the right to amend, alter, change or repeal any provision contained in this Certificate of Incorporation, in the manner now or hereafter prescribed by statute, except as provided in paragraph B. of this Article VII, and all rights conferred upon the stockholders herein are granted subject to this reservation.

20.


B. Notwithstanding any other provisions of this Certificate of Incorporation or any provision of law which might otherwise permit a lesser vote or no vote, but in addition to any affirmative vote of the holders of any particular class or series of the Voting Stock required by law, this Certificate of Incorporation or any Preferred Stock Designation, the affirmative vote of the holders of at least sixty-six and two-thirds percent (66-2/3%) of the voting power of all of the then-outstanding shares of the voting stock, voting together as a single class, shall be required to alter, amend or repeal Articles VI, VII, and VIII.

IX.

The name and the mailing address of the Sole Incorporator is as follows:

Sally A. Kay Cooley Godward LLP Five Palo Alto Square 3000 El Camino Real Palo Alto, CA 94306

IN WITNESS WHEREOF, this Certificate has been subscribed this 4th day of April, 2000 by the undersigned who affirms that the statements made herein are true and correct.

/s/ Sally A. Kay
-------------------------------
SALLY A. KAY
SOLE INCORPORATOR

21.


EXHIBIT 3.4

AMENDED AND RESTATED

CERTIFICATE OF INCORPORATION
OF
OMNICELL.COM

I.

The name of this corporation is Omnicell.com.

II.

The address of the registered office of the corporation in the State of Delaware is 1013 Centre Road, City of Wilmington, 19805, County of New Castle and the name of the registered agent of the corporation in the State of Delaware at such address is Corporation Service Company.

III.

The purpose of this corporation is to engage in any lawful act or activity for which a corporation may be organized under the General Corporation Law of the State of Delaware.

IV.

A. This corporation is authorized to issue two classes of stock to be designated, respectively, "Common Stock" and "Preferred Stock." The total number of shares which the corporation is authorized to issue is sixty-eight million five hundred thousand (68,500,000) shares. Fifty million (50,000,000) shares shall be Common Stock, each having a par value of one-tenth of one cent ($.001). Five million (5,000,000) shares shall be Preferred Stock, each having a par value of one-tenth of one cent ($.001).

B. The Preferred Stock may be issued from time to time in one or more series. The Board of Directors is hereby authorized, by filing a certificate (a "Preferred Stock Designation") pursuant to the Delaware General Corporation Law ("DGCL"), to fix or alter from time to time the designation, powers, preferences and rights of the shares of each such series and the qualifications, limitations or restrictions of any wholly unissued series of Preferred Stock, and to establish from time to time the number of shares constituting any such series or any of them; and to increase or decrease the number of shares of any series subsequent to the issuance of shares of that series, but not below the number of shares of such series then outstanding. In case the number of shares of any series shall be decreased in accordance with the foregoing sentence, the shares constituting such decrease shall resume the status that they had prior to the adoption of the resolution originally fixing the number of shares of such series.


V.

For the management of the business and for the conduct of the affairs of the corporation, and in further definition, limitation and regulation of the powers of the corporation, of its directors and of its stockholders or any class thereof, as the case may be, it is further provided that:

A.

1. The management of the business and the conduct of the affairs of the corporation shall be vested in its Board of Directors. The number of directors which shall constitute the whole Board of Directors shall be fixed exclusively by one or more resolutions adopted by the Board of Directors.

2. BOARD OF DIRECTORS

a. Subject to the rights of the holders of any series of Preferred Stock to elect additional directors under specified circumstances, following the closing of the initial public offering pursuant to an effective registration statement under the Securities Act of 1933, as amended (the "1933 Act"), covering the offer and sale of Common Stock to the public (the "Initial Public Offering"), the directors shall be divided into three classes designated as Class I, Class II and Class III, respectively. Directors shall be assigned to each class in accordance with a resolution or resolutions adopted by the Board of Directors. At the first annual meeting of stockholders following the closing of the Initial Public Offering, the term of office of the Class I directors shall expire and Class I directors shall be elected for a full term of three years. At the second annual meeting of stockholders following the Initial Public Offering, the term of office of the Class II directors shall expire and Class II directors shall be elected for a full term of three years. At the third annual meeting of stockholders following the Initial Public Offering, the term of office of the Class III directors shall expire and Class III directors shall be elected for a full term of three years. At each succeeding annual meeting of stockholders, directors shall be elected for a full term of three years to succeed the directors of the class whose terms expire at such annual meeting. During such time or times that the corporation is subject to Section 2115(b) of the California General Corporation Law ("CGCL"), this Section A.2.a of this Article V shall become effective and be applicable only when the corporation is a "listed" corporation within the meaning of Section 301.5 of the CGCL.

b. In the event that the corporation is unable to have a classified board under applicable law, Section 301.5 of the CGCL, Section A.
2. a. of this Article V shall not apply and all directors shall be elected at each annual meeting of stockholders to hold office until the next annual meeting.

c. No stockholder entitled to vote at an election for directors may cumulate votes to which such stockholder is entitled, unless, at the time of such election, the corporation (i) is subject to Section 2115(b) of the CGCL AND (ii) is not or ceases to be a "listed" corporation under Section 301.5 of the CGCL. During this time, every stockholder entitled to vote at an election for directors may cumulate such stockholder's votes and give one candidate a number of votes equal to the number of directors to be elected multiplied by the number of votes


to which such stockholder's shares are otherwise entitled, or distribute the stockholder's votes on the same principle among as many candidates as such stockholder thinks fit. No stockholder, however, shall be entitled to so cumulate such stockholder's votes unless (i) the names of such candidate or candidates have been placed in nomination prior to the voting and (ii) the stockholder has given notice at the meeting, prior to the voting, of such stockholder's intention to cumulate such stockholder's votes. If any stockholder has given proper notice to cumulate votes, all stockholders may cumulate their votes for any candidates who have been properly placed in nomination. Under cumulative voting, the candidates receiving the highest number of votes, up to the number of directors to be elected, are elected.

Notwithstanding the foregoing provisions of this section, each director shall serve until his successor is duly elected and qualified or until his death, resignation or removal. No decrease in the number of directors constituting the Board of Directors shall shorten the term of any incumbent director.

3. REMOVAL OF DIRECTORS

a. During such time or times that the corporation is subject to Section 2115(b) of the CGCL, the Board of Directors or any individual director may be removed from office at any time without cause by the affirmative vote of the holders of at least a majority of the outstanding shares entitled to vote on such removal; provided, however, that unless the entire Board is removed, no individual director may be removed when the votes cast against such director's removal, or not consenting in writing to such removal, would be sufficient to elect that director if voted cumulatively at an election which the same total number of votes were cast (or, if such action is taken by written consent, all shares entitled to vote were voted) and the entire number of directors authorized at the time of such director's most recent election were then being elected.

b. At any time or times that the corporation is not subject to
Section 2115(b) of the CGCL and subject to any limitations imposed by law,
Section A. 3. a. above shall no longer apply and removal shall be as provided in Section 141(k) of the DGCL.

4. VACANCIES

a. Subject to the rights of the holders of any series of Preferred Stock, any vacancies on the Board of Directors resulting from death, resignation, disqualification, removal or other causes and any newly created directorships resulting from any increase in the number of directors, shall, unless the Board of Directors determines by resolution that any such vacancies or newly created directorships shall be filled by the stockholders, except as otherwise provided by law, be filled only by the affirmative vote of a majority of the directors then in office, even though less than a quorum of the Board of Directors, and not by the stockholders. Any director elected in accordance with the preceding sentence shall hold office for the remainder of the full term of the director for which the vacancy was created or occurred and until such director's successor shall have been elected and qualified.

b. If at the time of filling any vacancy or any newly created directorship, the directors then in office shall constitute less than a majority of the whole board


(as constituted immediately prior to any such increase), the Delaware Court of Chancery may, upon application of any stockholder or stockholders holding at least ten percent (10%) of the total number of the shares at the time outstanding having the right to vote for such directors, summarily order an election to be held to fill any such vacancies or newly created directorships, or to replace the directors chosen by the directors then in offices as aforesaid, which election shall be governed by Section 211 of the DGCL.

c. At any time or times that the corporation is subject to
Section 2115(b) of the CGCL, if, after the filling of any vacancy by the directors then in office who have been elected by stockholders shall constitute less than a majority of the directors then in office, then

(i) Any holder or holders of an aggregate of five percent (5%) or more of the total number of shares at the time outstanding having the right to vote for those directors may call a special meeting of stockholders; or

(ii) The Superior Court of the proper county shall, upon application of such stockholder or stockholders, summarily order a special meeting of stockholders, to be held to elect the entire board, all in accordance with Section 305(c) of the CGCL. The term of office of any director shall terminate upon that election of a successor.

B.

1. Subject to paragraph (h) of Section 43 of the Bylaws, the Bylaws may be altered or amended or new Bylaws adopted by the affirmative vote of at least sixty-six and two-thirds percent (66-2/3%) of the voting power of all of the then-outstanding shares of the voting stock of the corporation entitled to vote. The Board of Directors shall also have the power to adopt, amend, or repeal Bylaws.

2. The directors of the corporation need not be elected by written ballot unless the Bylaws so provide.

3. No action shall be taken by the stockholders of the corporation except at an annual or special meeting of stockholders called in accordance with the Bylaws.

4. Advance notice of stockholder nominations for the election of directors and of business to be brought by stockholders before any meeting of the stockholders of the corporation shall be given in the manner provided in the Bylaws of the corporation.


VI.

A. The liability of the directors for monetary damages shall be eliminated to the fullest extent under applicable law.

B. This corporation is authorized to provide indemnification of agents (as defined in Section 317 of the CGCL) for breach of duty to the corporation and its shareholders through bylaw provisions or through agreements with the agents, or through shareholder resolutions, or otherwise, in excess of the indemnification otherwise permitted by Section 317 of the CGCL, subject, at any time or times the corporation is subject to Section 2115(b) to the limits on such excess indemnification set forth in Section 204 of the CGCL.

C. Any repeal or modification of this Article VI shall be prospective and shall not affect the rights under this Article VI in effect at the time of the alleged occurrence of any act or omission to act giving rise to liability or indemnification.

VII.

A. The corporation reserves the right to amend, alter, change or repeal any provision contained in this Certificate of Incorporation, in the manner now or hereafter prescribed by statute, except as provided in paragraph B. of this Article VII, and all rights conferred upon the stockholders herein are granted subject to this reservation.

B. Notwithstanding any other provisions of this Certificate of Incorporation or any provision of law which might otherwise permit a lesser vote or no vote, but in addition to any affirmative vote of the holders of any particular class or series of the Voting Stock required by law, this Certificate of Incorporation or any Preferred Stock Designation, the affirmative vote of the holders of at least sixty-six and two-thirds percent (66-2/3%) of the voting power of all of the then-outstanding shares of the voting stock, voting together as a single class, shall be required to alter, amend or repeal Articles V, VI, and VII.


EXHIBIT 3.5

BYLAWS

OF

OMNICELL TECHNOLOGIES, INC.

ARTICLE 1

CORPORATE OFFICES

SECTION 1.1 PRINCIPAL OFFICE The board of directors shall fix the location of the principal executive office of the corporation at any place within or outside the State of California. If the principal executive office is located outside such state and the corporation has one or more business offices in such state, then the board of directors shall fix and designate a principal business office in the State of California.

SECTION 1.2 OTHER OFFICES. The board of directors may at any time establish branch or subordinate offices at any place or places where the corporation is qualified to do business.

ARTICLE 2

MEETINGS OF SHAREHOLDERS

SECTION 2.1 PLACE OF MEETINGS. Meetings of shareholders shall be held at any place within or outside the State of California designated by the board of directors. In the absence of any such designation, shareholders' meetings shall be held at the principal executive office of the corporation.

SECTION 2.2 ANNUAL MEETING. The annual meeting of shareholders shall be held each year on a date and at a time designated by the board of directors. In the absence of such designation, the annual meeting of shareholders shall be held on the second Tuesday of May in each year at 10:00
a.m. However, if such day falls on a legal holiday, then the meeting shall be held at the same time and place on the next succeeding full business day. At the meeting, directors shall be elected, and any other proper business may be transacted.

SECTION 2.3 SPECIAL MEETING. A special meeting of the shareholders may be called at any time by the board of directors, or by the chairman of the board, or by the

1.


president, or by one or more shareholders holding shares in the aggregate entitled to cast not less than ten percent (10%) of the votes at that meeting.

If a special meeting is called by any person or persons other than the board of directors or the president or the chairman of the board, then the request shall be in writing, specifying the time of such meeting and the general nature of the business proposed to be transacted, and shall be delivered personally or sent by registered mail or by telegraphic or other facsimile transmission to the chairman of the board, the president, any vice president or the secretary of the corporation. The officer receiving the request shall cause notice to be promptly given to the shareholders entitled to vote, in accordance with the provisions of Sections 2.4 and 2.5 of these bylaws, that a meeting will be held at the time requested by the person or persons calling the meeting, so long as that time is not less than thirty-five (35) nor more than sixty (60) days after the receipt of the request. If the notice is not given within twenty (20) days after receipt of the request, then the person or persons requesting the meeting may give the notice. Nothing contained in this paragraph of this Section 2.3 shall be construed as limiting, fixing or affecting the time when a meeting of shareholders called by action of the board of directors may be held.

SECTION 2.4 NOTICE OF SHAREHOLDERS' MEETINGS. All notices of meetings of shareholders shall be sent or otherwise given in accordance with
Section 2.5 of these bylaws not less than ten (10) (or, if sent by third-class mail pursuant to Section 2.5 of these bylaws, thirty (30)) nor more than sixty (60) days before the date of the meeting. The notice shall specify the place, date, and hour of the meeting and (i) in the case of a special meeting, the general nature of the business to be transacted (no business other than that specified in the notice may be transacted) or (ii) in the case of the annual meeting, those matters which the board of directors, at the time of giving the notice, intends to present for action by the shareholders (but subject to the provisions of the next paragraph of this
Section 2.4 , any proper matter may be presented at the meeting for such action). The notice of any meeting at which directors are to be elected shall include the name of any nominee or nominees who, at the time of the notice, the board intends to present for election.

If action is proposed to be taken at any meeting for approval of (i) a contract or transaction in which a director has a direct or indirect financial interest, pursuant to Section 310 of the Corporations Code of California (the "Code"), (ii) an amendment of the articles of incorporation, pursuant to Section 902 of the Code, (iii) a reorganization of the corporation, pursuant to Section 1201 of the Code, (iv) a voluntary dissolution of the corporation, pursuant to Section 1900 of the Code, or (v) a distribution in dissolution other than in accordance with the rights of outstanding preferred shares, pursuant to Section 2007 of the Code, then the notice shall also state the general nature of that proposal.

SECTION 2.5 MANNER OF GIVING NOTICE; AFFIDAVIT OF NOTICE. Written notice of any meeting of shareholders shall be given either (i) personally or
(ii) by first-class mail or

2.


(iii) by third-class mail but only if the corporation has outstanding shares held of record by five hundred (500) or more persons (determined as provided in Section 605 of the Code) on the record date for the shareholders' meeting, or (iv) by telegraphic or other written communication. Notices not personally delivered shall be sent charges prepaid and shall be addressed to the shareholder at the address of that shareholder appearing on the books of the corporation or given by the shareholder to the corporation for the purpose of notice. If no such address appears on the corporation's books or is given, notice shall be deemed to have been given if sent to that shareholder by mail or telegraphic or other written communication to the corporation's principal executive office, or if published at least once in a newspaper of general circulation in the county where that office is located. Notice shall be deemed to have been given at the time when delivered personally or deposited in the mail or sent by telegram or other means of written communication.

If any notice addressed to a shareholder at the address of that shareholder appearing on the books of the corporation is returned to the corporation by the United States Postal Service marked to indicate that the United States Postal Service is unable to deliver the notice to the shareholder at that address, then all future notices or reports shall be deemed to have been duly given without further mailing if the same shall be available to the shareholder on written demand of the shareholder at the principal executive office of the corporation for a period of one (1) year from the date of the giving of the notice.

An affidavit of the mailing or other means of giving any notice of any shareholders' meeting, executed by the secretary, assistant secretary or any transfer agent of the corporation giving the notice, shall be prima facie evidence of the giving of such notice.

SECTION 2.6 QUORUM. The presence in person or by proxy of the holders of a majority of the shares entitled to vote thereat constitutes a quorum for the transaction of business at all meetings of shareholders. The shareholders present at a duly called or held meeting at which a quorum is present may continue to do business until adjournment, notwithstanding the withdrawal of enough shareholders to leave less than a quorum, if any action taken (other than adjournment) is approved by at least a majority of the shares required to constitute a quorum.

SECTION 2.7 ADJOURNED MEETING; NOTICE. Any shareholders' meeting, annual or special, whether or not a quorum is present, may be adjourned from time to time by the vote of the majority of the shares represented at that meeting, either in person or by proxy. In the absence of a quorum, no other business may be transacted at that meeting except as provided in Section 2.6 of these bylaws.

When any meeting of shareholders, either annual or special, is adjourned to another time or place, notice need not be given of the adjourned meeting if the time and place are announced at the meeting at which the adjournment is taken. However, if a new record date

3.


for the adjourned meeting is fixed or if the adjournment is for more than forty-five (45) days from the date set for the original meeting, then notice of the adjourned meeting shall be given. Notice of any such adjourned meeting shall be given to each shareholder of record entitled to vote at the adjourned meeting in accordance with the provisions of Sections 2.4 and 2.5 and of these bylaws. At any adjourned meeting the corporation may transact any business which might have been transacted at the original meeting.

SECTION 2.8 VOTING. The shareholders entitled to vote at any meeting of shareholders shall be determined in accordance with the provisions of
Section 2.11 of these bylaws, subject to the provisions of Sections 702 through 704 of the Code (relating to voting shares held by a fiduciary, in the name of a corporation or in joint ownership).

The shareholders' vote may be by voice vote or by ballot; provided, however, that any election for directors must be by ballot if demanded by any shareholder at the meeting and before the voting has begun.

Except as provided in the last paragraph of this Section 2.8, or as may be otherwise provided in the articles of incorporation, each outstanding share, regardless of class, shall be entitled to one vote on each matter submitted to a vote of the shareholders. Any shareholder entitled to vote on any matter may vote part of the shares in favor of the proposal and refrain from voting the remaining shares or, except when the matter is the election of directors, may vote them against the proposal; but, if the shareholder fails to specify the number of shares which the shareholder is voting affirmatively, it will be conclusively presumed that the shareholder's approving vote is with respect to all shares which the shareholder is entitled to vote.

If a quorum is present, the affirmative vote of the majority of the shares represented and voting at a duly held meeting (which shares voting affirmatively also constitute at least a majority of the required quorum) shall be the act of the shareholders, unless the vote of a greater number or a vote by classes is required by the Code or by the articles of incorporation.

At a shareholders' meeting at which directors are to be elected, a shareholder shall be entitled to cumulate votes (i.e., cast for any candidate a number of votes greater than the number of votes which such shareholder normally is entitled to cast) if the candidates' names have been placed in nomination prior to commencement of the voting and the shareholder has given notice prior to commencement of the voting of the shareholder's intention to cumulate votes. If any shareholder has given such a notice, then every shareholder entitled to vote may cumulate votes for candidates in nomination either (i) by giving one candidate a number of votes equal to the number of directors to be elected multiplied by the number of votes to which that shareholder's shares are normally entitled or (ii) by distributing the shareholder's votes on the same principle among any or all of the

4.


candidates, as the shareholder thinks fit. The candidates receiving the highest number of affirmative votes, up to the number of directors to be elected, shall be elected; votes against any candidate and votes withheld shall have no legal effect.

SECTION 2.9 VALIDATION OF MEETINGS; WAIVER OF NOTICE; CONSENT

The transactions of any meeting of shareholders, either annual or special, however called and noticed, and wherever held, shall be as valid as though they had been taken at a meeting duly held after regular call and notice, if a quorum be present either in person or by proxy, and if, either before or after the meeting, each person entitled to vote, who was not present in person or by proxy, signs a written waiver of notice or a consent to the holding of the meeting or an approval of the minutes thereof. The waiver of notice or consent or approval need not specify either the business to be transacted or the purpose of any annual or special meeting of shareholders, except that if action is taken or proposed to be taken for approval of any of those matters specified in the second paragraph of Section 2.4 of these bylaws, the waiver of notice or consent or approval shall state the general nature of the proposal. All such waivers, consents, and approvals shall be filed with the corporate records or made a part of the minutes of the meeting.

Attendance by a person at a meeting shall also constitute a waiver of notice of and presence at that meeting, except when the person objects at the beginning of the meeting to the transaction of any business because the meeting is not lawfully called or convened. Attendance at a meeting is not a waiver of any right to object to the consideration of matters required by the Code to be included in the notice of the meeting but not so included, if that objection is expressly made at the meeting.

SECTION 2.10 SHAREHOLDER ACTION BY WRITTEN CONSENT WITHOUT A MEETING. Any action which may be taken at any annual or special meeting of shareholders may be taken without a meeting and without prior notice, if a consent in writing, setting forth the action so taken, is signed by the holders of outstanding shares having not less than the minimum number of votes that would be necessary to authorize or take that action at a meeting at which all shares entitled to vote on that action were present and voted.

In the case of election of directors, such a consent shall be effective only if signed by the holders of all outstanding shares entitled to vote for the election of directors. However, a director may be elected at any time to fill any vacancy on the board of directors, provided that it was not created by removal of a director and that it has not been filled by the directors, by the written consent of the holders of a majority of the outstanding shares entitled to vote for the election of directors.

All such consents shall be maintained in the corporate records. Any shareholder giving a written consent, or the shareholder's proxy holders, or a transferee of the shares, or

5.


a personal representative of the shareholder, or their respective proxy holders, may revoke the consent by a writing received by the secretary of the corporation before written consents of the number of shares required to authorize the proposed action have been filed with the secretary.

If the consents of all shareholders entitled to vote have not been solicited in writing and if the unanimous written consent of all such shareholders has not been received, then the secretary shall give prompt notice of the corporate action approved by the shareholders without a meeting. Such notice shall be given to those shareholders entitled to vote who have not consented in writing and shall be given in the manner specified in Section of these bylaws. In the case of approval of (i) a contract or transaction in which a director has a direct or indirect financial interest, pursuant to Section 310 of the Code, (ii) indemnification of a corporate "agent," pursuant to Section 317 of the Code, (iii) a reorganization of the corporation, pursuant to Section 1201 of the Code, and (iv) a distribution in dissolution other than in accordance with the rights of outstanding preferred shares, pursuant to Section 2007 of the Code, the notice shall be given at least ten (10) days before the consummation of any action authorized by that approval.

SECTION 2.11 RECORD DATE FOR SHAREHOLDER NOTICE; VOTING; GIVING CONSENTS. For purposes of determining the shareholders entitled to notice of any meeting or to vote thereat or entitled to give consent to corporate action without a meeting, the board of directors may fix, in advance, a record date, which shall not be more than sixty (60) days nor less than ten
(10) days before the date of any such meeting nor more than sixty (60) days before any such action without a meeting, and in such event only shareholders of record on the date so fixed are entitled to notice and to vote or to give consents, as the case may be, notwithstanding any transfer of any shares on the books of the corporation after the record date, except as otherwise provided in the Code.

If the board of directors does not so fix a record date:

(a) the record date for determining shareholders entitled to notice of or to vote at a meeting of shareholders shall be at the close of business on the business day next preceding the day on which notice is given or, if notice is waived, at the close of business on the business day next preceding the day on which the meeting is held; and

(b) the record date for determining shareholders entitled to give consent to corporate action in writing without a meeting, (i) when no prior action by the board has been taken, shall be the day on which the first written consent is given, or (ii) when prior action by the board has been taken, shall be at the close of business on the day on which the board adopts the resolution relating to that action, or the sixtieth (60th) day before the date of such other action, whichever is later.

6.


The record date for any other purpose shall be as provided in Article 8 of these bylaws.

SECTION 2.12 PROXIES. Every person entitled to vote for directors, or on any other matter, shall have the right to do so either in person or by one or more agents authorized by a written proxy signed by the person and filed with the secretary of the corporation. A proxy shall be deemed signed if the shareholder's name is placed on the proxy whether by manual signature, typewriting, telegraphic transmission or otherwise) by the shareholder or the shareholder's attorney-in-fact. A validly executed proxy which does not state that it is irrevocable shall continue in full force and effect unless (i) the person who executed the proxy revokes it prior to the time of voting by delivering a writing to the corporation stating that the proxy is revoked or by executing a subsequent proxy and presenting it to the meeting or by voting in person at the meeting, or (ii) written notice of the death or incapacity of the maker of that proxy is received by the corporation before the vote pursuant to that proxy is counted; provided, however, that no proxy shall be valid after the expiration of eleven (11) months from the date of the proxy, unless otherwise provided in the proxy. The dates contained on the forms of proxy presumptively determine the order of execution, regardless of the postmark dates on the envelopes in which they are mailed. The revocability of a proxy that states on its face that it is irrevocable shall be governed by the provisions of Sections 705(e) and 705(f) of the Code.

SECTION 2.13 INSPECTORS OF ELECTION. Before any meeting of shareholders, the board of directors may appoint an inspector or inspectors of election to act at the meeting or its adjournment. If no inspector of election is so appointed, then the chairman of the meeting may, and on the request of any shareholder or a shareholder's proxy shall, appoint an inspector or inspectors of election to act at the meeting. The number of inspectors shall be either one (1) or three (3). If inspectors are appointed at a meeting pursuant to the request of one (1) or more shareholders or proxies, then the holders of a majority of shares or their proxies present at the meeting shall determine whether one (1) or three (3) inspectors are to be appointed. If any person appointed as inspector fails to appear or fails or refuses to act, then the chairman of the meeting may, and upon the request of any shareholder or a shareholder's proxy shall, appoint a person to fill that vacancy.

Such inspectors shall:

(a) determine the number of shares outstanding and the voting power of each, the number of shares represented at the meeting, the existence of a quorum, and the authenticity, validity, and effect of proxies;

(b) receive votes, ballots or consents;

7.


(c) hear and determine all challenges and questions in any way arising in connection with the right to vote;

(d) count and tabulate all votes or consents;

(e) determine when the polls shall close;

(f) determine the result; and

(g) do any other acts that may be proper to conduct the election or vote with fairness to all shareholders.

ARTICLE 3

DIRECTORS

SECTION 3.1 POWERS. Subject to the provisions of the Code and any limitations in the articles of incorporation and these bylaws relating to action required to be approved by the shareholders or by the outstanding shares, the business and affairs of the corporation shall be managed and all corporate powers shall be exercised by or under the direction of the board of directors.

SECTION 3.2 NUMBER OF DIRECTORS. The number of directors of the corporation shall be not less than five (5) nor more than nine (9). The exact number of directors shall be eight (8) until changed, within the limits specified above, by a resolution amending this Section 3.2, duly adopted by the board of directors or by the shareholders. The indefinite number of directors may be changed, or a definite number may be fixed without provision for an indefinite number, by a duly adopted amendment to the articles of incorporation or by an amendment to this bylaw duly adopted by the vote or written consent of holders of a majority of the outstanding shares entitled to vote; provided, however, that an amendment reducing the fixed number or the minimum number of directors to a number less than five (5) cannot be adopted if the votes cast against its adoption at a meeting, or the shares not consenting in the case of an action by written consent, are equal to more than sixteen and two-thirds percent (16-2/3%) of the outstanding shares entitled to vote thereon. No amendment may change the stated maximum number of authorized directors to a number greater than two (2) times the stated minimum number of directors minus one (1).

No reduction of the authorized number of directors shall have the effect of removing any director before that director's term of office expires.

SECTION 3.3 ELECTION AND TERM OF OFFICE OF DIRECTORS. Directors shall be elected at each annual meeting of shareholders to hold office until the next annual meeting. Each director, including a director elected to fill a vacancy, shall hold office until the

8.


expiration of the term for which elected and until a successor has been elected and qualified.

SECTION 3.4 RESIGNATION AND VACANCIES. Any director may resign effective on giving written notice to the chairman of the board, the president, the secretary or the board of directors, unless the notice specifies a later time for that resignation to become effective. If the resignation of a director is effective at a future time, the board of directors may elect a successor to take office when the resignation becomes effective.

Vacancies in the board of directors may be filled by a majority of the remaining directors, even if less than a quorum, or by a sole remaining director; however, a vacancy created by the removal of a director by the vote or written consent of the shareholders or by court order may be filled only by the affirmative vote of a majority of the shares represented and voting at a duly held meeting at which a quorum is present (which shares voting affirmatively also constitute a majority of the required quorum), or by the unanimous written consent of all shares entitled to vote thereon. Each director so elected shall hold office until the next annual meeting of the shareholders and until a successor has been elected and qualified.

A vacancy or vacancies in the board of directors shall be deemed to exist (i) in the event of the death, resignation or removal of any director,
(ii) if the board of directors by resolution declares vacant the office of a director who has been declared of unsound mind by an order of court or convicted of a felony, (iii) if the authorized number of directors is increased, or (iv) if the shareholders fail, at any meeting of shareholders at which any director or directors are elected, to elect the number of directors to be elected at that meeting.

The shareholders may elect a director or directors at any time to fill any vacancy or vacancies not filled by the directors, but any such election other than to fill a vacancy created by removal, if by written consent, shall require the consent of the holders of a majority of the outstanding shares entitled to vote thereon.

SECTION 3.5 PLACE OF MEETINGS; MEETINGS BY TELEPHONE. Regular meetings of the board of directors may be held at any place within or outside the State of California that has been designated from time to time by resolution of the board. In the absence of such a designation, regular meetings shall be held at the principal executive office of the corporation. Special meetings of the board may be held at any place within or outside the State of California that has been designated in the notice of the meeting or, if not stated in the notice or if there is no notice, at the principal executive office of the corporation.

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Any meeting, regular or special, may be held by conference telephone or similar communication equipment, so long as all directors participating in the meeting can hear one another; and all such directors shall be deemed to be present in person at the meeting.

SECTION 3.6 REGULAR MEETINGS. Regular meetings of the board of directors may be held without notice if the times of such meetings are fixed by the board of directors.

SECTION 3.7 SPECIAL MEETINGS; NOTICE. Special meetings of the board of directors for any purpose or purposes may be called at any time by the chairman of the board, the president, any vice president, the secretary or any two directors.

Notice of the time and place of special meetings shall be delivered personally or by telephone to each director or sent by first-class mail or telegram, charges prepaid, addressed to each director at that director's address as it is shown on the records of the corporation. If the notice is mailed, it shall be deposited in the United States mail at least four (4) days before the time of the holding of the meeting. If the notice is delivered personally or by telephone or telegram, it shall be delivered personally or by telephone or to the telegraph company at least forty-eight
(48) hours before the time of the holding of the meeting. Any oral notice given personally or by telephone may be communicated either to the director or to a person at the office of the director who the person giving the notice has reason to believe will promptly communicate it to the director. The notice need not specify the purpose or the place of the meeting, if the meeting is to be held at the principal executive office of the corporation.

SECTION 3.8 QUORUM. A majority of the authorized number of directors shall constitute a quorum for the transaction of business, except to adjourn as provided in Section 3.10 of these bylaws. Every act or decision done or made by a majority of the directors present at a duly held meeting at which a quorum is present shall be regarded as the act of the board of directors, subject to the provisions of Section 310 of the Code (as to approval of contracts or transactions in which a director has a direct or indirect material financial interest), Section 311 of the Code (as to appointment of committees), Section 317(e) of the Code (as to indemnification of directors), the articles of incorporation, and other applicable law.

A meeting at which a quorum is initially present may continue to transact business notwithstanding the withdrawal of directors, if any action taken is approved by at least a majority of the required quorum for that meeting.

SECTION 3.9 WAIVER OF NOTICE. Notice of a meeting need not be given to any director (i) who signs a waiver of notice or a consent to holding the meeting or an approval of the minutes thereof, whether before or after the meeting, or (ii) who attends the meeting without protesting, prior thereto or at its commencement, the lack of notice to such

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directors. All such waivers, consents, and approvals shall be filed with the corporate records or made part of the minutes of the meeting. A waiver of notice need not specify the purpose of any regular or special meeting of the board of directors.

SECTION 3.10 ADJOURNMENT. A majority of the directors present, whether or not constituting a quorum, may adjourn any meeting to another time and place.

SECTION 3.11 NOTICE OF ADJOURNMENT. Notice of the time and place of holding an adjourned meeting need not be given unless the meeting is adjourned for more than twenty-four (24) hours. If the meeting is adjourned for more than twenty-four (24) hours, then notice of the time and place of the adjourned meeting shall be given before the adjourned meeting takes place, in the manner specified in Section 3.7 of these bylaws, to the directors who were not present at the time of the adjournment.

SECTION 3.12 BOARD ACTION BY WRITTEN CONSENT WITHOUT A MEETING. Any action required or permitted to be taken by the board of directors may be taken without a meeting, provided that all members of the board individually or collectively consent in writing to that action. Such action by written consent shall have the same force and effect as a unanimous vote of the board of directors. Such written consent and any counterparts thereof shall be filed with the minutes of the proceedings of the board.

SECTION 3.13 FEES AND COMPENSATION OF DIRECTORS. Directors and members of committees may receive such compensation, if any, for their services and such reimbursement of expenses as may be fixed or determined by resolution of the board of directors. This Section 3.13 shall not be construed to preclude any director from serving the corporation in any other capacity as an officer, agent, employee or otherwise and receiving compensation for those services.

SECTION 3.14 APPROVAL OF LOANS TO OFFICERS.** The corporation may, upon the approval of the board of directors alone, make loans of money or property to, or guarantee the obligations of, any officer of the corporation or its parent or subsidiary, whether or not a director, or adopt an employee benefit plan or plans authorizing such loans or guaranties provided that (i) the board of directors determines that such a loan or guaranty or plan may reasonably be expected to benefit the corporation, (ii) the corporation has outstanding shares held of record by 100 or more persons (determined as provided in Section 605 of the Code) on the date of approval by the board of directors, and (iii) the approval of the board of directors is by a vote sufficient without counting the vote of any interested director or directors.

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** This section is effective only if it has been approved by the shareholders in accordance with Sections 315(b) and 152 of the Code.

ARTICLE 4

COMMITTEES

SECTION 4.1 COMMITTEES OF DIRECTORS. The board of directors may, by resolution adopted by a majority of the authorized number of directors, designate one (1) or more committees, each consisting of two or more directors, to serve at the pleasure of the board. The board may designate one
(1) or more directors as alternate members of any committee, who may replace any absent member at any meeting of the committee. The appointment of members or alternate members of a committee requires the vote of a majority of the authorized number of directors. Any committee, to the extent provided in the resolution of the board, shall have all the authority of the board, except with respect to:

(a) the approval of any action which, under the Code, also requires shareholders' approval or approval of the outstanding shares;

(b) the filling of vacancies on the board of directors or in any committee;

(c) the fixing of compensation of the directors for serving on the board or any committee;

(d) the amendment or repeal of these bylaws or the adoption of new bylaws;

(e) the amendment or repeal of any resolution of the board of directors which by its express terms is not so amendable or repealable;

(f) a distribution to the shareholders of the corporation, except at a rate or in a periodic amount or within a price range determined by the board of directors; or

(g) the appointment of any other committees of the board of directors or the members of such committees.

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SECTION 4.2 MEETINGS AND ACTION OF COMMITTEES. Meetings and actions of committees shall be governed by, and held and taken in accordance with, the provisions of Article 3 of these bylaws, Section 3.5 (place of meetings),
Section 3.6 (regular meetings), Section 3.7 (special meetings and notice),
Section 3.8 (quorum), Section 3.9 (waiver of notice), Section 3.10 (adjournment), Section 3.11 (notice of adjournment), and Section 3.12 (action without meeting), with such changes in the context of those bylaws as are necessary to substitute the committee and its members for the board of directors and its members; provided, however, that the time of regular meetings of committees may be determined either by resolution of the board of directors or by resolution of the committee, that special meetings of committees may also be called by resolution of the board of directors, and that notice of special meetings of committees shall also be given to all alternate members, who shall have the right to attend all meetings of the committee. The board of directors may adopt rules for the government of any committee not inconsistent with the provisions of these bylaws.

ARTICLE 5

OFFICERS

SECTION 5.1 OFFICERS. The officers of the corporation shall be a president, a secretary, and a chief financial officer. The corporation may also have, at the discretion of the board of directors, a chairman of the board, one or more vice presidents, one or more assistant secretaries, one or more assistant treasurers, and such other officers as may be appointed in accordance with the provisions of Section of these bylaws. Any number of offices may be held by the same person.

SECTION 5.2 ELECTION OF OFFICERS. The officers of the corporation, except such officers as may be appointed in accordance with the provisions of
Section 5.3 or Section 5.5 of these bylaws, shall be chosen by the board, subject to the rights, if any, of an officer under any contract of employment.

SECTION 5.3 SUBORDINATE OFFICERS. The board of directors may appoint, or may empower the president to appoint, such other officers as the business of the corporation may require, each of whom shall hold office for such period, have such authority, and perform such duties as are provided in these bylaws or as the board of directors may from time to time determine.

SECTION 5.4 REMOVAL AND RESIGNATION OF OFFICERS. Subject to the rights, if any, of an officer under any contract of employment, any officer may be removed, either with or without cause, by the board of directors at any regular or special meeting of the board or, except in case of an officer chosen by the board of directors, by any officer upon whom such power of removal may be conferred by the board of directors.

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Any officer may resign at any time by giving written notice to the corporation. Any resignation shall take effect at the date of the receipt of that notice or at any later time specified in that notice; and, unless otherwise specified in that notice, the acceptance of the resignation shall not be necessary too make it effective. Any resignation is without prejudice to the rights, if any, of the corporation under any contract to which the officer is a party.

SECTION 5.5 VACANCIES IN OFFICES. A vacancy in any office because of death, resignation, removal, disqualification or any other cause shall be filled in the manner prescribed in these bylaws for regular appointments to that office.

SECTION 5.6 CHAIRMAN OF THE BOARD. The chairman of the board, if such an officer be elected, shall, if present, preside at meetings of the board of directors and exercise and perform such other powers and duties as may from time to time be assigned to him by the board of directors or as may be prescribed by these bylaws. If there is no president, then the chairman of the board shall also be the chief executive officer of the corporation and shall have the powers and duties prescribed in Section 5.7 of these bylaws.

SECTION 5.7 PRESIDENT. Subject to such supervisory powers, if any, as may be given by the board of directors to the chairman of the board, if there be such an officer, the president shall be the chief executive officer of the corporation and shall, subject to the control of the board of directors, have general supervision, direction, and control of the business and the officers of the corporation. He shall preside at all meetings of the shareholders and, in the absence or nonexistence of a chairman of the board, at all meetings of the board of directors. He shall have the general powers and duties of management usually vested in the office of president of a corporation ration, and shall have such other powers and duties as may be prescribed by the board of directors or these bylaws.

SECTION 5.8 VICE PRESIDENTS. In the absence or disability of the president, the vice presidents, if any, in order of their rank as fixed by the board of directors or, if not ranked, a vice president designated by the board of directors, shall perform all the duties of the president and when so acting shall have all the powers of, and be subject to all the restrictions upon, the president. The vice presidents shall have such other powers and perform such other duties as from time to time may be prescribed for them respectively by the board of directors, these bylaws, the president or the chairman of the board.

SECTION 5.9 SECRETARY. The secretary shall keep or cause to be kept, at the principal executive office of the corporation or such other place as the board of directors may direct, a book of minutes of all meetings and actions of directors, committees of directors and shareholders. The minutes shall show the time and place of each meeting, whether regular or special (and, if special, how authorized and the notice given), the names

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of those present at directors' meetings or committee meetings, the number of shares present or represented at shareholders' meetings, and the proceedings thereof.

The secretary shall keep, or cause to be kept, at the principal executive office of the corporation or at the office of the corporation's transfer agent or registrar, as determined by resolution of the board of directors, a share register, or a duplicate share register, showing the names of all shareholders and their addresses, the number and classes of shares held by each, the number and date of certificates evidencing such shares, and the number and date of cancellation of every certificate surrendered for cancellation.

The secretary shall give, or cause to be given, notice of all meetings of the shareholders and of the board of directors required to be given by law or by these bylaws. He shall keep the seal of the corporation, if one be adopted, in safe custody and shall have such other powers and perform such other duties as may be prescribed by the board of directors or by these bylaws.

SECTION 5.10 CHIEF FINANCIAL OFFICER. The chief financial officer shall keep and maintain, or cause to be kept and maintained, adequate and correct books and records of accounts of the properties and business transactions of the corporation, including accounts of its assets, liabilities, receipts, disbursements, gains, losses, capital, retained earnings, and shares. The books of account shall at all reasonable times be open to inspection by any director.

The chief financial officer shall deposit all money and other valuables in the name and to the credit of the corporation with such depositaries as may be designated by the board of directors. He shall disburse the funds of the corporation as may be ordered by the board of directors, shall render to the president and directors, whenever they request it, an account of all of his transactions as chief financial officer and of the financial condition of the corporation, and shall have such other powers and perform such other duties as may be prescribed by the board of directors or these bylaws.

ARTICLE 6

INDEMNIFICATION OF DIRECTORS. OFFICERS. EMPLOYEES, AND OTHER AGENTS

SECTION 6.1 INDEMNIFICATION OF DIRECTORS AND OFFICERS. The corporation shall, to the maximum extent and in the manner permitted by the Code, indemnify each of its directors and officers against expenses (as defined in Section 317(a) of the Code), judgments, fines, settlements, and other amounts actually and reasonably incurred in connection with any proceeding (as defined in Section 317(a) of the Code), arising by reason of the fact that such person is or was an agent of the corporation. For purposes of

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this Article 6, a "director" or "officer" of the corporation includes any person (i) who is or was a director or officer of the corporation, (ii) who is or was serving at the request of the corporation as a director or officer of another corporation, partnership, joint venture, trust or other enterprise, or (iii) who was a director or officer of a corporation which was a predecessor corporation of the corporation or of another enterprise at the request of such predecessor corporation.

SECTION 6.2 INDEMNIFICATION OF OTHERS. The corporation shall have the power, to the extent and in the manner permitted by the Code, to indemnify each of its employees and agents (other than directors and officers) against expenses (as defined in Section 317(a) of the Code), judgments, fines, settlements, and other amounts actually and reasonably incurred in connection with any proceeding (as defined in Section 317(a) of the Code), arising by reason of the fact that such person is or was an agent of the corporation. For purposes of this Article 6, an "employee" or "agent" of the corporation (other than a director or officer) includes any person (i) who is or was an employee or agent of the corporation, (ii) who is or was serving at the request of the corporation as an employee or agent of another corporation, partnership, joint venture, trust or other enterprise, or (iii) who was an employee or agent of a corporation which was a predecessor corporation of the corporation or of another enterprise at the request of such predecessor corporation.

SECTION 6.3 PAYMENT OF EXPENSES IN ADVANCE. Expenses incurred in defending any civil or criminal action or proceeding for which indemnification is required pursuant to Section 6.1 or for which indemnification is permitted pursuant to Section 6.2 following authorization thereof by the Board of Directors shall be paid by the corporation in advance of the final disposition of such action or proceeding upon receipt of an undertaking by or on behalf of the indemnified party to repay such amount if it shall ultimately be determined that the indemnified party is not entitled to be indemnified as authorized in this Article 6.

SECTION 6.4 INDEMNITY NOT EXCLUSIVE. The indemnification provided by this Article 6 shall not be deemed exclusive of any other rights to which those seeking indemnification may be entitled under any bylaw, agreement, vote of shareholders or disinterested directors or otherwise, both as to action in an official capacity and as to action in another capacity while holding such office, to the extent that such additional rights to indemnification are authorized in the Articles of Incorporation.

SECTION 6.5 INSURANCE INDEMNIFICATION. The corporation shall have the power to purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the corporation against any liability asserted against or incurred by such person in such capacity or arising out of such person's status as such, whether or not the corporation would have the power to indemnify him against such liability under the provisions of this Article 6.

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SECTION 6.6 CONFLICTS. No indemnification or advance shall be made under this Article 6, except where such indemnification or advance is mandated by law or the order, judgment or decree of any court of competent jurisdiction, in any circumstance where it appears:

(a) That it would be inconsistent with a provision of the Articles of Incorporation, these bylaws, a resolution of the shareholders or an agreement in effect at the time of the accrual of the alleged cause of the action asserted in the proceeding in which the expenses were incurred or other amounts were paid, which prohibits or otherwise limits indemnification; or

(b) That it would be inconsistent with any condition expressly imposed by a court in approving a settlement.

ARTICLE 7

RECORDS AND REPORTS

SECTION 7.1 MAINTENANCE AND INSPECTION OF SHARE REGISTER. The corporation shall keep either at its principal executive office or at the office of its transfer agent or registrar (if either be appointed), as determined by resolution of the board of directors, a record of its shareholders listing the names and addresses of all shareholders and the number and class of shares held by each shareholder.

A shareholder or shareholders of the corporation who holds at least five percent (5%) in the aggregate of the outstanding voting shares of the corporation or who holds at least one percent (1%) of such voting shares and has filed a Schedule 14B with the Securities and Exchange Commission relating to the election of directors, may (i) inspect and copy the records of shareholders' names, addresses, and shareholdings during usual business hours on five (5) days' prior written demand on the corporation, (ii) obtain from the transfer agent of the corporation, on written demand and on the tender of such transfer agent's usual charges for such list, a list of the names and addresses of the shareholders who are entitled to vote for the election of directors, and their shareholdings, as of the most recent record date for which that list has been compiled or as of a date specified by the shareholder after the date of demand. Such list shall be made available to any such shareholder by the transfer agent on or before the later of five (5) days after the demand is received or five (5) days after the date specified in the demand as the date as of which the list is to be compiled.

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The record of shareholders shall also be open to inspection on the written demand of any shareholder or holder of a voting trust certificate, at any time during usual business hours, for a purpose reasonably related to the holder's interests as a shareholder or as the holder of a voting trust certificate.

Any inspection and copying under this Section 7.1 may be made in person or by an agent or attorney of the shareholder or holder of a voting trust certificate making the demand.

SECTION 7.2 MAINTENANCE AND INSPECTION OF BYLAWS. The corporation shall keep at its principal executive office or, if its principal executive office is not in the State of California, at its principal business office in California the original or a copy of these bylaws as amended to date, which bylaws shall be open to inspection by the shareholders at all reasonable times during office hours. If the principal executive office of the corporation is outside the State of California and the corporation has no principal business office in such state, then the secretary shall, upon the written request of any shareholder, furnish to that shareholder a copy of these bylaws as amended to date.

SECTION 7.3 MAINTENANCE AND INSPECTION OF OTHER CORPORATE RECORDS. The accounting books and records and the minutes of proceedings of the shareholders, of the board of directors, and of any committee or committees of the board of directors shall be kept at such place or places as are designated by the board of directors or, in absence of such designation, at the principal executive office of the corporation. The minutes shall be kept in written form, and the accounting books and records shall be kept either in written form or in any other form capable of being converted into written form.

The minutes and accounting books and records shall be open to inspection upon the written demand of any shareholder or holder of a voting trust certificate, at any reasonable time during usual business hours, for a purpose reasonably related to the holder's interests as a shareholder or as the holder of a voting trust certificate. The inspection may be made in person or by an agent or attorney and shall include the right to copy and make extracts. Such rights of inspection shall extend to the records of each subsidiary corporation of the corporation.

SECTION 7.4 INSPECTION BY DIRECTORS. Every director shall have the absolute right at any reasonable time to inspect all books, records, and documents of every kind as well as the physical properties of the corporation and each of its subsidiary corporations. Such inspection by a director may be made in person or by an agent or attorney. The right of inspection includes the right to copy and make extracts of documents.

SECTION 7.5 ANNUAL REPORT TO SHAREHOLDERS; WAIVER. The board of directors shall cause an annual report to be sent to the shareholders not later than one hundred twenty

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(120) days after the close of the fiscal year adopted by the corporation. Such report shall be sent at least fifteen (15) days (or, if sent by third-class mail, thirty-five (35) days) before the annual meeting of shareholders to be held during the next fiscal year and in the manner specified in Section of these bylaws for giving notice to shareholders of the corporation.

The annual report shall contain (i) a balance sheet as of the end of the fiscal year, (ii) an income statement, (iii) a statement of changes in financial position for the fiscal year, and (iv) any report of independent accountants or, if there is no such report, the certificate of an authorized officer of the corporation that the statements were prepared without audit from the books and records of the corporation.

The foregoing requirement of an annual report shall be waived so long as the shares of the corporation are held by fewer than one hundred
(100) holders of record.

SECTION 7.6 FINANCIAL STATEMENTS. If no annual report for the fiscal year has been sent to shareholders, then the corporation shall, upon the written request of any shareholder made more than one hundred twenty (120) days after the close of such fiscal year, deliver or mail to the person making the request, within thirty (30) days thereafter, a copy of a balance sheet as of the end of such fiscal year and an income statement and statement of changes in financial position for such fiscal year.

If a shareholder or shareholders holding at least five percent (5%) of the outstanding shares of any class of stock of the corporation makes a written request to the corporation for an income statement of the corporation for the three-month, six-month or nine-month period of the then current fiscal year ended more than thirty (30) days before the date of the request, and for a balance sheet of the corporation as of the end of that period, then the chief financial officer shall cause that statement to be prepared, if not already prepared, and shall deliver personally or mail that statement or statements to the person making the request within thirty (30) days after the receipt of the request. If the corporation has not sent to the shareholders its annual report for the last fiscal year, the statements referred to in the first paragraph of this Section 7.6 shall likewise be delivered or mailed to the shareholder or shareholders within thirty (30) days after the request.

The quarterly income statements and balance sheets referred to in this section shall be accompanied by the report, if any, of any independent accountants engaged by the corporation or by the certificate of an authorized officer of the corporation that the financial statements were prepared without audit from the books and records of the corporation.

SECTION 7.7 REPRESENTATION OF SHARES OF OTHER CORPORATIONS. The chairman of the board, the president, any vice president, the chief financial officer, the secretary or assistant secretary of this corporation, or any other person authorized by the board of directors or the president or a vice president, is authorized to vote, represent, and exercise

19.


on behalf of this corporation all rights incident to any and all shares of any other corporation or corporations standing in the name of this corporation. The authority herein granted may be exercised either by such person directly or by any other person authorized to do so by proxy or power of attorney duly executed by such person having the authority.

ARTICLE 8

GENERAL MATTERS

SECTION 8.1 RECORD DATE FOR PURPOSES OTHER THAN NOTICE AND VOTING. For purposes of determining the shareholders entitled to receive payment of any dividend or other distribution or allotment of any rights or the shareholders entitled to exercise any rights in respect of any other lawful action (other than action by shareholders by written consent without a meeting), the board of directors may fix, in advance, a record date, which shall not be more than sixty (60) days before any such action. In that case, only shareholders of record at the close of business on the date so fixed are entitled to receive the dividend, distribution or allotment of rights, or to exercise such rights, as the case may be, notwithstanding any transfer of any shares on the books of the corporation after the record date so fixed, except as otherwise provided in the Code.

If the board of directors does not so fix a record date, then the record date for determining shareholders for any such purpose shall be at the close of business on the day on which the board adopts the applicable resolution or the sixtieth (60th) day before the date of that action, whichever is later.

SECTION 8.2 CHECKS; DRAFTS; EVIDENCES OF INDEBTEDNESS. From time to time, the board of directors shall determine by resolution which person or persons may sign or endorse all checks, drafts, other orders for payment of money, notes or other evidences of indebtedness that are issued in the name of or payable to the corporation, and only the persons so authorized shall sign or endorse those instruments.

SECTION 8.3 CORPORATE CONTRACTS AND INSTRUMENTS: HOW EXECUTED. The board of directors, except as otherwise provided in these bylaws, may authorize any officer or officers, or agent or agents, to enter into any contract or execute any instrument in the name of and on behalf of the corporation; such authority may be general or confined to specific instances. Unless so authorized or ratified by the board of directors or within the agency power of an officer, no officer, agent or employee shall have any power or authority to bind the corporation by any contract or engagement or to pledge its credit or to render it liable for any purpose or for any amount.

SECTION 8.4 CERTIFICATES FOR SHARES. A certificate or certificates for shares of the corporation shall be issued to each shareholder when any of such shares are fully paid. The

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board of directors may authorize the issuance of certificates for shares partly paid provided that these certificates shall state the total amount of the consideration to be paid for them and the amount actually paid. All certificates shall be signed in the name of the corporation by the chairman of the board or the vice chairman of the board or the president or a vice president and by the chief financial officer or an assistant treasurer or the secretary or an assistant secretary, certifying the number of shares and the class or series of shares owned by the shareholder. Any or all of the signatures on the certificate may be facsimile.

In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed on a certificate ceases to be that officer, transfer agent or registrar before that certificate is issued, it may be issued by the corporation with the same effect as if that person were an officer, transfer agent or registrar at the date of issue.

SECTION 8.5 LOST CERTIFICATES. Except as provided in this Section 8.5, no new certificates for shares shall be issued to replace a previously issued certificate unless the latter is surrendered to the corporation and canceled at the same time. The board of directors may, in case any share certificate or certificate for any other security is lost, stolen or destroyed, authorize the issuance of replacement certificates on such terms and conditions as the board may require; the board may require indemnification of the corporation secured by a bond or other adequate security sufficient to protect the corporation against any claim that may be made against it, including any expense or liability, on account of the alleged loss, theft or destruction of the certificate or the issuance of the replacement certificate.

SECTION 8.6 CONSTRUCTION; DEFINITIONS. Unless the context requires otherwise, the general provisions, rules of construction, and definitions in the Code shall govern the construction of these bylaws. Without limiting the generality of this provision, the singular number includes the plural, the plural number includes the singular, and the term "person" includes both a corporation and a natural person.

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ARTICLE 9

AMENDMENTS

SECTION 9.1 AMENDMENT BY SHAREHOLDERS. New bylaws may be adopted or these bylaws may be amended or repealed by the vote or written consent of holders of a majority of the outstanding shares entitled to vote; provided, however, that if the articles of incorporation of the corporation set forth the number of authorized directors of the corporation, then the authorized number of directors may be changed only by an amendment of the articles of incorporation.

SECTION 9.2 AMENDMENT BY DIRECTORS. Subject to the rights of the shareholders as provided in Section 9.1 of these bylaws, bylaws, other than a bylaw or an amendment of a bylaw changing the authorized number of directors (except to fix the authorized number of directors pursuant to a bylaw providing for a variable number of directors), may be adopted, amended or repealed by the board of directors.

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CERTIFICATE OF ADOPTION OF BYLAWS

OF

OMNICELL TECHNOLOGIES, INC.

CERTIFICATE BY SECRETARY OF ADOPTION BY SHAREHOLDERS' VOTE

The undersigned hereby certifies that he is the duly elected, qualified, and acting Secretary of Omnicell Technologies, Inc. and that the foregoing Bylaws, comprising twenty-five (25) pages, were submitted to the shareholders by written consent dated May 10, 1993, and recorded in the minutes thereof and were ratified by the vote of shareholders entitled to exercise the majority of the voting power of the corporation.

IN WITNESS WHEREOF, the undersigned has hereunto set his hand and affixed the corporate seal this _____ day of _________________1993.


Michael J. O'Donnell, Secretary

BYLAWS

OF

OMNICELL TECHNOLOGIES, INC.


TABLE OF CONTENTS

                                                                                                              PAGE
ARTICLE 1.            CORPORATE OFFICES..........................................................................1

         Section 1.1       Principal Office......................................................................1
         Section 1.2       Other Offices.........................................................................1

ARTICLE 2.            MEETINGS OF SHAREHOLDERS...................................................................1

         Section 2.1       Place of Meetings.....................................................................1
         Section 2.2       Annual Meeting........................................................................1
         Section 2.3       Special Meeting.......................................................................1
         Section 2.4       Notice of Shareholders' Meetings......................................................2
         Section 2.5       Manner of Giving Notice; Affidavit of Notice..........................................2
         Section 2.6       Quorum................................................................................3
         Section 2.7       Adjourned Meeting; Notice.............................................................3
         Section 2.8       Voting................................................................................4
         Section 2.9       Validation of Meetings; Waiver of Notice; Consent.....................................5
         Section 2.10      Shareholder Action by Written Consent without a Meeting...............................5
         Section 2.11      Record Date for Shareholder Notice; Voting; Giving Consents...........................6
         Section 2.12      Proxies...............................................................................6
         Section 2.13      Inspectors of Election................................................................7

ARTICLE 3.            DIRECTORS..................................................................................8

         Section 3.1       Powers................................................................................8
         Section 3.2       Number of Directors...................................................................8
         Section 3.3       Election and Term of Office of Directors..............................................8
         Section 3.4       Resignation and Vacancies.............................................................8
         Section 3.5       Place of Meetings; Meetings by Telephone..............................................9
         Section 3.6       Regular Meetings......................................................................9
         Section 3.7       Special Meetings; Notice.............................................................10
         Section 3.8       Quorum...............................................................................10
         Section 3.9       Waiver of Notice.....................................................................10
         Section 3.10      Adjournment..........................................................................10
         Section 3.11      Notice of Adjournment................................................................11
         Section 3.12      Board Action by Written Consent without a Meeting....................................11
         Section 3.13      Fees and Compensation of Directors...................................................11
         Section 3.14      Approval of Loans to Officers.**.....................................................11

ARTICLE 4.            COMMITTEES................................................................................12

                                       i.

                                TABLE OF CONTENTS
                                  (CONTINUED)

         Section 4.1       Committees of Directors..............................................................12
         Section 4.2       Meetings And Action Of Committees....................................................12

ARTICLE 5.            OFFICERS..................................................................................13

         Section 5.1       Officers.............................................................................13
         Section 5.2       Election of Officers.................................................................13
         Section 5.3       Subordinate Officers.................................................................13
         Section 5.4       Removal and Resignation of Officers..................................................13
         Section 5.5       Vacancies in Offices.................................................................14
         Section 5.6       Chairman of the Board................................................................14
         Section 5.7       President............................................................................14
         Section 5.8       Vice Presidents......................................................................14
         Section 5.9       Secretary............................................................................14
         Section 5.10      Chief Financial Officer..............................................................15

ARTICLE 6.            INDEMNIFICATION OF DIRECTORS.  OFFICERS.  EMPLOYEES, AND OTHER AGENTS.....................15

         Section 6.1       Indemnification of Directors and Officers............................................15
         Section 6.2       Indemnification of Others............................................................16
         Section 6.3       Payment of Expenses in Advance.......................................................16
         Section 6.4       Indemnity Not Exclusive..............................................................16
         Section 6.5       Insurance Indemnification............................................................16
         Section 6.6       Conflicts............................................................................16

ARTICLE 7.            RECORDS AND REPORTS.......................................................................17

         Section 7.1       Maintenance and Inspection of Share Register.........................................17
         Section 7.2       Maintenance and Inspection of Bylaws.................................................18
         Section 7.3       Maintenance and Inspection of Other Corporate Records................................18
         Section 7.4       Inspection by Directors..............................................................18
         Section 7.5       Annual Report to Shareholders; Waiver................................................18
         Section 7.6       Financial Statements.................................................................19
         Section 7.7       Representation of Shares of Other Corporations.......................................19

ARTICLE 8.            GENERAL MATTERS...........................................................................20

         Section 8.1       Record Date for Purposes Other Than Notice and Voting................................20
         Section 8.2       Checks; Drafts; Evidences of Indebtedness............................................20
         Section 8.3       Corporate Contracts and Instruments: How Executed....................................20

                                       ii.

                                TABLE OF CONTENTS
                                  (CONTINUED)

         Section 8.4       Certificates for Shares..............................................................20
         Section 8.5       Lost Certificates....................................................................21
         Section 8.6       Construction; Definitions............................................................21

ARTICLE 9.            AMENDMENTS................................................................................21

         Section 9.1       Amendment by Shareholders............................................................21
         Section 9.2       Amendment by Directors...............................................................21

iii.


EXHIBIT 3.6

BYLAWS

OF

OMNICELL MERGER CORPORATION

(A DELAWARE CORPORATION)


                                                                                                               PAGE
ARTICLE I             OFFICES.....................................................................................1

         Section 1.        Registered Office......................................................................1

         Section 2.        Other Offices..........................................................................1

ARTICLE II            CORPORATE SEAL..............................................................................1

         Section 3.        Corporate Seal.........................................................................1

ARTICLE III           STOCKHOLDERS' MEETINGS......................................................................1

         Section 4.        Place of Meetings......................................................................1

         Section 5.        Annual Meetings........................................................................1

         Section 6.        Special Meetings.......................................................................3

         Section 7.        Notice of Meetings.....................................................................4

         Section 8.        Quorum.................................................................................5

         Section 9.        Adjournment and Notice of Adjourned Meetings...........................................5

         Section 10.       Voting Rights..........................................................................5

         Section 11.       Joint Owners of Stock..................................................................6

         Section 12.       List of Stockholders...................................................................6

         Section 13.       Action without Meeting.................................................................6

         Section 14.       Organization...........................................................................7

ARTICLE IV            DIRECTORS...................................................................................8

         Section 15.       Number and Term of Office..............................................................8

         Section 16.       Powers.................................................................................8

         Section 17.       Classes of Directors...................................................................8

         Section 18.       Vacancies..............................................................................9

         Section 19.       Resignation...........................................................................10

         Section 20.       Removal...............................................................................10

         Section 21.       Meetings..............................................................................10

         Section 22.       Quorum and Voting.....................................................................11

         Section 23.       Action without Meeting................................................................12

         Section 24.       Fees and Compensation.................................................................12

         Section 25.       Committees............................................................................12

         Section 26.       Organization..........................................................................13


                                       i.

                                TABLE OF CONTENTS
                                   (CONTINUED)

                                                                                                               PAGE

ARTICLE V             OFFICERS...................................................................................13

         Section 27.       Officers Designated...................................................................13

         Section 28.       Tenure and Duties of Officers.........................................................14

         Section 29.       Delegation of Authority...............................................................15

         Section 30.       Resignations..........................................................................15

         Section 31.       Removal...............................................................................15

ARTICLE VI            EXECUTION OF CORPORATE INSTRUMENTS AND VOTING OF SECURITIES OWNED BY THE
                      CORPORATION................................................................................15

         Section 32.       Execution of Corporate Instruments....................................................15

         Section 33.       Voting of Securities Owned by the  Corporation........................................16

ARTICLE VII           SHARES OF STOCK............................................................................16

         Section 34.       Form and Execution of Certificates....................................................16

         Section 35.       Lost Certificates.....................................................................17

         Section 36.       Transfers.............................................................................17

         Section 37.       Fixing Record Dates...................................................................17

         Section 38.       Registered Stockholders...............................................................18

ARTICLE VIII          OTHER SECURITIES OF THE CORPORATION........................................................18

         Section 39.       Execution of Other Securities.........................................................18

ARTICLE IX            DIVIDENDS..................................................................................19

         Section 40.       Declaration of Dividends..............................................................19

         Section 41.       Dividend Reserve......................................................................19

ARTICLE X             FISCAL YEAR................................................................................19

         Section 42.       Fiscal Year...........................................................................19

ARTICLE XI            INDEMNIFICATION............................................................................19

         Section 43.       Indemnification of Directors, Executive Officers, Other Officers, Employees
                           and Other Agents......................................................................19

ARTICLE XII           NOTICES....................................................................................23

         Section 44.       Notices...............................................................................23

ARTICLE XIII          AMENDMENTS.................................................................................24

         Section 45.       Amendments............................................................................24


                                       ii.

                                TABLE OF CONTENTS
                                   (CONTINUED)

                                                                                                               PAGE

ARTICLE XIV           LOANS TO OFFICERS..........................................................................24

         Section 46.       Loans to Officers.....................................................................24

iii.


BYLAWS

OF

OMNICELL MERGER CORPORATION

(A DELAWARE CORPORATION)

ARTICLE I

OFFICES

SECTION 1. REGISTERED OFFICE. The registered office of the corporation in the State of Delaware shall be in the City of Wilmington, County of New Castle.

SECTION 2. OTHER OFFICES. The corporation shall also have and maintain an office or principal place of business at such place as may be fixed by the Board of Directors, and may also have offices at such other places, both within and without the State of Delaware as the Board of Directors may from time to time determine or the business of the corporation may require.

ARTICLE II

CORPORATE SEAL

SECTION 3. CORPORATE SEAL. The corporate seal shall consist of a die bearing the name of the corporation and the inscription, "Corporate Seal-Delaware." Said seal may be used by causing it or a facsimile thereof to be impressed or affixed or reproduced or otherwise.

ARTICLE III

STOCKHOLDERS' MEETINGS

SECTION 4. PLACE OF MEETINGS. Meetings of the stockholders of the corporation shall be held at such place, either within or without the State of Delaware, as may be designated from time to time by the Board of Directors, or, if not so designated, then at the office of the corporation required to be maintained pursuant to Section 2 hereof.

SECTION 5. ANNUAL MEETINGS.

(a) The annual meeting of the stockholders of the corporation, for the purpose of election of directors and for such other business as may lawfully come before it, shall be held on such date and at such time as may be designated from time to time by the Board of Directors. Nominations of persons for election to the Board of Directors of the corporation and the proposal of business to be considered by the stockholders may be made at an annual meeting of stockholders: (i) pursuant to the corporation's notice of meeting of stockholders; (ii) by or at the

1.


direction of the Board of Directors; or (iii) by any stockholder of the corporation who was a stockholder of record at the time of giving of notice provided for in the following paragraph, who is entitled to vote at the meeting and who complied with the notice procedures set forth in Section 5.

(b) At an annual meeting of the stockholders, only such business shall be conducted as shall have been properly brought before the meeting. For nominations or other business to be properly brought before an annual meeting by a stockholder pursuant to clause (c) of Section 5(a) of these Bylaws, (i) the stockholder must have given timely notice thereof in writing to the Secretary of the corporation, (ii) such other business must be a proper matter for stockholder action under the Delaware General Corporation Law ("DGCL"), (iii) if the stockholder, or the beneficial owner on whose behalf any such proposal or nomination is made, has provided the corporation with a Solicitation Notice (as defined in this Section 5(b)), such stockholder or beneficial owner must, in the case of a proposal, have delivered a proxy statement and form of proxy to holders of at least the percentage of the corporation's voting shares required under applicable law to carry any such proposal, or, in the case of a nomination or nominations, have delivered a proxy statement and form of proxy to holders of a percentage of the corporation's voting shares reasonably believed by such stockholder or beneficial owner to be sufficient to elect the nominee or nominees proposed to be nominated by such stockholder, and must, in either case, have included in such materials the Solicitation Notice, and (iv) if no Solicitation Notice relating thereto has been timely provided pursuant to this section, the stockholder or beneficial owner proposing such business or nomination must not have solicited a number of proxies sufficient to have required the delivery of such a Solicitation Notice under this Section 5. To be timely, a stockholder's notice shall be delivered to the Secretary at the principal executive offices of the Corporation not later than the close of business on the ninetieth (90th) day nor earlier than the close of business on the one hundred twentieth (120th) day prior to the first anniversary of the preceding year's annual meeting; provided, however, that in the event that the date of the annual meeting is advanced more than thirty (30) days prior to or delayed by more than thirty (30) days after the anniversary of the preceding year's annual meeting, notice by the stockholder to be timely must be so delivered not earlier than the close of business on the one hundred twentieth (120th) day prior to such annual meeting and not later than the close of business on the later of the ninetieth (90th) day prior to such annual meeting or the tenth (10th) day following the day on which public announcement of the date of such meeting is first made. In no event shall the public announcement of an adjournment of an annual meeting commence a new time period for the giving of a stockholder's notice as described above. Such stockholder's notice shall set forth: (A) as to each person whom the stockholder proposed to nominate for election or reelection as a director all information relating to such person that is required to be disclosed in solicitations of proxies for election of directors in an election contest, or is otherwise required, in each case pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended (the "1934 Act") and Rule 14a-11 thereunder (including such person's written consent to being named in the proxy statement as a nominee and to serving as a director if elected); (B) as to any other business that the stockholder proposes to bring before the meeting, a brief description of the business desired to be brought before the meeting, the reasons for conducting such business at the meeting and any material interest in such business of such stockholder and the beneficial owner, if any, on whose behalf the proposal is made; and (C) as to the stockholder giving the notice and the beneficial owner, if any, on whose behalf the nomination or proposal is made (i) the name and address of such stockholder, as they appear on the corporation's books,

2.


and of such beneficial owner, (ii) the class and number of shares of the corporation which are owned beneficially and of record by such stockholder and such beneficial owner, and (iii) whether either such stockholder or beneficial owner intends to deliver a proxy statement and form of proxy to holders of, in the case of the proposal, at least the percentage of the corporation's voting shares required under applicable law to carry the proposal or, in the case of a nomination or nominations, a sufficient number of holders of the corporation's voting shares to elect such nominee or nominees (an affirmative statement of such intent, a "Solicitation Notice").

(c) Notwithstanding anything in the second sentence of
Section 5(b) of these Bylaws to the contrary, in the event that the number of directors to be elected to the Board of Directors of the Corporation is increased and there is no public announcement naming all of the nominees for director or specifying the size of the increased Board of Directors made by the corporation at least one hundred (100) days prior to the first anniversary of the preceding year's annual meeting, a stockholder's notice required by this Section 5 shall also be considered timely, but only with respect to nominees for any new positions created by such increase, if it shall be delivered to the Secretary at the principal executive offices of the corporation not later than the close of business on the tenth (10th) day following the day on which such public announcement is first made by the corporation.

(d) Only such persons who are nominated in accordance with the procedures set forth in this Section 5 shall be eligible to serve as directors and only such business shall be conducted at a meeting of stockholders as shall have been brought before the meeting in accordance with the procedures set forth in this Section 5. Except as otherwise provided by law, the Chairman of the meeting shall have the power and duty to determine whether a nomination or any business proposed to be brought before the meeting was made, or proposed, as the case may be, in accordance with the procedures set forth in these Bylaws and, if any proposed nomination or business is not in compliance with these Bylaws, to declare that such defective proposal or nomination shall not be presented for stockholder action at the meeting and shall be disregarded.

(e) Notwithstanding the foregoing provisions of this
Section 5, in order to include information with respect to a stockholder proposal in the proxy statement and form of proxy for a stockholders' meeting, stockholders must provide notice as required by the regulations promulgated under the 1934 Act. Nothing in these Bylaws shall be deemed to affect any rights of stockholders to request inclusion of proposals in the corporation proxy statement pursuant to Rule 14a-8 under the 1934 Act.

(f) For purposes of this Section 5, "public announcement" shall mean disclosure in a press release reported by the Dow Jones News Service, Associated Press or comparable national news service or in a document publicly filed by the corporation with the Securities and Exchange Commission pursuant to Section 13, 14 or 15(d) of the 1934 Act.

SECTION 6. SPECIAL MEETINGS.

(a) Special meetings of the stockholders of the corporation may be called, for any purpose or purposes, by (i) the Chairman of the Board of Directors, (ii) the Chief Executive Officer, or (iii) the Board of Directors pursuant to a resolution adopted by a majority of the total

3.


number of authorized directors (whether or not there exist any vacancies in previously authorized directorships at the time any such resolution is presented to the Board of Directors for adoption).

At any time or times that the corporation is subject to Section 2115(b) of the California General Corporation Law ("CGCL"), stockholders holding five percent (5%) or more of the outstanding shares shall have the right to call a special meeting of stockholders only as set forth in Section 18(c) herein.

(b) If a special meeting is properly called by any person or persons other than the Board of Directors, the request shall be in writing, specifying the general nature of the business proposed to be transacted, and shall be delivered personally or sent by registered mail or by telegraphic or other facsimile transmission to the Chairman of the Board of Directors, the Chief Executive Officer, or the Secretary of the corporation. No business may be transacted at such special meeting otherwise than specified in such notice. The Board of Directors shall determine the time and place of such special meeting, which shall be held not less than thirty-five (35) nor more than one hundred twenty (120) days after the date of the receipt of the request. Upon determination of the time and place of the meeting, the officer receiving the request shall cause notice to be given to the stockholders entitled to vote, in accordance with the provisions of
Section 7 of these Bylaws. If the notice is not given within one hundred
(100) days after the receipt of the request, the person or persons properly requesting the meeting may set the time and place of the meeting and give the notice. Nothing contained in this paragraph (b) shall be construed as limiting, fixing, or affecting the time when a meeting of stockholders called by action of the Board of Directors may be held.

(c) Nominations of persons for election to the Board of Directors may be made at a special meeting of stockholders at which directors are to be elected pursuant to the corporation's notice of meeting (i) by or at the direction of the Board of Directors or (ii) by any stockholder of the corporation who is a stockholder of record at the time of giving notice provided for in these Bylaws who shall be entitled to vote at the meeting and who complies with the notice procedures set forth in this Section 6(c). In the event the corporation calls a special meeting of stockholders for the purpose of electing one or more directors to the Board of Directors, any such stockholder may nominate a person or persons (as the case may be), for election to such position(s) as specified in the corporation's notice of meeting, if the stockholder's notice required by Section 5(b) of these Bylaws shall be delivered to the Secretary at the principal executive offices of the corporation not earlier than the close of business on the one hundred twentieth (120th) day prior to such special meeting and not later than the close of business on the later of the ninetieth (90th) day prior to such meeting or the tenth (10th) day following the day on which public announcement is first made of the date of the special meeting and of the nominees proposed by the Board of Directors to be elected at such meeting. In no event shall the public announcement of an adjournment of a special meeting commence a new time period for the giving of a stockholder's notice as described above.

SECTION 7. NOTICE OF MEETINGS. Except as otherwise provided by law or the Certificate of Incorporation, written notice of each meeting of stockholders shall be given not less than ten (10) nor more than sixty (60) days before the date of the meeting to each stockholder entitled to vote at such meeting, such notice to specify the place, date and hour and purpose or purposes of the meeting. Notice of the time, place and purpose of any meeting of

4.


stockholders may be waived in writing, signed by the person entitled to notice thereof, either before or after such meeting, and will be waived by any stockholder by his attendance thereat in person or by proxy, except when the stockholder attends a meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. Any stockholder so waiving notice of such meeting shall be bound by the proceedings of any such meeting in all respects as if due notice thereof had been given.

SECTION 8. QUORUM. At all meetings of stockholders, except where otherwise provided by statute or by the Certificate of Incorporation, or by these Bylaws, the presence, in person or by proxy duly authorized, of the holders of a majority of the outstanding shares of stock entitled to vote shall constitute a quorum for the transaction of business. In the absence of a quorum, any meeting of stockholders may be adjourned, from time to time, either by the chairman of the meeting or by vote of the holders of a majority of the shares represented thereat, but no other business shall be transacted at such meeting. The stockholders present at a duly called or convened meeting, at which a quorum is present, may continue to transact business until adjournment, notwithstanding the withdrawal of enough stockholders to leave less than a quorum. Except as otherwise provided by statute, the Certificate of Incorporation or these Bylaws, in all matters other than the election of directors, the affirmative vote of the majority of shares present in person or represented by proxy at the meeting and entitled to vote on the subject matter shall be the act of the stockholders. Except as otherwise provided by statute, the Certificate of Incorporation or these Bylaws, directors shall be elected by a plurality of the votes of the shares present in person or represented by proxy at the meeting and entitled to vote on the election of directors. Where a separate vote by a class or classes or series is required, except where otherwise provided by the statute or by the Certificate of Incorporation or these Bylaws, a majority of the outstanding shares of such class or classes or series, present in person or represented by proxy, shall constitute a quorum entitled to take action with respect to that vote on that matter and, except where otherwise provided by the statute or by the Certificate of Incorporation or these Bylaws, the affirmative vote of the majority (plurality, in the case of the election of directors) of the votes cast by the holders of shares of such class or classes or series shall be the act of such class or classes or series.

SECTION 9. ADJOURNMENT AND NOTICE OF ADJOURNED MEETINGS. Any meeting of stockholders, whether annual or special, may be adjourned from time to time either by the chairman of the meeting or by the vote of a majority of the shares casting votes. When a meeting is adjourned to another time or place, notice need not be given of the adjourned meeting if the time and place thereof are announced at the meeting at which the adjournment is taken. At the adjourned meeting, the corporation may transact any business which might have been transacted at the original meeting. If the adjournment is for more than thirty (30) days or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting.

SECTION 10. VOTING RIGHTS. For the purpose of determining those stockholders entitled to vote at any meeting of the stockholders, except as otherwise provided by law, only persons in whose names shares stand on the stock records of the corporation on the record date, as provided in Section 12 of these Bylaws, shall be entitled to vote at any meeting of stockholders. Every person entitled to vote shall have the right to do so either in person or by an

5.


agent or agents authorized by a proxy granted in accordance with Delaware law. An agent so appointed need not be a stockholder. No proxy shall be voted after three (3) years from its date of creation unless the proxy provides for a longer period.

SECTION 11. JOINT OWNERS OF STOCK. If shares or other securities having voting power stand of record in the names of two (2) or more persons, whether fiduciaries, members of a partnership, joint tenants, tenants in common, tenants by the entirety, or otherwise, or if two (2) or more persons have the same fiduciary relationship respecting the same shares, unless the Secretary is given written notice to the contrary and is furnished with a copy of the instrument or order appointing them or creating the relationship wherein it is so provided, their acts with respect to voting shall have the following effect: (a) if only one (1) votes, his act binds all; (b) if more than one (1) votes, the act of the majority so voting binds all; (c) if more than one (1) votes, but the vote is evenly split on any particular matter, each faction may vote the securities in question proportionally, or may apply to the Delaware Court of Chancery for relief as provided in the DGCL, Section
217(b). If the instrument filed with the Secretary shows that any such tenancy is held in unequal interests, a majority or even-split for the purpose of subsection (c) shall be a majority or even-split in interest.

SECTION 12. LIST OF STOCKHOLDERS. The Secretary shall prepare and make, at least ten (10) days before every meeting of stockholders, a complete list of the stockholders entitled to vote at said meeting, arranged in alphabetical order, showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten (10) days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or, if not specified, at the place where the meeting is to be held. The list shall be produced and kept at the time and place of meeting during the whole time thereof and may be inspected by any stockholder who is present.

SECTION 13. ACTION WITHOUT MEETING.

(a) Unless otherwise provided in the Certificate of Incorporation, any action required by statute to be taken at any annual or special meeting of the stockholders, or any action which may be taken at any annual or special meeting of the stockholders, may be taken without a meeting, without prior notice and without a vote, if a consent in writing, setting forth the action so taken, shall be signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted.

(b) Every written consent shall bear the date of signature of each stockholder who signs the consent, and no written consent shall be effective to take the corporate action referred to therein unless, within sixty (60) days of the earliest dated consent delivered to the corporation in the manner herein required, written consents signed by a sufficient number of stockholders to take action are delivered to the corporation by delivery to its registered office in the State of Delaware, its principal place of business or an officer or agent of the corporation having custody of the book in which proceedings of meetings of stockholders are recorded.

6.


Delivery made to a corporation's registered office shall be by hand or by certified or registered mail, return receipt requested.

(c) Prompt notice of the taking of the corporate action without a meeting by less than unanimous written consent shall be given to those stockholders who have not consented in writing and who, if the action had been taken at a meeting, would have been entitled to notice of the meeting if the record date for such meeting had been the date that written consents signed by a sufficient number of stockholders to take action were delivered to the corporation as provided in Section 228 (c) of the DGCL. If the action which is consented to is such as would have required the filing of a certificate under any section of the DGCL if such action had been voted on by stockholders at a meeting thereof, then the certificate filed under such section shall state, in lieu of any statement required by such section concerning any vote of stockholders, that written consent has been given in accordance with Section 228 of the DGCL.

(d) Notwithstanding the foregoing, no such action by written consent may be taken following the closing of the initial public offering pursuant to an effective registration statement under the Securities Act of 1933, as amended (the "1933 Act"), covering the offer and sale of Common Stock of the corporation (the "Initial Public Offering").

SECTION 14. ORGANIZATION.

(a) At every meeting of stockholders, the Chairman of the Board of Directors, or, if a Chairman has not been appointed or is absent, the President, or, if the President is absent, a chairman of the meeting chosen by a majority in interest of the stockholders entitled to vote, present in person or by proxy, shall act as chairman. The Secretary, or, in his absence, an Assistant Secretary directed to do so by the President, shall act as secretary of the meeting.

(b) The Board of Directors of the corporation shall be entitled to make such rules or regulations for the conduct of meetings of stockholders as it shall deem necessary, appropriate or convenient. Subject to such rules and regulations of the Board of Directors, if any, the chairman of the meeting shall have the right and authority to prescribe such rules, regulations and procedures and to do all such acts as, in the judgment of such chairman, are necessary, appropriate or convenient for the proper conduct of the meeting, including, without limitation, establishing an agenda or order of business for the meeting, rules and procedures for maintaining order at the meeting and the safety of those present, limitations on participation in such meeting to stockholders of record of the corporation and their duly authorized and constituted proxies and such other persons as the chairman shall permit, restrictions on entry to the meeting after the time fixed for the commencement thereof, limitations on the time allotted to questions or comments by participants and regulation of the opening and closing of the polls for balloting on matters which are to be voted on by ballot. Unless and to the extent determined by the Board of Directors or the chairman of the meeting, meetings of stockholders shall not be required to be held in accordance with rules of parliamentary procedure.

7.


ARTICLE IV

DIRECTORS

SECTION 15. NUMBER AND TERM OF OFFICE. The authorized number of directors of the corporation shall be fixed in accordance with the Certificate of Incorporation. Directors need not be stockholders unless so required by the Certificate of Incorporation. If for any cause, the directors shall not have been elected at an annual meeting, they may be elected as soon thereafter as convenient at a special meeting of the stockholders called for that purpose in the manner provided in these Bylaws.

SECTION 16. POWERS. The powers of the corporation shall be exercised, its business conducted and its property controlled by the Board of Directors, except as may be otherwise provided by statute or by the Certificate of Incorporation.

SECTION 17. CLASSES OF DIRECTORS.

(a) Subject to the rights of the holders of any series of Preferred Stock to elect additional directors under specified circumstances, following the closing of the Initial Public Offering, the directors shall be divided into three classes designated as Class I, Class II and Class III, respectively. Directors shall be assigned to each class in accordance with a resolution or resolutions adopted by the Board of Directors. At the first annual meeting of stockholders following the closing of the Initial Public Offering, the term of office of the Class I directors shall expire and Class I directors shall be elected for a full term of three years. At the second annual meeting of stockholders following the Initial Public Offering, the term of office of the Class II directors shall expire and Class II directors shall be elected for a full term of three years. At the third annual meeting of stockholders following the Initial Public Offering, the term of office of the Class III directors shall expire and Class III directors shall be elected for a full term of three years. At each succeeding annual meeting of stockholders, directors shall be elected for a full term of three years to succeed the directors of the class whose terms expire at such annual meeting. During such time or times that the corporation is subject to Section 2115(b) of the CGCL, this Section 17(a) shall become effective and apply only when the corporation is a "listed" corporation within the meaning of Section 301.5 of the CGCL.

(b) In the event that the corporation is unable to have a classified Board of Directors under applicable law, Section 17(a) of these Bylaws shall not apply and all directors shall be elected at each annual meeting of stockholders to hold office until the next annual meeting.

(c) No stockholder entitled to vote at an election for directors may cumulate votes to which such stockholder is entitled, unless, at the time of the election, the corporation (i) is subject to Section 2115(b) of the CGCL AND (ii) is not or ceases to be a "listed" corporation under Section 301.5 of the CGCL. During this time, every stockholder entitled to vote at an election for directors may cumulate such stockholder's votes and give one candidate a number of votes equal to the number of directors to be elected multiplied by the number of votes to which such stockholder's shares are otherwise entitled, or distribute the stockholder's votes on the same principle among as many candidates as such stockholder thinks fit. No stockholder, however,

8.


shall be entitled to so cumulate such stockholder's votes unless (i) the names of such candidate or candidates have been placed in nomination prior to the voting and (ii) the stockholder has given notice at the meeting, prior to the voting, of such stockholder's intention to cumulate such stockholder's votes. If any stockholder has given proper notice to cumulate votes, all stockholders may cumulate their votes for any candidates who have been properly placed in nomination. Under cumulative voting, the candidates receiving the highest number of votes, up to the number of directors to be elected, are elected.

Notwithstanding the foregoing provisions of this section, each director shall serve until his successor is duly elected and qualified or until his death, resignation or removal. No decrease in the number of directors constituting the Board of Directors shall shorten the term of any incumbent director.

SECTION 18. VACANCIES.

(a) Unless otherwise provided in the Certificate of Incorporation, any vacancies on the Board of Directors resulting from death, resignation, disqualification, removal or other causes and any newly created directorships resulting from any increase in the number of directors shall, unless the Board of Directors determines by resolution that any such vacancies or newly created directorships shall be filled by stockholders, be filled only by the affirmative vote of a majority of the directors then in office, even though less than a quorum of the Board of Directors. Any director elected in accordance with the preceding sentence shall hold office for the remainder of the full term of the director for which the vacancy was created or occurred and until such director's successor shall have been elected and qualified. A vacancy in the Board of Directors shall be deemed to exist under this Section 18 in the case of the death, removal or resignation of any director.

(b) If at the time of filling any vacancy or any newly created directorship, the directors then in office shall constitute less than a majority of the whole board (as constituted immediately prior to any such increase), the Delaware Court of Chancery may, upon application of any stockholder or stockholders holding at least ten percent (10%) of the total number of the shares at the time outstanding having the right to vote for such directors, summarily order an election to be held to fill any such vacancies or newly created directorships, or to replace the directors chosen by the directors then in offices as aforesaid, which election shall be governed by Section 211 of the DGCL.

(c) At any time or times that the corporation is subject to
Section 2115(b) of the CGCL, if, after the filling of any vacancy, the directors then in office who have been elected by stockholders shall constitute less than a majority of the directors then in office, then

(1) Any holder or holders of an aggregate of five percent (5%) or more of the total number of shares at the time outstanding having the right to vote for those directors may call a special meeting of stockholders; or

(2) The Superior Court of the proper county shall, upon application of such stockholder or stockholders, summarily order a special meeting of stockholders, to be held

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to elect the entire board, all in accordance with Section 305(c) of the CGCL. The term of office of any director shall terminate upon that election of a successor.

SECTION 19. RESIGNATION. Any director may resign at any time by delivering his written resignation to the Secretary, such resignation to specify whether it will be effective at a particular time, upon receipt by the Secretary or at the pleasure of the Board of Directors. If no such specification is made, it shall be deemed effective at the pleasure of the Board of Directors. When one or more directors shall resign from the Board of Directors, effective at a future date, a majority of the directors then in office, including those who have so resigned, shall have power to fill such vacancy or vacancies, the vote thereon to take effect when such resignation or resignations shall become effective, and each Director so chosen shall hold office for the unexpired portion of the term of the Director whose place shall be vacated and until his successor shall have been duly elected and qualified.

SECTION 20. REMOVAL.

(a) During such time or times that the corporation is subject to Section 2115(b) of the CGCL, the Board of Directors or any individual director may be removed from office at any time without cause by the affirmative vote of the holders of at least a majority of the outstanding shares entitled to vote on such removal; provided, however, that unless the entire Board is removed, no individual director may be removed when the votes cast against such director's removal, or not consenting in writing to such removal, would be sufficient to elect that director if voted cumulatively at an election which the same total number of votes were cast (or, if such action is taken by written consent, all shares entitled to vote were voted) and the entire number of directors authorized at the time of such director's most recent election were then being elected.

(b) Following any date on which the corporation is no longer subject to Section 2115(b) of the CGCL and subject to any limitations imposed by law, Section 20(a) above shall no longer apply and removal shall be as provided in Section 141(k) of the DGCL.

SECTION 21. MEETINGS.

(a) ANNUAL MEETINGS. The annual meeting of the Board of Directors shall be held immediately before or after the annual meeting of stockholders and at the place where such meeting is held. No notice of an annual meeting of the Board of Directors shall be necessary and such meeting shall be held for the purpose of electing officers and transacting such other business as may lawfully come before it.

(b) REGULAR MEETINGS. Unless otherwise restricted by the Certificate of Incorporation, regular meetings of the Board of Directors may be held at any time or date and at any place within or without the State of Delaware which has been designated by the Board of Directors and publicized among all directors. No formal notice shall be required for regular meetings of the Board of Directors.

(c) SPECIAL MEETINGS. Unless otherwise restricted by the Certificate of Incorporation, special meetings of the Board of Directors may be held at any time and place

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within or without the State of Delaware whenever called by the Chairman of the Board, the President or any two of the directors

(d) TELEPHONE MEETINGS. Any member of the Board of Directors, or of any committee thereof, may participate in a meeting by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and participation in a meeting by such means shall constitute presence in person at such meeting.

(e) NOTICE OF MEETINGS. Notice of the time and place of all meetings of the Board of Directors shall be orally or in writing, by telephone, including a voice messaging system or other system or technology designed to record and communicate messages, facsimile, telegraph or telex, or by electronic mail or other electronic means, during normal business hours, at least twenty-four (24) hours before the date and time of the meeting, or sent in writing to each director by first class mail, charges prepaid, at least three (3) days before the date of the meeting. Notice of any meeting may be waived in writing at any time before or after the meeting and will be waived by any director by attendance thereat, except when the director attends the meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened.

(f) WAIVER OF NOTICE. The transaction of all business at any meeting of the Board of Directors, or any committee thereof, however called or noticed, or wherever held, shall be as valid as though had at a meeting duly held after regular call and notice, if a quorum be present and if, either before or after the meeting, each of the directors not present shall sign a written waiver of notice. All such waivers shall be filed with the corporate records or made a part of the minutes of the meeting.

SECTION 22. QUORUM AND VOTING.

(a) Unless the Certificate of Incorporation requires a greater number and except with respect to indemnification questions arising under Section 43 hereof, for which a quorum shall be one-third of the exact number of directors fixed from time to time in accordance with the Certificate of Incorporation, a quorum of the Board of Directors shall consist of a majority of the exact number of directors fixed from time to time by the Board of Directors in accordance with the Certificate of Incorporation; PROVIDED, HOWEVER, at any meeting whether a quorum be present or otherwise, a majority of the directors present may adjourn from time to time until the time fixed for the next regular meeting of the Board of Directors, without notice other than by announcement at the meeting.

(b) At each meeting of the Board of Directors at which a quorum is present, all questions and business shall be determined by the affirmative vote of a majority of the directors present, unless a different vote be required by law, the Certificate of Incorporation or these Bylaws.

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SECTION 23. ACTION WITHOUT MEETING. Unless otherwise restricted by the Certificate of Incorporation or these Bylaws, any action required or permitted to be taken at any meeting of the Board of Directors or of any committee thereof may be taken without a meeting, if all members of the Board of Directors or committee, as the case may be, consent thereto in writing, and such writing or writings are filed with the minutes of proceedings of the Board of Directors or committee.

SECTION 24. FEES AND COMPENSATION. Directors shall be entitled to such compensation for their services as may be approved by the Board of Directors, including, if so approved, by resolution of the Board of Directors, a fixed sum and expenses of attendance, if any, for attendance at each regular or special meeting of the Board of Directors and at any meeting of a committee of the Board of Directors. Nothing herein contained shall be construed to preclude any director from serving the corporation in any other capacity as an officer, agent, employee, or otherwise and receiving compensation therefor.

SECTION 25. COMMITTEES.

(a) EXECUTIVE COMMITTEE. The Board of Directors may appoint an Executive Committee to consist of one (1) or more members of the Board of Directors. The Executive Committee, to the extent permitted by law and provided in the resolution of the Board of Directors shall have and may exercise all the powers and authority of the Board of Directors in the management of the business and affairs of the corporation, and may authorize the seal of the corporation to be affixed to all papers which may require it; but no such committee shall have the power or authority in reference to (i) approving or adopting, or recommending to the stockholders, any action or matter expressly required by the DGCL to be submitted to stockholders for approval, or (ii) adopting, amending or repealing any bylaw of the corporation.

(b) OTHER COMMITTEES. The Board of Directors may, from time to time, appoint such other committees as may be permitted by law. Such other committees appointed by the Board of Directors shall consist of one (1) or more members of the Board of Directors and shall have such powers and perform such duties as may be prescribed by the resolution or resolutions creating such committees, but in no event shall any such committee have the powers denied to the Executive Committee in these Bylaws.

(c) TERM. Each member of a committee of the Board of Directors shall serve a term on the committee coexistent with such member's term on the Board of Directors. The Board of Directors, subject to any requirements of any outstanding series of preferred Stock and the provisions of subsections (a) or (b) of this Bylaw, may at any time increase or decrease the number of members of a committee or terminate the existence of a committee. The membership of a committee member shall terminate on the date of his death or voluntary resignation from the committee or from the Board of Directors. The Board of Directors may at any time for any reason remove any individual committee member and the Board of Directors may fill any committee vacancy created by death, resignation, removal or increase in the number of members of the committee. The Board of Directors may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee, and, in addition, in the absence or disqualification of any member of a committee, the member or members thereof present at any meeting and not disqualified from

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voting, whether or not he or they constitute a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in the place of any such absent or disqualified member.

(d) MEETINGS. Unless the Board of Directors shall otherwise provide, regular meetings of the Executive Committee or any other committee appointed pursuant to this Section 25 shall be held at such times and places as are determined by the Board of Directors, or by any such committee, and when notice thereof has been given to each member of such committee, no further notice of such regular meetings need be given thereafter. Special meetings of any such committee may be held at any place which has been determined from time to time by such committee, and may be called by any director who is a member of such committee, upon written notice to the members of such committee of the time and place of such special meeting given in the manner provided for the giving of written notice to members of the Board of Directors of the time and place of special meetings of the Board of Directors. Notice of any special meeting of any committee may be waived in writing at any time before or after the meeting and will be waived by any director by attendance thereat, except when the director attends such special meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. A majority of the authorized number of members of any such committee shall constitute a quorum for the transaction of business, and the act of a majority of those present at any meeting at which a quorum is present shall be the act of such committee.

SECTION 26. ORGANIZATION. At every meeting of the directors, the Chairman of the Board of Directors, or, if a Chairman has not been appointed or is absent, the President (if a director), or if the President is absent, the most senior Vice President (if a director), or, in the absence of any such person, a chairman of the meeting chosen by a majority of the directors present, shall preside over the meeting. The Secretary, or in his absence, any Assistant Secretary directed to do so by the President, shall act as secretary of the meeting.

ARTICLE V

OFFICERS

SECTION 27. OFFICERS DESIGNATED. The officers of the corporation shall include, if and when designated by the Board of Directors, the Chairman of the Board of Directors, the Chief Executive Officer, the President, one or more Vice Presidents, the Secretary, the Chief Financial Officer, the Treasurer and the Controller, all of whom shall be elected at the annual organizational meeting of the Board of Directors. The Board of Directors may also appoint one or more Assistant Secretaries, Assistant Treasurers, Assistant Controllers and such other officers and agents with such powers and duties as it shall deem necessary. The Board of Directors may assign such additional titles to one or more of the officers as it shall deem appropriate. Any one person may hold any number of offices of the corporation at any one time unless specifically prohibited therefrom by law. The salaries and other compensation of the officers of the corporation shall be fixed by or in the manner designated by the Board of Directors.

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SECTION 28. TENURE AND DUTIES OF OFFICERS.

(a) GENERAL. All officers shall hold office at the pleasure of the Board of Directors and until their successors shall have been duly elected and qualified, unless sooner removed. Any officer elected or appointed by the Board of Directors may be removed at any time by the Board of Directors. If the office of any officer becomes vacant for any reason, the vacancy may be filled by the Board of Directors.

(b) DUTIES OF CHAIRMAN OF THE BOARD OF DIRECTORS. The Chairman of the Board of Directors, when present, shall preside at all meetings of the stockholders and the Board of Directors. The Chairman of the Board of Directors shall perform other duties commonly incident to his office and shall also perform such other duties and have such other powers, as the Board of Directors shall designate from time to time. If there is no President, then the Chairman of the Board of Directors shall also serve as the Chief Executive Officer of the corporation and shall have the powers and duties prescribed in paragraph (c) of this Section 28.

(c) DUTIES OF PRESIDENT. The President shall preside at all meetings of the stockholders and at all meetings of the Board of Directors, unless the Chairman of the Board of Directors has been appointed and is present. Unless some other officer has been elected Chief Executive Officer of the corporation, the President shall be the chief executive officer of the corporation and shall, subject to the control of the Board of Directors, have general supervision, direction and control of the business and officers of the corporation. The President shall perform other duties commonly incident to his office and shall also perform such other duties and have such other powers, as the Board of Directors shall designate from time to time.

(d) DUTIES OF VICE PRESIDENTS. The Vice Presidents may assume and perform the duties of the President in the absence or disability of the President or whenever the office of President is vacant. The Vice Presidents shall perform other duties commonly incident to their office and shall also perform such other duties and have such other powers as the Board of Directors or the President shall designate from time to time.

(e) DUTIES OF SECRETARY. The Secretary shall attend all meetings of the stockholders and of the Board of Directors and shall record all acts and proceedings thereof in the minute book of the corporation. The Secretary shall give notice in conformity with these Bylaws of all meetings of the stockholders and of all meetings of the Board of Directors and any committee thereof requiring notice. The Secretary shall perform all other duties given him in these Bylaws and other duties commonly incident to his office and shall also perform such other duties and have such other powers, as the Board of Directors shall designate from time to time. The President may direct any Assistant Secretary to assume and perform the duties of the Secretary in the absence or disability of the Secretary, and each Assistant Secretary shall perform other duties commonly incident to his office and shall also perform such other duties and have such other powers as the Board of Directors or the President shall designate from time to time.

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(f) DUTIES OF CHIEF FINANCIAL OFFICER. The Chief Financial Officer shall keep or cause to be kept the books of account of the corporation in a thorough and proper manner and shall render statements of the financial affairs of the corporation in such form and as often as required by the Board of Directors or the President. The Chief Financial Officer, subject to the order of the Board of Directors, shall have the custody of all funds and securities of the corporation. The Chief Financial Officer shall perform other duties commonly incident to his office and shall also perform such other duties and have such other powers as the Board of Directors or the President shall designate from time to time. The President may direct the Treasurer or any Assistant Treasurer, or the Controller or any Assistant Controller to assume and perform the duties of the Chief Financial Officer in the absence or disability of the Chief Financial Officer, and each Treasurer and Assistant Treasurer and each Controller and Assistant Controller shall perform other duties commonly incident to his office and shall also perform such other duties and have such other powers as the Board of Directors or the President shall designate from time to time.

SECTION 29. DELEGATION OF AUTHORITY. The Board of Directors may from time to time delegate the powers or duties of any officer to any other officer or agent, notwithstanding any provision hereof.

SECTION 30. RESIGNATIONS. Any officer may resign at any time by giving written notice to the Board of Directors or to the President or to the Secretary. Any such resignation shall be effective when received by the person or persons to whom such notice is given, unless a later time is specified therein, in which event the resignation shall become effective at such later time. Unless otherwise specified in such notice, the acceptance of any such resignation shall not be necessary to make it effective. Any resignation shall be without prejudice to the rights, if any, of the corporation under any contract with the resigning officer.

SECTION 31. REMOVAL. Any officer may be removed from office at any time, either with or without cause, by the affirmative vote of a majority of the directors in office at the time, or by the unanimous written consent of the directors in office at the time, or by any committee or superior officers upon whom such power of removal may have been conferred by the Board of Directors.

ARTICLE VI

EXECUTION OF CORPORATE INSTRUMENTS AND VOTING OF SECURITIES
OWNED BY THE CORPORATION

SECTION 32. EXECUTION OF CORPORATE INSTRUMENTS. The Board of Directors may, in its discretion, determine the method and designate the signatory officer or officers, or other person or persons, to execute on behalf of the corporation any corporate instrument or document, or to sign on behalf of the corporation the corporate name without limitation, or to enter into contracts on behalf of the corporation, except where otherwise provided by law or these Bylaws, and such execution or signature shall be binding upon the corporation.

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All checks and drafts drawn on banks or other depositaries on funds to the credit of the corporation or in special accounts of the corporation shall be signed by such person or persons as the Board of Directors shall authorize so to do.

Unless authorized or ratified by the Board of Directors or within the agency power of an officer, no officer, agent or employee shall have any power or authority to bind the corporation by any contract or engagement or to pledge its credit or to render it liable for any purpose or for any amount.

SECTION 33. VOTING OF SECURITIES OWNED BY THE CORPORATION. All stock and other securities of other corporations owned or held by the corporation for itself, or for other parties in any capacity, shall be voted, and all proxies with respect thereto shall be executed, by the person authorized so to do by resolution of the Board of Directors, or, in the absence of such authorization, by the Chairman of the Board of Directors, the Chief Executive Officer, the President, or any Vice President.

ARTICLE VII

SHARES OF STOCK

SECTION 34. FORM AND EXECUTION OF CERTIFICATES. Certificates for the shares of stock of the corporation shall be in such form as is consistent with the Certificate of Incorporation and applicable law. Every holder of stock in the corporation shall be entitled to have a certificate signed by or in the name of the corporation by the Chairman of the Board of Directors, or the President or any Vice President and by the Treasurer or Assistant Treasurer or the Secretary or Assistant Secretary, certifying the number of shares owned by him in the corporation. Any or all of the signatures on the certificate may be facsimiles. In case any officer, transfer agent, or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent, or registrar before such certificate is issued, it may be issued with the same effect as if he were such officer, transfer agent, or registrar at the date of issue. Each certificate shall state upon the face or back thereof, in full or in summary, all of the powers, designations, preferences, and rights, and the limitations or restrictions of the shares authorized to be issued or shall, except as otherwise required by law, set forth on the face or back a statement that the corporation will furnish without charge to each stockholder who so requests the powers, designations, preferences and relative, participating, optional, or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights. Within a reasonable time after the issuance or transfer of uncertificated stock, the corporation shall send to the registered owner thereof a written notice containing the information required to be set forth or stated on certificates pursuant to this section or otherwise required by law or with respect to this section a statement that the corporation will furnish without charge to each stockholder who so requests the powers, designations, preferences and relative participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights. Except as otherwise expressly provided by law, the rights and obligations of the holders of certificates representing stock of the same class and series shall be identical.

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SECTION 35. LOST CERTIFICATES. A new certificate or certificates shall be issued in place of any certificate or certificates theretofore issued by the corporation alleged to have been lost, stolen, or destroyed, upon the making of an affidavit of that fact by the person claiming the certificate of stock to be lost, stolen, or destroyed. The corporation may require, as a condition precedent to the issuance of a new certificate or certificates, the owner of such lost, stolen, or destroyed certificate or certificates, or his legal representative, to agree to indemnify the corporation in such manner as it shall require or to give the corporation a surety bond in such form and amount as it may direct as indemnity against any claim that may be made against the corporation with respect to the certificate alleged to have been lost, stolen, or destroyed.

SECTION 36. TRANSFERS.

(a) Transfers of record of shares of stock of the corporation shall be made only upon its books by the holders thereof, in person or by attorney duly authorized, and upon the surrender of a properly endorsed certificate or certificates for a like number of shares.

(b) The corporation shall have power to enter into and perform any agreement with any number of stockholders of any one or more classes of stock of the corporation to restrict the transfer of shares of stock of the corporation of any one or more classes owned by such stockholders in any manner not prohibited by the DGCL.

SECTION 37. FIXING RECORD DATES.

(a) In order that the corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, the Board of Directors may fix, in advance, a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board of Directors, and which record date shall, subject to applicable law, not be more than sixty
(60) nor less than ten (10) days before the date of such meeting. If no record date is fixed by the Board of Directors, the record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders shall be at the close of business on the day next preceding the day on which notice is given, or if notice is waived, at the close of business on the day next preceding the day on which the meeting is held. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; PROVIDED, HOWEVER, that the Board of Directors may fix a new record date for the adjourned meeting.

(b) Prior to the Initial Public Offering, in order that the corporation may determine the stockholders entitled to consent to corporate action in writing without a meeting, the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board of Directors, and which date shall not be more than ten (10) days after the date upon which the resolution fixing the record date is adopted by the Board of Directors. Any stockholder of record seeking to have the stockholders authorize or take corporate action by written consent shall, by written notice to the Secretary, request the Board of Directors to fix a record date. The Board of Directors shall promptly, but in all events within ten (10) days after the date on which such a request is received, adopt a resolution fixing the record date. If no record date has been fixed by the Board of Directors within ten (10) days of the date on which such a request is received, the record date for

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determining stockholders entitled to consent to corporate action in writing without a meeting, when no prior action by the Board of Directors is required by applicable law, shall be the first date on which a signed written consent setting forth the action taken or proposed to be taken is delivered to the corporation by delivery to its registered office in the State of Delaware, its principal place of business or an officer or agent of the corporation having custody of the book in which proceedings of meetings of stockholders are recorded. Delivery made to the corporation's registered office shall be by hand or by certified or registered mail, return receipt requested. If no record date has been fixed by the Board of Directors and prior action by the Board of Directors is required by law, the record date for determining stockholders entitled to consent to corporate action in writing without a meeting shall be at the close of business on the day on which the Board of Directors adopts the resolution taking such prior action.

(c) In order that the corporation may determine the stockholders entitled to receive payment of any dividend or other distribution or allotment of any rights or the stockholders entitled to exercise any rights in respect of any change, conversion or exchange of stock, or for the purpose of any other lawful action, the Board of Directors may fix, in advance, a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted, and which record date shall be not more than sixty (60) days prior to such action. If no record date is fixed, the record date for determining stockholders for any such purpose shall be at the close of business on the day on which the Board of Directors adopts the resolution relating thereto.

SECTION 38. REGISTERED STOCKHOLDERS. The corporation shall be entitled to recognize the exclusive right of a person registered on its books as the owner of shares to receive dividends, and to vote as such owner, and shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person whether or not it shall have express or other notice thereof, except as otherwise provided by the laws of Delaware.

ARTICLE VIII

OTHER SECURITIES OF THE CORPORATION

SECTION 39. EXECUTION OF OTHER SECURITIES. All bonds, debentures and other corporate securities of the corporation, other than stock certificates (covered in Section 34), may be signed by the Chairman of the Board of Directors, the President or any Vice President, or such other person as may be authorized by the Board of Directors, and the corporate seal impressed thereon or a facsimile of such seal imprinted thereon and attested by the signature of the Secretary or an Assistant Secretary, or the Chief Financial Officer or Treasurer or an Assistant Treasurer; PROVIDED, HOWEVER, that where any such bond, debenture or other corporate security shall be authenticated by the manual signature, or where permissible facsimile signature, of a trustee under an indenture pursuant to which such bond, debenture or other corporate security shall be issued, the signatures of the persons signing and attesting the corporate seal on such bond, debenture or other corporate security may be the imprinted facsimile of the signatures of such persons. Interest coupons appertaining to any such bond, debenture or other corporate security, authenticated by a trustee as aforesaid, shall be signed by the Treasurer or an Assistant Treasurer of the corporation or such other person as may be authorized by the Board of Directors, or bear imprinted thereon the facsimile signature of such person. In case any officer

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who shall have signed or attested any bond, debenture or other corporate security, or whose facsimile signature shall appear thereon or on any such interest coupon, shall have ceased to be such officer before the bond, debenture or other corporate security so signed or attested shall have been delivered, such bond, debenture or other corporate security nevertheless may be adopted by the corporation and issued and delivered as though the person who signed the same or whose facsimile signature shall have been used thereon had not ceased to be such officer of the corporation.

ARTICLE IX

DIVIDENDS

SECTION 40. DECLARATION OF DIVIDENDS. Dividends upon the capital stock of the corporation, subject to the provisions of the Certificate of Incorporation and applicable law, if any, may be declared by the Board of Directors pursuant to law at any regular or special meeting. Dividends may be paid in cash, in property, or in shares of the capital stock, subject to the provisions of the Certificate of Incorporation and applicable law.

SECTION 41. DIVIDEND RESERVE. Before payment of any dividend, there may be set aside out of any funds of the corporation available for dividends such sum or sums as the Board of Directors from time to time, in their absolute discretion, think proper as a reserve or reserves to meet contingencies, or for equalizing dividends, or for repairing or maintaining any property of the corporation, or for such other purpose as the Board of Directors shall think conducive to the interests of the corporation, and the Board of Directors may modify or abolish any such reserve in the manner in which it was created.

ARTICLE X

FISCAL YEAR

SECTION 42. FISCAL YEAR. The fiscal year of the corporation shall be fixed by resolution of the Board of Directors.

ARTICLE XI

INDEMNIFICATION

SECTION 43. INDEMNIFICATION OF DIRECTORS, EXECUTIVE OFFICERS, OTHER OFFICERS, EMPLOYEES AND OTHER AGENTS.

(a) DIRECTORS AND EXECUTIVE OFFICERS. The corporation shall indemnify its directors and executive officers (for the purposes of this Article XI, "executive officers" shall have the meaning defined in Rule 3b-7 promulgated under the 1934 Act) to the fullest extent not prohibited by the DGCL or any other applicable law; PROVIDED, HOWEVER, that the corporation may modify the extent of such indemnification by individual contracts with its directors and executive officers; and, PROVIDED, FURTHER, that the corporation shall not be required to indemnify any director or executive officer in connection with any proceeding (or part thereof) initiated by such person unless (i) such indemnification is expressly required to be made by law, (ii) the

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proceeding was authorized by the Board of Directors of the corporation, (iii) such indemnification is provided by the corporation, in its sole discretion, pursuant to the powers vested in the corporation under the DGCL or any other applicable law or (iv) such indemnification is required to be made under subsection (d).

(b) OTHER OFFICERS, EMPLOYEES AND OTHER AGENTS. The corporation shall have power to indemnify its other officers, employees and other agents as set forth in the DGCL or any other applicable law. The Board of Directors shall have the power to delegate the determination of whether indemnification shall be given to any such person except executive officers to such officers or other persons as the Board of Directors shall determine.

(c) EXPENSES. The corporation shall advance to any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that he is or was a director or executive officer, of the corporation, or is or was serving at the request of the corporation as a director or executive officer of another corporation, partnership, joint venture, trust or other enterprise, prior to the final disposition of the proceeding, promptly following request therefor, all expenses incurred by any director or executive officer in connection with such proceeding upon receipt of an undertaking by or on behalf of such person to repay said amounts if it should be determined ultimately that such person is not entitled to be indemnified under this Section 43 or otherwise.

Notwithstanding the foregoing, unless otherwise determined pursuant to paragraph (e) of this Section 43, no advance shall be made by the corporation to an executive officer of the corporation (except by reason of the fact that such executive officer is or was a director of the corporation in which event this paragraph shall not apply) in any action, suit or proceeding, whether civil, criminal, administrative or investigative, if a determination is reasonably and promptly made (i) by the Board of Directors by a majority vote of a quorum consisting of directors who were not parties to the proceeding, or (ii) if such quorum is not obtainable, or, even if obtainable, a quorum of disinterested directors so directs, by independent legal counsel in a written opinion, that the facts known to the decision-making party at the time such determination is made demonstrate clearly and convincingly that such person acted in bad faith or in a manner that such person did not believe to be in or not opposed to the best interests of the corporation.

(d) ENFORCEMENT. Without the necessity of entering into an express contract, all rights to indemnification and advances to directors and executive officers under this Bylaw shall be deemed to be contractual rights and be effective to the same extent and as if provided for in a contract between the corporation and the director or executive officer. Any right to indemnification or advances granted by this Section 43 to a director or executive officer shall be enforceable by or on behalf of the person holding such right in any court of competent jurisdiction if (i) the claim for indemnification or advances is denied, in whole or in part, or (ii) no disposition of such claim is made within ninety (90) days of request therefor. The claimant in such enforcement action, if successful in whole or in part, shall be entitled to be paid also the expense of prosecuting his claim. In connection with any claim for indemnification, the corporation shall be entitled to raise as a defense to any such action that the claimant has not met the standards of conduct that make it permissible under the DGCL or any other applicable law for the corporation to indemnify the claimant for the amount claimed. In connection with any

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claim by an executive officer of the corporation (except in any action, suit or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that such executive officer is or was a director of the corporation) for advances, the corporation shall be entitled to raise a defense as to any such action clear and convincing evidence that such person acted in bad faith or in a manner that such person did not believe to be in or not opposed to the best interests of the corporation, or with respect to any criminal action or proceeding that such person acted without reasonable cause to believe that his conduct was lawful. Neither the failure of the corporation (including its Board of Directors, independent legal counsel or its stockholders) to have made a determination prior to the commencement of such action that indemnification of the claimant is proper in the circumstances because he has met the applicable standard of conduct set forth in the DGCL or any other applicable law, nor an actual determination by the corporation (including its Board of Directors, independent legal counsel or its stockholders) that the claimant has not met such applicable standard of conduct, shall be a defense to the action or create a presumption that claimant has not met the applicable standard of conduct. In any suit brought by a director or executive officer to enforce a right to indemnification or to an advancement of expenses hereunder, the burden of proving that the director or executive officer is not entitled to be indemnified, or to such advancement of expenses, under this Section 43 or otherwise shall be on the corporation.

(e) NON-EXCLUSIVITY OF RIGHTS. The rights conferred on any person by this Bylaw shall not be exclusive of any other right which such person may have or hereafter acquire under any applicable statute, provision of the Certificate of Incorporation, Bylaws, agreement, vote of stockholders or disinterested directors or otherwise, both as to action in his official capacity and as to action in another capacity while holding office. The corporation is specifically authorized to enter into individual contracts with any or all of its directors, officers, employees or agents respecting indemnification and advances, to the fullest extent not prohibited by the Delaware General Corporation Law, or by any other applicable law.

(f) SURVIVAL OF RIGHTS. The rights conferred on any person by this Bylaw shall continue as to a person who has ceased to be a director, officer, employee or other agent and shall inure to the benefit of the heirs, executors and administrators of such a person.

(g) INSURANCE. To the fullest extent permitted by the DGCL or any other applicable law, the corporation, upon approval by the Board of Directors, may purchase insurance on behalf of any person required or permitted to be indemnified pursuant to this Section 43.

(h) AMENDMENTS. Any repeal or modification of this Section 43 shall only be prospective and shall not affect the rights under this Bylaw in effect at the time of the alleged occurrence of any action or omission to act that is the cause of any proceeding against any agent of the corporation.

(i) SAVING CLAUSE. If this Bylaw or any portion hereof shall be invalidated on any ground by any court of competent jurisdiction, then the corporation shall nevertheless indemnify each director and executive officer to the full extent not prohibited by any applicable portion of this
Section 43 that shall not have been invalidated, or by any other applicable law. If this Section 43 shall be invalid due to the application of the indemnification provisions of

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another jurisdiction, then the corporation shall indemnify each director and executive officer to the full extent under any other applicable law.

(j) CERTAIN DEFINITIONS. For the purposes of this Bylaw, the following definitions shall apply:

(1) The term "proceeding" shall be broadly construed and shall include, without limitation, the investigation, preparation, prosecution, defense, settlement, arbitration and appeal of, and the giving of testimony in, any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative.

(2) The term "expenses" shall be broadly construed and shall include, without limitation, court costs, attorneys' fees, witness fees, fines, amounts paid in settlement or judgment and any other costs and expenses of any nature or kind incurred in connection with any proceeding.

(3) The term the "corporation" shall include, in addition to the resulting corporation, any constituent corporation (including any constituent of a constituent) absorbed in a consolidation or merger which, if its separate existence had continued, would have had power and authority to indemnify its directors, officers, and employees or agents, so that any person who is or was a director, officer, employee or agent of such constituent corporation, or is or was serving at the request of such constituent corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, shall stand in the same position under the provisions of this Section 43 with respect to the resulting or surviving corporation as he would have with respect to such constituent corporation if its separate existence had continued.

(4) References to a "director," "executive officer," "officer," "employee," or "agent" of the corporation shall include, without limitation, situations where such person is serving at the request of the corporation as, respectively, a director, executive officer, officer, employee, trustee or agent of another corporation, partnership, joint venture, trust or other enterprise.

(5) References to "other enterprises" shall include employee benefit plans; references to "fines" shall include any excise taxes assessed on a person with respect to an employee benefit plan; and references to "serving at the request of the corporation" shall include any service as a director, officer, employee or agent of the corporation which imposes duties on, or involves services by, such director, officer, employee, or agent with respect to an employee benefit plan, its participants, or beneficiaries; and a person who acted in good faith and in a manner he reasonably believed to be in the interest of the participants and beneficiaries of an employee benefit plan shall be deemed to have acted in a manner "not opposed to the best interests of the corporation" as referred to in this Section 43.

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ARTICLE XII

NOTICES

SECTION 44. NOTICES.

(a) NOTICE TO STOCKHOLDERS. Whenever, under any provisions of these Bylaws, notice is required to be given to any stockholder, it shall be given in writing, timely and duly deposited in the United States mail, postage prepaid, and addressed to his last known post office address as shown by the stock record of the corporation or its transfer agent.

(b) NOTICE TO DIRECTORS. Any notice required to be given to any director may be given by the method stated in subsection (a), or by overnight delivery service, facsimile, telex or telegram, except that such notice other than one which is delivered personally shall be sent to such address as such director shall have filed in writing with the Secretary, or, in the absence of such filing, to the last known post office address of such director.

(c) AFFIDAVIT OF MAILING. An affidavit of mailing, executed by a duly authorized and competent employee of the corporation or its transfer agent appointed with respect to the class of stock affected, specifying the name and address or the names and addresses of the stockholder or stockholders, or director or directors, to whom any such notice or notices was or were given, and the time and method of giving the same, shall in the absence of fraud, be prima facie evidence of the facts therein contained.

(d) TIME NOTICES DEEMED GIVEN. All notices given by mail or by overnight delivery service, as above provided, shall be deemed to have been given as at the time of mailing, and all notices given by facsimile, telex or telegram shall be deemed to have been given as of the sending time recorded at time of transmission.

(e) METHODS OF NOTICE. It shall not be necessary that the same method of giving notice be employed in respect of all directors, but one permissible method may be employed in respect of any one or more, and any other permissible method or methods may be employed in respect of any other or others.

(f) FAILURE TO RECEIVE NOTICE. The period or limitation of time within which any stockholder may exercise any option or right, or enjoy any privilege or benefit, or be required to act, or within which any director may exercise any power or right, or enjoy any privilege, pursuant to any notice sent him in the manner above provided, shall not be affected or extended in any manner by the failure of such stockholder or such director to receive such notice.

(g) NOTICE TO PERSON WITH WHOM COMMUNICATION IS UNLAWFUL. Whenever notice is required to be given, under any provision of law or of the Certificate of Incorporation or Bylaws of the corporation, to any person with whom communication is unlawful, the giving of such notice to such person shall not be required and there shall be no duty to apply to any governmental authority or agency for a license or permit to give such notice to such person. Any action or meeting which shall be taken or held without notice to any such person with whom communication is unlawful shall have the same force and effect as if such notice had been duly given. In the event that the action taken by the corporation is such as to require the filing of a

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certificate under any provision of the DGCL, the certificate shall state, if such is the fact and if notice is required, that notice was given to all persons entitled to receive notice except such persons with whom communication is unlawful.

(h) NOTICE TO PERSON WITH UNDELIVERABLE ADDRESS. Whenever notice is required to be given, under any provision of law or the Certificate of Incorporation or Bylaws of the corporation, to any stockholder to whom (i) notice of two consecutive annual meetings, and all notices of meetings or of the taking of action by written consent without a meeting to such person during the period between such two consecutive annual meetings, or (ii) all, and at least two, payments (if sent by first class mail) of dividends or interest on securities during a twelve-month period, have been mailed addressed to such person at his address as shown on the records of the corporation and have been returned undeliverable, the giving of such notice to such person shall not be required. Any action or meeting which shall be taken or held without notice to such person shall have the same force and effect as if such notice had been duly given. If any such person shall deliver to the corporation a written notice setting forth his then current address, the requirement that notice be given to such person shall be reinstated. In the event that the action taken by the corporation is such as to require the filing of a certificate under any provision of the DGCL, the certificate need not state that notice was not given to persons to whom notice was not required to be given pursuant to this paragraph.

ARTICLE XIII

AMENDMENTS

SECTION 45. AMENDMENTS. Subject to paragraph (h) of Section 43 of the Bylaws, the Bylaws may be altered or amended or new Bylaws adopted by the affirmative vote of at least sixty-six and two-thirds percent (66-2/3%) of the voting power of all of the then-outstanding shares of the voting stock of the corporation entitled to vote. The Board of Directors shall also have the power to adopt, amend, or repeal Bylaws.

ARTICLE XIV

LOANS TO OFFICERS

SECTION 46. LOANS TO OFFICERS. The corporation may lend money to, or guarantee any obligation of, or otherwise assist any officer or other employee of the corporation or of its subsidiaries, including any officer or employee who is a Director of the corporation or its subsidiaries, whenever, in the judgment of the Board of Directors, such loan, guarantee or assistance may reasonably be expected to benefit the corporation. The loan, guarantee or other assistance may be with or without interest and may be unsecured, or secured in such manner as the Board of Directors shall approve, including, without limitation, a pledge of shares of stock of the corporation. Nothing in these Bylaws shall be deemed to deny, limit or restrict the powers of guaranty or warranty of the corporation at common law or under any statute.

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OMNICELL.COM

AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT


OMNICELL.COM

AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT

THIS AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT (the "Agreement") is entered into as of the 20th day of January, 2000, by and among OMNICELL.COM, a California corporation (the "Company") the holders of Series A through J Preferred Stock set forth on Exhibit A (the "Prior Holders") and the purchasers of Series K Preferred Stock (the "Purchasers") listed on Exhibit B hereto. The Prior Holders and the Purchasers are collectively referred to hereinafter as the "Investors" and each individually as an "Investor."

RECITALS

WHEREAS, the Company and the Prior Holders are parties to the Series A Preferred Subscription Agreements entered into on or around October 1992, the Series B Preferred Subscription Agreements entered into on or around May 1993, the Series C Preferred Stock Purchase Agreement dated May 14, 1993, the Series D Preferred Stock Purchase Agreement dated October 25, 1993, the Series E Preferred Stock Purchase Agreement dated December 22, 1993, the Series F Preferred Stock Purchase Agreement dated June 8, 1994, the Series G Preferred issued in May through July 1995, and the Series H Preferred Stock Agreement dated September 18, 1995 (collectively, the "Prior Agreements") pursuant to which the Company granted the Prior Holders certain participation, registration and information rights.

WHEREAS, the Purchasers are purchasing shares of the Company's Series K Preferred Stock (the "Series K Preferred") pursuant to that certain Series K Preferred Stock Purchase Agreement (the "Purchase Agreement") of even date herewith; (the "Financing").

WHEREAS, the obligations in the Purchase Agreement are conditioned upon the execution and delivery of this Agreement;

WHEREAS, the Company and the Prior Holders intend that this Agreement shall supercede the portion of the Prior Agreements related to participation, registration and information rights, all the Prior Holders shall be deemed to be parties to this Agreement and that the Prior Agreements shall terminate upon the Closing of the Financing; and

WHEREAS, in connection with the consummation of the Financing, the parties desire to enter into this Agreement in order to grant registration, information rights and other rights to the Holders and Investors as set forth below.

NOW, THEREFORE, in consideration of the premises and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree hereto as follows:


SECTION 1. GENERAL.

1.1 DEFINITIONS. As used in this Agreement the following terms shall have the following respective meanings:

"Commission" shall mean the Securities and Exchange Commission or any other federal agency at the time administering the Securities Act.

"Conversion Stock" means the Common Stock issued or issuable pursuant to conversion of the Company's outstanding Series A Preferred issued pursuant to the Subscription Agreements on or around October 1992, Series B Preferred issued pursuant to the Subscription Agreements on or around May 1993, Series C Preferred issued pursuant to the Series C Preferred Stock Purchase Agreement dated May 14, 1993, Series D Preferred issued pursuant to the Series D Preferred Stock Purchase Agreement dated October 25, 1993, Series E Preferred issued pursuant to the Series E Preferred Stock Purchase Agreement dated December 22, 1993, the Series F Preferred issued pursuant to the Series F Preferred Stock Purchase Agreement dated June 8, 1994, the Series G Preferred issued in May through July 1995, the Series H Preferred issued pursuant to the Series H Preferred Stock Agreement dated September 18, 1995, the Series J Preferred issued upon the conversion of the Series I Preferred issued pursuant to the Series I Preferred Stock Agreement dated June 7, 1996 and the Series K Preferred issued pursuant to the Purchase Agreement.

"Exchange Act" means the Securities Exchange Act of 1934, as amended.

"Form S-3" means such form under the Securities Act as in effect on the date hereof or any successor or similar registration form under the Securities Act subsequently adopted by the SEC which permits inclusion or incorporation of substantial information by reference to other documents filed by the Company with the SEC.

"Holder" means any Investor holding Registrable Securities and purchasers of Series A Preferred, Series B Preferred, Series C Preferred, Series D Preferred, Series E Preferred, Series F Preferred, Series G Preferred, or Series H Preferred (who for purposes of Section 2 of this Agreement, shall be included in the definition of "Investor") and any persons holding Registrable Securities to whom the rights under Section 2 have been transferred in accordance with Section 2.12 hereof.

"Initial Offering" means the Company's first firm commitment underwritten public offering of its Common Stock registered under the Securities Act.

"Initiating Holders" shall mean any Holders who in the aggregate are Holders of at least 40% of the Registrable Securities.

"Register," "registered," and "registration" refer to a registration effected by preparing and filing a registration statement in compliance with the Securities Act, and the declaration or ordering of effectiveness of such registration statement or document.

"Registrable Securities" means (a) Conversion Stock; and
(b) any Common Stock of the Company issued or issuable in respect of the Conversion Stock or other securities issued


or issuable pursuant to the conversion of the Series A Preferred, Series B Preferred, Series C Preferred, Series D Preferred, Series E Preferred, Series F Preferred, Series G Preferred, Series H Preferred, Series J Preferred and Series K Preferred upon any stock split, stock dividend, recapitalization, or similar event, or any Common Stock otherwise issued or issuable with respect to such securities; provided however, that shares of Common Stock or other securities shall only be treated as Registrable Securities if and so long as they have not been (i) sold to or through a broker or dealer or underwriter in a public distribution or a public securities transaction or (ii) transferred without concurrent transfer of registration rights pursuant to
Section 2.12. "Registrable Securities then outstanding" shall be the number of shares determined by calculating the total number of shares of the Company's Common Stock that are Registrable Securities and either (a) are then issued and outstanding or (b) are issuable pursuant to then exercisable or convertible securities.

"Registration Expenses" shall mean all expenses incurred by the Company in complying with Sections 2.4, 2.5 and 2.6 hereof, including, without limitation, all registration and filing fees, printing expenses, fees and disbursements of counsel for the Company, reasonable fees and disbursements not to exceed twenty-five thousand dollars ($25,000) of a single special counsel for the Holders, blue sky fees and expenses and the expense of any special audits incident to or required by any such registration (but excluding the compensation of regular employees of the Company which shall be paid in any event by the Company).

"Restricted Securities" shall mean the securities of the Company required to bear the legend set forth in Section 2.2 hereof.

"Securities Act" shall mean the Securities Act of 1933, as amended.

"Selling Expenses" shall mean all underwriting discounts and selling commissions applicable to the sale.

"Shares" shall mean the Company's Preferred Stock held by the Holders listed on Exhibit A hereto and their permitted assigns.

SECTION 2. REGISTRATION; RESTRICTIONS ON TRANSFER.

2.1 RESTRICTIONS ON TRANSFERABILITY. The Shares and the Conversion Stock shall not be sold, assigned, transferred or pledged except upon the conditions specified in this Section 2, which conditions are intended to ensure compliance with the provisions of the Securities Act. Each Investor will cause any proposed purchaser, assignee, transferee, or pledgee of the Shares or the Conversion Stock held by an Investor to agree to take and hold such securities subject to the provisions and upon the conditions specified in this Section 2.

2.2 RESTRICTIVE LEGEND. Each certificate representing (i) the Shares,
(ii) the Conversion Stock and (iii) any other securities issued in respect of the Shares or the Conversion Stock upon any stock split, stock dividend, recapitalization, merger, consolidation or similar event, shall (unless otherwise permitted by the provisions of Section 2.3 below) be stamped or


otherwise imprinted with a legend in the following form (in addition to any legend required under applicable state securities laws):

THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE "ACT"). SUCH SHARES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH SALE OR TRANSFER COMPLIES WITH THE PROVISIONS OF RULE 144 UNDER THE ACT IN THE OPINION OF COUNSEL TO THE COMPANY OR THE COMPANY RECEIVES AN OPINION OF COUNSEL REASONABLY ACCEPTABLE TO IT STATING THAT SUCH SALE OR TRANSFER IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF THE ACT. COPIES OF THE AGREEMENT COVERING THE PURCHASE OF THESE SHARES AND RESTRICTING THEIR TRANSFER MAY BE OBTAINED AT NO COST BY WRITTEN REQUEST MADE BY THE HOLDER OF RECORD OF THIS CERTIFICATE TO THE SECRETARY OF THE CORPORATION AT THE PRINCIPAL EXECUTIVE OFFICES OF THE CORPORATION.

Each Purchaser and Holder consents to the Company making a notation on its records and giving instructions to any transfer agent of the Shares or the Common Stock in order to implement the restrictions on transfer established in this Section 2.

Any legend endorsed on a certificate as described above shall be removed and the Company shall issue a certificate without such legend to the holder of such security if such security is registered under the Securities Act or if a notification under Regulation A of the Securities Act is in effect with respect thereto, or if such security may be sold under Rule 144(k) of the Commission under the Securities Act.

2.3 NOTICE OF PROPOSED TRANSFERS. The Holder of each certificate representing Restricted Securities by acceptance thereof agrees to comply in all respects with the provisions of this Section 2.3. Prior to any proposed sale, assignment, transfer or pledge of any Restricted Securities, unless there is in effect a registration statement under the Securities Act covering the proposed transfer, the Holder thereof shall give written notice to the Company of such Holder's intention to effect such transfer, sale, assignment or pledge. Each such notice shall describe the manner and circumstances of the proposed transfer, sale, assignment or pledge in sufficient detail, and shall be accompanied (except in the case of (i) a transfer not involving a change in beneficial ownership, (ii) a transfer which complies with the provisions of Rule 144 under the Securities Act in the opinion of counsel to the Company, (iii) a transaction involving the distribution of Restricted Securities by any Holder to any of its partners, retired partners, or to the estate of any of its partners or retired partners, or to such Holder's spouse, siblings, spouse of such siblings, ancestors and descendants and any trust established solely for such Holder's benefit or for the benefit of such Holder's spouse, siblings, ancestors and/or descendants, or to such Holder's "affiliates", as defined under the Securities Act), at such Holder's expense, by either (i) a written opinion of legal counsel who shall be, and whose legal opinion shall be, reasonably satisfactory to the Company addressed to the Company, to the effect proposed that


the transfer of the Restricted Securities may be effected without registration under the Securities Act or (ii) a "no action" letter from the Commission to the effect that the transfer of such securities without registration will not result in a recommendation by the staff of the Commission that action be taken with respect thereto, whereupon the Holder of such Restricted Securities shall be entitled to transfer such Restricted Securities in accordance with the terms of the notice delivered by the Holder to the Company. Each certificate evidencing the Restricted Securities transferred as above provided shall bear, except if such transfer is made pursuant to Rule 144, the appropriate restrictive legend set forth in Section 2.2 above, except that such certificate shall not bear such restrictive legend if in the opinion of counsel for such Holder and the Company such legend is not required in order to establish compliance with any provision of the Securities Act.

2.4 REQUESTED REGISTRATION.

(a) REQUEST FOR REGISTRATION. In case the Company shall receive from Initiating Holders a written request that the Company effect any registration, qualification or compliance with respect to such Initiating Holders' Registrable Securities where the reasonably anticipated aggregate offering price to the public, net of underwriting discounts and commissions, would exceed $5,000,000, the Company shall:

(i) promptly give written notice of the proposed registration, qualification or compliance to all other Holders; and

(ii) as soon as practicable, use its best efforts to effect such registration, qualification or compliance (including, without limitation, appropriate qualification under applicable blue sky or other state securities laws and appropriate compliance with applicable regulations issued under the Securities Act and any other governmental requirements or regulations) as may be so requested and as would permit or facilitate the sale and distribution of all or such portion of such Registrable Securities as are specified in such request, together with all or such portion of the Registrable Securities of any Holder or Holders joining in such request as are specified in a written request received by the Company within twenty (20) days after receipt of such written notice from the Company;

Provided, however, that the Company shall not be obligated to file a registration statement to effect any such registration, qualification or compliance pursuant to this Section 2.4:

(A) In any particular jurisdiction in which the Company would be required to execute a general consent to service of process in effecting such registration, qualification or compliance unless the Company is already subject to service in such jurisdiction and except as may be required by the Securities Act;

(B) Starting on a date sixty (60) days prior to and ending on a date four months immediately following the effective date of any registration statement pertaining to the securities of the Company (other than a registration of securities in a Rule 145 transaction or with respect to an employee benefit plan), provided that the Company is actively employing in good faith all reasonable efforts to cause such registration statement to become effective;


(C) After (i) the Company has effected two such registrations pursuant to this Section 8.5 (provided such Holders are able to register at least 90% of the shares of Registrable Securities for which they requested registration) and (ii) each such registration has been declared or ordered effective; or

(D) If the Company shall furnish to such Holders a certificate signed by the President of the Company stating that in the good faith judgment of the Board of Directors it would be seriously detrimental to the Company or its shareholders for a registration statement to be filed in the near future, then the Company's obligation to use its best efforts to register, qualify or comply under this Section 2.4 shall be deferred for a period not to exceed 120 days from the date of receipt of written request from the Initiating Holders.

Subject to the foregoing clauses (A) through (D), the Company shall file a registration statement covering the Registrable Securities so requested to be registered as soon as practicable, after receipt of the request or requests of the Initiating Holders.

(b) UNDERWRITING. In the event that the Initiating Holders specify that a registration pursuant to Section 2.4 is for a registered public offering involving an underwriting, the Company shall so advise the Holders as part of the notice given pursuant to Section 2.4(a)(i). In such event, the right of any Holder to registration pursuant to Section 2.4 shall be conditioned upon such Holder's participation in the underwriting arrangements required by this
Section 2.4, and the inclusion of such Holder's Registrable Securities in the underwriting to the extent requested shall be limited to the extent provided herein.

The Company shall (together with all Holders proposing to distribute their securities through such underwriting) enter into an underwriting agreement in customary form with the managing underwriter of nationally recognized standing selected for such underwriting by a majority in interest of the Initiating Holders, but subject to the Company's reasonable approval. Notwithstanding any other provision of this Section 2.4, if the managing underwriter advises the Initiating Holders in writing that marketing factors require a limitation of the number of shares to be underwritten, then the Company shall so advise all holders of Registrable Securities who have elected to participate in such offering and the number of shares of Registrable Securities that may be included in the registration and underwriting shall be allocated among all Holders thereof in proportion, as nearly as practicable, to the respective amounts of Registrable Securities held by such Holders at the time of filing the registration statement. No Registrable Securities excluded from the underwriting by reason of the underwriter's marketing limitation shall be included in such registration.

If any Holder of Registrable Securities disapproves of the terms of the underwriting, such person may elect to withdraw therefrom by written notice to the Company, the managing underwriter and the Initiating Holders. The Registrable Securities and/or other securities so withdrawn shall also be withdrawn from registration, and such Registrable Securities shall not be transferred in a public distribution prior to 120 days after the effective date of such registration, or such other shorter period of time as the underwriters may permit. If by the withdrawal of such Registrable Securities a greater number of Registrable Securities held by other Holders may be included in such registration (up to the maximum of any limitation then imposed by the underwriters), then the Company shall offer to all Holders, if any, whose shares have been


excluded from the registration by the terms of this paragraph, the right to include additional Registrable Securities in the same proportion used in determining the underwriter limitation in this Section 2.4(b) up to the limitation then imposed by the Underwriters.

2.5 COMPANY REGISTRATION.

(a) NOTICE OF REGISTRATION. If at any time or from time to time the Company shall determine to register any of its securities, either for its own account or the account of a security holder or holders, other than (i) a registration relating solely to employee benefit plans, (ii) a registration relating solely to a Commission Rule 145 transaction or (iii) a registration in which the only Common Stock being registered is Common Stock issuable upon conversion of convertible debt securities which are also being registered, the Company will:

(i) promptly give to each Holder written notice thereof; and

(ii) include in such registration (and any related qualification under blue sky laws or other compliance), and in any underwriting involved therein, all the Registrable Securities specified in a written request or requests, made within 30 days after receipt of such written notice from the Company, by any Holder.

(b) UNDERWRITING. If the registration of which the Company gives notice is for a registered public offering involving an underwriting, the Company shall so advise the Holders as a part of the written notice given pursuant to Section 2.5(a)(i). In such event the right of any Holder to registration pursuant to Section 2.5 shall be conditioned upon such Holder's participation in such underwriting and the inclusion of Registrable Securities in the underwriting to the extent provided herein.

All Holders proposing to distribute their securities through such underwriting shall (together with the Company and the other Holders distributing their securities through such underwriting) enter into an underwriting agreement in customary form with the managing underwriter selected for such underwriting by the Company. If the managing underwriter determines that marketing factors require a limitation of the number of shares to be underwritten, the underwriter may exclude some or all Registrable Securities from such registration and underwriting and then the Company shall so advise all Holders of Registrable Securities who have elected to participate in such offering and the number of shares of Registrable Securities that may be included in the registration and underwriting shall be allocated among all Holders thereof in proportion, as nearly as practicable, to the respective amounts of Registrable Securities held by such Holders at the time of filing the registration statement but the foregoing shall not be interpreted to require any cutback in the number of shares to be sold by the Company in such an offering. Notwithstanding the above, in the event of an offering other than the Company's initial public offering, the number of Registrable Securities included in such offering shall not be reduced to less than 20% of the shares to be offered in such offering.

If any Holder disapproves of the terms of any such underwriting, such person may elect to withdraw therefrom by written notice to the Company and the managing underwriter. Any securities excluded or withdrawn from such underwriting shall be withdrawn from such registration. If by the withdrawal of such Registrable Securities a greater number of


Registrable Securities held by other Holders may be included in such registration (up to the maximum of any limitation then imposed by the underwriters), then the Company shall offer to all Holders, if any, whose shares have been excluded from the registration by the terms of this paragraph, the right to include additional Registrable Securities in the same proportion used in determining the underwriter limitation in this Section up to the limitation then imposed by the Underwriters.

(c) RIGHT TO TERMINATE REGISTRATION. The Company shall have the right to terminate or withdraw any registration initiated by it under this
Section 2.5 prior to the effectiveness of such registration whether or not any Holder elected to include securities in such registration.

2.6 REGISTRATION ON FORM S-3.

(a) If a Holder or Holders request that the Company file a registration statement on Form S-3 (or any successor form to Form S-3) for a public offering of shares of the Registrable Securities, the reasonably anticipated aggregate price to the public of which, net of underwriting discounts and commissions, would exceed $1,000,000, and the Company is a registrant entitled to use Form S-3 to register the Registrable Securities for such an offering, the Company shall use its best efforts to cause such Registrable Securities to be registered for the offering on such form and to cause such Registrable Securities to be qualified in such jurisdictions as the Holder or Holders may reasonably request; provided, however, that the Company shall not be required to effect more than four registrations pursuant to this
Section 2.6. The substantive provisions of Section 2.4(b) shall be applicable to each registration initiated under this Section 2.6. The Company shall give notice to all Holders of Registrable Securities of the receipt of a request for registration pursuant to this Section 2.6 and shall provide a reasonable opportunity for other Holders to participate in the registration.

(b) Notwithstanding the foregoing, the Company shall not be obligated to file a registration statement pursuant to this Section 2.6:

(i) in any particular jurisdiction in which the Company would be required to execute a general consent to service of process in effecting such registration, qualification or compliance unless the Company is already subject to service in such jurisdiction and except as may be required by the Securities Act;

(ii) if the Company, within ten (10) days of the receipt of the request of the initiating Holders, gives notice of its bona fide intention to effect the filing of a registration statement with the Commission within ninety (90) days of receipt of such request (other than with respect to a registration statement relating to a Rule 145 transaction or an offering solely to employees);

(iii) starting with a date sixty (60) days prior to, and ending on a date four months immediately following, the effective date of any registration statement pertaining to the securities of the Company (other than a registration of securities in a Rule 145 transaction or with respect to an employee benefit plan), provided that the Company is actively employing in good faith all reasonable efforts to cause such registration statement to become effective;


(iv) if the shares held by such Holder can be sold pursuant to Rule 144 within a three month period of the date of the request for a registration under this Section 2.6 and the applicable Holder holds less than two (2%) percent of the outstanding voting stock of the Company; or

(v) if the Company shall furnish to such Holders a certificate signed by the President of the Company stating that in the good faith judgment of the Board of Directors it would be seriously detrimental to the Company or its shareholders for a registration statement to be filed in the near future, then the Company's obligation to use its best efforts to file a registration statement shall be deferred for a period not to exceed one hundred twenty (120) days from the receipt of the request to file such registration by such Holder.

2.7 EXPENSES OF REGISTRATION.

All Registration Expenses incurred in connection with all registrations pursuant to Sections 2.4, 2.5 and 2.6 shall be borne by the Company. Unless otherwise stated, all Selling Expenses relating to securities registered on behalf of the Holders shall be borne by the Holders of such securities pro rata on the basis of the number of shares so registered and sold.

2.8 REGISTRATION PROCEDURES. In the case of each registration, qualification or compliance effected by the Company pursuant to this Section 2, the Company will keep each Holder advised in writing as to the initiation of each registration, qualification and compliance and as to the completion thereof, including any stop order or other proceeding initiated with respect to such offering. At its expense the Company will:

(a) Prepare and file with the Commission a registration statement with respect to such securities and use its best efforts to cause such registration statement to become and remain effective for at least two (2) years or until the distribution described in the Registration Statement has been completed, whichever first occurs; and

(b) Furnish to the Holders participating in such registration such reasonable number of copies of the registration statement, preliminary prospectus, final prospectus and such other documents as such Holders may reasonably request.


2.9 INDEMNIFICATION.

(a) The Company will indemnify each Holder, each of its officers and directors and partners, and each person controlling such Holder within the meaning of Section 15 of the Securities Act, with respect to which registration, qualification or compliance has been effected pursuant to this
Section 2, and each underwriter, if any, and each person who controls any underwriter within the meaning of Section 15 of the Securities Act, against all expenses, claims, losses, damages or liabilities (or actions in respect thereof), including any of the foregoing incurred in settlement of any litigation, commenced or threatened, arising out of or based on any untrue statement (or alleged untrue statement) of a material fact contained in any registration statement, prospectus, offering circular or other document, or any amendment or supplement thereto, incident to any such registration, qualification or compliance, or based on any omission (or alleged omission) to state therein a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances in which they were made, not misleading, or any violation by the Company of the Securities Act or any state securities law or any rule or regulation promulgated thereunder applicable to the Company in connection with any such registration, qualification or compliance, and the Company will reimburse each such Holder, each of its officers and directors, and each person controlling such Holder, each such underwriter and each person who controls any such underwriter, for any legal and any other expenses reasonably incurred in connection with investigating, preparing or defending any such claim, loss, damage, liability or action, provided that the Company will not be liable in any such case to the extent that any such claim, loss, damage, liability or expense arises out of or is based on any untrue statement or omission or alleged untrue statement or omission, made in reliance upon and in conformity with written information furnished to the Company by an instrument duly executed by any Holder, controlling person or underwriter and stated to be specifically for use therein; provided, however, that the foregoing indemnity agreement is subject to the condition that, insofar as it relates to any such untrue statement, alleged untrue statement, omission or alleged omission made in a preliminary prospectus on file with the Commission at the time the registration statement becomes effective or the amended prospectus filed with the Commission pursuant to Rule 424(b) (the "Final Prospectus"), such indemnity agreement shall not inure to the benefit of any underwriter, if a copy of the Final Prospectus was not furnished to the person asserting the loss, liability, claim or damage at or prior to the time such action is required by the Securities Act and such failure to furnish such Final Prospectus was the cause of such loss, liability, claim or damage.

(b) Each Holder will, if Registrable Securities held by such Holder are included in the securities as to which such registration, qualification or compliance is being effected, indemnify the Company, each of its directors and officers, each underwriter, if any, of the Company's securities covered by such a registration statement, each person who controls the Company or such underwriter within the meaning of Section 15 of the Securities Act, and each other such Holder, each of its officers and directors and each person controlling such Holder within the meaning of Section 15 of the Securities Act, against all claims, losses, damages and liabilities (or actions in respect thereof) arising out of or based on any untrue statement (or alleged untrue statement) of a material fact contained in any such registration statement, prospectus, offering circular or other document, or any omission (or alleged omission) to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, and will reimburse the Company, such Holders, such directors, officers, persons,


underwriters or control persons for any legal or any other expenses reasonably incurred in connection with investigating or defending any such claim, loss, damage, liability or action, in each case to the extent, but only to the extent, that such untrue statement (or alleged untrue statement) or omission (or alleged omission) is made in such registration statement, prospectus, offering circular or other document in reliance upon and in conformity with written information furnished to the Company by an instrument duly executed by such Holder and stated to be specifically for use therein; provided, however, that the foregoing indemnity agreement is subject to the condition that, insofar as it relates to any untrue statement, alleged untrue statement, omission or alleged omission made in a preliminary prospectus on file with the Commission at the time the registration statement becomes effective or in the Final Prospectus, such indemnity agreement shall not inure to the benefit of any underwriter or any Holder, if there is no underwriter, if a copy of the Final Prospectus was not furnished to the person asserting the loss, liability, claim or damage at or prior to the time such action is required by the Securities Act and such failure to furnish such Final Prospectus was the cause of such loss, liability, claim or damage. Notwithstanding the foregoing, the liability of each Holder under this subsection (b) shall be limited in an amount equal to the net proceeds received for the shares sold by such Holder.

(c) Each party entitled to indemnification under this Section
2.9 (the "Indemnified Party") shall give written notice to the party required to provide indemnification (the "Indemnifying Party") promptly after such Indemnified Party has actual knowledge of any claim as to which indemnity may be sought, and the Indemnifying Party shall have the option to assume the defense of any such claim or any litigation resulting therefrom, provided that counsel for the Indemnifying Party, who shall conduct the defense of such claim or litigation, shall be approved by the Indemnified Party (whose approval shall not unreasonably be withheld), and the Indemnified Party may participate in such defense at such party's expense, and provided further that the failure of any Indemnified Party to give notice as provided herein shall not relieve the Indemnifying Party of its obligations under this Section 2 unless the failure to give such notice is materially prejudicial to an Indemnifying Party's ability to defend such action and provided further, that the Indemnifying Party shall not assume the defense for matters as to which there is a conflict of interest or separate and different defenses. No claim may be settled without the consent of the Indemnifying Party (which consent shall not be unreasonably withheld). No Indemnifying Party, in the defense of any such claim or litigation, shall, except with the consent of each Indemnified Party, consent to entry of any judgment or enter into any settlement which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such Indemnified Party of a release from all liability in respect to such claim or litigation.

2.10 INFORMATION BY HOLDER. Each Holder holding Registrable Securities included in any registration shall furnish to the Company such information regarding such Registrable Securities held by them and the distribution proposed by such Holder as the Company may reasonably request in writing and as shall be required in connection with any registration, qualification or compliance referred to in this Section 2.


2.11 RULE 144 REPORTING. With a view to making available the benefits of certain rules and regulations of the Commission which may at any time permit the sale of the Restricted Securities to the public without registration, after such time as a public market exists for the Common Stock of the Company, the Company agrees to use its best efforts to:

(a) Make and keep public information available, as those terms are understood and defined in Rule 144 under the Securities Act, at all times after the effective date of the Initial Offering, as defined below;

(b) Use its best efforts to file with the Commission in a timely manner all reports and other documents required of the Company under the Securities Act and the Securities Exchange Act of 1934, as amended (at any time after it has become subject to such reporting requirements); and

(c) So long as a Purchaser owns any Restricted Securities, to furnish to the Purchaser forthwith upon request a written statement by the Company as to its compliance with the reporting requirements of Rule 144 (at any time after 90 days after the effective date of the first registration statement filed by the Company for an offering of its securities to the general public), and of the Securities Act and the Securities Exchange Act of 1934 (at any time after it has become subject to such reporting requirements), a copy of the most recent annual or quarterly report of the Company, and such other reports and documents of the Company and other information in the possession of or reasonably obtainable by the Company as a Purchaser may reasonably request in availing itself of any rule or regulation of the Commission allowing a Purchaser to sell any such securities without registration.

2.12 TRANSFER OF REGISTRATION RIGHTS. The rights to cause the Company to register securities granted Holders under Sections 2.4, 2.5 and 2.6 may be assigned to a transferee or assignee in connection with any transfer or assignment of Registrable Securities by a Purchaser provided that: (i) such transfer shall otherwise be effected in accordance with applicable securities laws, (ii) such assignee or transferee acquires at least 100,000 shares (adjusted for stock splits, reverse splits, reorganizations and the like) of Registrable Securities, (iii) written notice is promptly given to the Company,
(iv) such transferee agrees to be bound by the provisions of this Section 2 and
(v) such Holder obtains the prior written consent of the Company, which consent shall not be unreasonably withheld. Notwithstanding the foregoing, the rights to cause the Company to register securities may be assigned to any constituent partner or affiliate of a Holder or to such Holder's spouse, siblings, spouse of such siblings, ancestors and descendants and any trust established solely for such Holder's benefit or for the benefit of such Holder's spouse, siblings, ancestors and/or descendants, without compliance with item (ii) above, provided written notice thereof is promptly given to the Company.

2.13 LOCKUP AGREEMENT. Each holder of Registrable Securities and each transferee pursuant to Section 2 hereof agrees, in connection with any registration of the Company's securities, upon request of the Company or the underwriters managing any underwritten offering of the Company's securities, not to sell, make any short sale of, loan, grant any option for the purchase of, or otherwise dispose of any Registrable Securities (other than those included in the registration) without the prior written consent of the Company or such underwriter, as the case may be, for such period of time (not to exceed 180 days) from the effective date of such


registration as the Company or the underwriters may specify; provided that these obligations shall apply only to the Initial Offering and not to any subsequent registration of the Company's securities; and provided further that this Section 2.13 shall apply only if all officers and directors of the Company who hold shares of stock or options to purchase common stock have signed agreements with the underwriters containing similar restrictions. The holders of Registrable Securities agree that the Company may instruct its transfer agent to place stop-transfer notations in its records to enforce the provisions of this Section 2.13.

2.14 TERMINATION. The registration rights granted pursuant to this
Section 2 shall terminate on the fifth anniversary of the closing of the Initial Offering.

SECTION 3. COVENANTS OF THE COMPANY.

3.1 BASIC FINANCIAL INFORMATION AND REPORTING.

(a) The Company will maintain true books and records of account in which full and correct entries will be made of all its business transactions pursuant to a system of accounting established and administered in accordance with generally accepted accounting principles consistently applied, and will set aside on its books all such proper accruals and reserves as shall be required under generally accepted accounting principles consistently applied.

(b) As soon as practicable after the end of each fiscal year of the Company, and in any event within one hundred twenty (120) days thereafter, to the extent requested by an Investor the Company will furnish each Investor a balance sheet of the Company, as at the end of such fiscal year, and a statement of income and a statement of cash flows of the Company, for such year, all prepared in accordance with generally accepted accounting principles consistently applied and setting forth in each case in comparative form the figures for the previous fiscal year, all in reasonable detail. Such financial statements shall be accompanied by a report and opinion thereon by independent public accountants of national standing selected by the Company's Board of Directors.

(c) The Company will furnish each Investor, as soon as practicable after the end of the first, second and third quarterly accounting periods in each fiscal year of the Company, and in any event within forty-five
(45) days thereafter, to the extent requested by such Investor a balance sheet of the Company as of the end of each such quarterly period, and a statement of income and a statement of cash flows of the Company for such period and for the current fiscal year to date, prepared in accordance with generally accepted accounting principles, with the exception that no notes need be attached to such statements and year-end audit adjustments may not have been made.

3.2 CONFIDENTIALITY OF RECORDS. Each Investor agrees to use, and to use its best efforts to insure that its authorized representatives use, the same degree of care as such Investor uses to protect its own confidential information to keep confidential any information furnished to it which the Company identifies as being confidential or proprietary (so long as such information is not in the public domain), except that such Investor may disclose such proprietary or confidential information to any partner, subsidiary or parent of such Investor for the purpose of


evaluating its investment in the Company as long as such partner, subsidiary or parent is advised of the confidentiality provisions of this Section 3.3.

3.3 RESERVATION OF COMMON STOCK. The Company will at all times reserve and keep available, solely for issuance and delivery upon the conversion of the Preferred Stock, all Common Stock issuable from time to time upon such conversion.

3.4 APPOINTMENT OF AUDIT COMMITTEE MEMBER. The Company will take all actions within its control to cause the appointment of the representative of the Series K Preferred on the Company's Board of Directors as a member of the Audit Committee of the Company's Board of Directors.

3.5 TERMINATION OF COVENANTS. All covenants of the Company contained in
Section 3 of this Agreement shall expire and terminate as to each Investor upon the earlier of (i) the effective date of the registration statement pertaining to the Initial Offering, which results in the Preferred Stock being converted into Common Stock or (ii) upon (a) the sale, lease or other disposition of all or substantially all of the assets of the Company or (b) an acquisition of the Company by another corporation or entity by consolidation, merger or other reorganization in which the holders of the Company's outstanding voting stock immediately prior to such transaction own, immediately after such transaction, securities representing less than fifty percent (50%) of the voting power of the corporation or other entity surviving such transaction, PROVIDED that this
Section 3.5 shall not apply to a merger effected exclusively for the purpose of changing the domicile of the Company (a "Change in Control").

SECTION 4. RIGHTS OF FIRST REFUSAL.

The Company hereby grants to each Investor the right of first refusal to purchase, pro rata, a portion of "New Securities" (as defined in this Section
4) that the Company may, from time to time, propose to sell and issue. Each Investor's pro rata share, for purposes of this right of first refusal, is the ratio (as of the record date set for determining which of the Company's shareholders are entitled to such right of first refusal) of (X) the number of shares of Common Stock owned or issuable (calculated after giving effect to any anti-dilution adjustment as a result of such issuance) upon the conversion of the Preferred Stock owned by such Investor to (Y) the total number of shares of Common Stock outstanding or issuable (calculated after giving effect to any anti-dilution adjustment as a result of such issuance) upon the conversion of all outstanding Preferred Stock. This right of first refusal shall be subject to the following provisions:

(a) "NEW SECURITIES" shall mean any Common Stock and Preferred Stock of the Company whether or not authorized on the date hereof, and rights, options, or warrants to purchase such Common Stock or Preferred Stock, and securities of any type whatsoever that are, or may become, convertible into said Common Stock or Preferred Stock; provided, however, that "New Securities" does not include the following:

(i) all shares of Common Stock, or options to purchase shares of Common Stock, issued or granted to officers, directors, employees and consultants of the


Company pursuant to stock and option plans or arrangements approved by the Board of Directors;

(ii) shares of Common Stock issuable upon conversion of any of the Company's Preferred Stock;

(iii) securities of the Company offered to the public pursuant to a registration statement filed under the Securities Act;

(iv) securities of the Company issued pursuant to the acquisition of another corporation by the Company by merger, purchase of substantially all of the assets, or other reorganization whereby the Company owns not less than fifty-one percent (51%) of the voting power of such other corporation;

(v) shares of Common Stock or Preferred Stock issued in connection with any stock split, stock dividend, or recapitalization by the Company; or

(vi) shares of Common Stock or Preferred Stock (or options or warrants therefore) issued in connection with bona fide equipment, accounts receivable, or other similar debt financing undertaken with a leasing company, bank, or other financial institution regularly engaged in the business of lending money.

(b) In the event that the Company proposes to undertake an issuance of New Securities, it shall give each Investor written notice of its intention, describing the number and type of New Securities, the price, the general terms upon which the Company proposes to issue the same, and Investor's pro rata share of the New Securities. Each Investor shall have ten (10) business days from the date such notice is given to agree to purchase up to its pro rata share of such New Securities at the price and upon the general terms specified in the notice by giving written notice to the Company and stating therein the quantity of New Securities to be purchased.

(c) The Company shall have ninety (90) days after giving the notice referred to above to sell (or enter into an agreement pursuant to which the sale of New Securities covered thereby shall be closed, if at all, within thirty (30) days from the date of such agreement) with the New Securities respecting which the Investor's rights were not exercised at a price and upon general terms no more favorable to the purchasers thereof than specified in the Company's notice. In the event the Company has not sold the New Securities within such ninety (90) day period (or sold and issued New Securities in accordance with the foregoing within thirty (30) days from the date of such agreement), the Company shall not thereafter issue or sell any New Securities without first offering such New Securities to the Purchasers in the manner provided above.

(d) The right of first refusal granted under this Agreement shall expire upon the date of the Initial Offering.

(e) This right of first refusal can be assigned, but only in connection with an assignment of the Shares, and not to a party who is, or who has an interest in, a competitor or potential competitor of the Company, as determined by the Company's Board of Directors.


(f) This right of first refusal shall not apply to Investors who no longer own any Shares or Common Stock issuable upon conversion thereof as of the date of the notice referred to above.

SECTION 5. MISCELLANEOUS.

5.1 GOVERNING LAW. This Agreement shall be governed by and construed under the laws of the State of California as applied to agreements among California residents entered into and to be performed entirely within California.

5.2 SURVIVAL. The representations, warranties, covenants, and agreements made herein shall survive any investigation made by any Holder and the closing of the transactions contemplated hereby. All statements as to factual matters contained in any certificate or other instrument delivered by or on behalf of the Company pursuant hereto in connection with the transactions contemplated hereby shall be deemed to be representations and warranties by the Company hereunder solely as of the date of such certificate or instrument.

5.3 SUCCESSORS AND ASSIGNS. Except as otherwise expressly provided herein, the provisions hereof shall inure to the benefit of, and be binding upon, the successors, assigns, heirs, executors, and administrators of the parties hereto and shall inure to the benefit of and be enforceable by each person who shall be a holder of Registrable Securities from time to time; PROVIDED, HOWEVER, that prior to the receipt by the Company of adequate written notice of the transfer of any Registrable Securities specifying the full name and address of the transferee, the Company may deem and treat the person listed as the holder of such shares in its records as the absolute owner and holder of such shares for all purposes, including the payment of dividends or any redemption price.

5.4 ENTIRE AGREEMENT. This Agreement, the Exhibits and Schedules hereto, the Purchase Agreement and the other documents delivered pursuant thereto constitute the full and entire understanding and agreement between the parties with regard to the subjects hereof and no party shall be liable or bound to any other in any manner by any representations, warranties, covenants and agreements except as specifically set forth herein and therein. Sections 8 and 9 of each of the Prior Agreements which relate to participation, registration and information rights shall terminate and be superceded by this Agreement

5.5 SEVERABILITY. In the event one or more of the provisions of this Agreement should, for any reason, be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality, or unenforceability shall not affect any other provisions of this Agreement, and this Agreement shall be construed as if such invalid, illegal or unenforceable provision had never been contained herein. 5.6 AMENDMENT AND WAIVER.

(a) Except as otherwise expressly provided, this Agreement may be amended or modified only upon the written consent of the Company and the holders of at least a majority of the Registrable Securities; PROVIDED, HOWEVER, that this Agreement may not be amended or modified to adversely affect the Series K Preferred differently than any other series of Preferred Stock without the approval of at least a majority of the shares of Series K Preferred.


(b) Except as otherwise expressly provided, the obligations of the Company and the rights of the Holders under this Agreement may be waived only with the written consent of the holders of at least a majority of the Registrable Securities; PROVIDED, HOWEVER, that the obligations under this Agreement may not be waived to adversely affect the Series K Preferred differently than any other series of Preferred Stock without the approval of at least a majority of the shares Series K Preferred.

(c) For the purposes of determining the number of Holder or Investors entitled to vote or exercise any rights hereunder, the Company shall be entitled to rely solely on the list of record holders of its stock as maintained by or on behalf of the Company.

5.7 DELAYS OR OMISSIONS. It is agreed that no delay or omission to exercise any right, power, or remedy accruing to any Holder, upon any breach, default or noncompliance of the Company under this Agreement shall impair any such right, power, or remedy, nor shall it be construed to be a waiver of any such breach, default or noncompliance, or any acquiescence therein, or of any similar breach, default or noncompliance thereafter occurring. It is further agreed that any waiver, permit, consent, or approval of any kind or character on any Holder's part of any breach, default or noncompliance under the Agreement or any waiver on such Holder's part of any provisions or conditions of this Agreement must be in writing and shall be effective only to the extent specifically set forth in such writing. All remedies, either under this Agreement, by law, or otherwise afforded to Holders, shall be cumulative and not alternative.

5.8 NOTICES. All notices required or permitted hereunder shall be in writing and shall be deemed effectively given: (a) upon personal delivery to the party to be notified, (b) when sent by confirmed electronic mail or facsimile if sent during normal business hours of the recipient; if not, then on the next business day, (c) five (5) days after having been sent by registered or certified mail, return receipt requested, postage prepaid, or (d) one (1) day after deposit with a nationally recognized overnight courier, specifying next day delivery, with written verification of receipt. All communications shall be sent to the party to be notified at the address as set forth on the signature pages hereof or Exhibit A hereto or at such other address as such party may designate by ten (10) days advance written notice to the other parties hereto.

5.9 ATTORNEYS' FEES. In the event that any suit or action is instituted to enforce any provision in this Agreement, the prevailing party in such dispute shall be entitled to recover from the losing party all fees, costs and expenses of enforcing any right of such prevailing party under or with respect to this Agreement, including without limitation, such reasonable fees and expenses of attorneys and accountants, which shall include, without limitation, all fees, costs and expenses of appeals.

5.10 TITLES AND SUBTITLES. The titles of the sections and subsections of this Agreement are for convenience of reference only and are not to be considered in construing this Agreement.

5.11 ADDITIONAL INVESTORS.

(a) Notwithstanding anything to the contrary contained herein, if the Company shall issue additional shares of its Preferred Stock pursuant to the Purchase Agreement, any purchaser of such shares of Preferred Stock may become a party to this


Agreement by executing and delivering an additional counterpart signature page to this Agreement and shall be deemed an "Investor" hereunder.

(b) Notwithstanding anything to the contrary contained herein, if the Company shall issue Equity Securities in accordance with Section 4(iv) or
(vi) of this Agreement, any purchaser of such Equity Securities may become a party to this Agreement by executing and delivering an additional counterpart signature page to this Agreement and shall be deemed an "Investor" hereunder.

5.12 COUNTERPARTS. This Agreement may be executed in any number of counterparts, each of which shall be an original, but all of which together shall constitute one instrument.

[THIS SPACE INTENTIONALLY LEFT BLANK]


IN WITNESS WHEREOF, the parties hereto have executed this AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT as of the date set forth in the first paragraph hereof.

COMPANY:                                   PURCHASERS:

OMNICELL.COM                               ABS CAPITAL PARTNERS III, L.P.
                                           BY:  ABS PARTNERS III, LLC
                                           ITS:  GENERAL PARTNER

By:  /s/ Earl E. Fry                       By:
     ------------------------------           ---------------------------------
     Earl E. Fry                                 John D. Stobo, Jr.
     Vice President and                          Managing Member
     Chief Financial Officer


                                           PURCHASER:
                                                     --------------------------
                                           By:
                                              --------------------------------
                                           Name:
                                                ------------------------------
                                           Title:
                                                 -----------------------------

PRIOR HOLDERS:

SHAREHOLDER:
By:
Print Name:
Title:

INVESTOR RIGHTS AGREEMENT SIGNATURE PAGE


IN WITNESS WHEREOF, the parties hereto have executed this AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT as of the date set forth in the first paragraph hereof.

COMPANY:                                   PURCHASERS:

OMNICELL.COM                               ABS CAPITAL PARTNERS III, L.P.
                                           BY:  ABS PARTNERS III, LLC
                                           ITS:  GENERAL PARTNER

By:                                        By: /s/ John D. Stobo, Jr.
   --------------------------------          ----------------------------------
         Earl E. Fry                                John D. Stobo, Jr.
         Vice President and                         Managing Member
         Chief Financial Officer


                                           PURCHASER:
                                                     --------------------------
                                           By:
                                              ---------------------------------
                                           Name:
                                                ------------------------------
                                           Title:
                                                 -----------------------------

PRIOR HOLDERS:

SHAREHOLDER:
By:
Print Name:
Title:

INVESTOR RIGHTS AGREEMENT SIGNATURE PAGE


IN WITNESS WHEREOF, the parties hereto have executed this AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT as of the date set forth in the first paragraph hereof.

COMPANY:                                   PURCHASERS:

OMNICELL.COM                               ABS CAPITAL PARTNERS III, L.P.
                                           BY:  ABS PARTNERS III, LLC
                                           ITS:  GENERAL PARTNER

By:                                        By:
   --------------------------------           ---------------------------------
                                                    John D. Stobo, Jr.
                                                    Managing Member

PURCHASER:

By:
Name:
Title:

PRIOR HOLDERS:

SHAREHOLDER: SHELDON ASHER TRUST

By: /s/ Sheldon D. Asher
   --------------------------------

Print Name: Sheldon D. Asher
           ------------------------
Title:
      -----------------------------

INVESTOR RIGHTS AGREEMENT SIGNATURE PAGE


IN WITNESS WHEREOF, the parties hereto have executed this AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT as of the date set forth in the first paragraph hereof.

COMPANY:                                   PURCHASERS:

OMNICELL.COM                               ABS CAPITAL PARTNERS III, L.P.
                                           BY:  ABS PARTNERS III, LLC
                                           ITS:  GENERAL PARTNER

By:                                        By:
   --------------------------------           ---------------------------------
                                                    John D. Stobo, Jr.
                                                    Managing Member

PURCHASER:

By:

Name:

Title:

PRIOR HOLDERS:

SHAREHOLDER: HB ATKINSON CHARITABLE
TRUST

By: /s/ John C. Atkinson
   --------------------------------

Print Name: John C. Atkinson
           ------------------------

Title: Trustee
      -----------------------------

INVESTOR RIGHTS AGREEMENT SIGNATURE PAGE


IN WITNESS WHEREOF, the parties hereto have executed this AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT as of the date set forth in the first paragraph hereof.

COMPANY:                                   PURCHASERS:

OMNICELL.COM                               ABS CAPITAL PARTNERS III, L.P.
                                           BY:  ABS PARTNERS III, LLC
                                           ITS:  GENERAL PARTNER

By:                                        By:
   --------------------------------           ---------------------------------
                                                    John D. Stobo, Jr.
                                                    Managing Member

PURCHASER:

By:
Name:
Title:

PRIOR HOLDERS:

SHAREHOLDER: DELPHI VENTURES II, L.P.

BY: DELPHI MANAGEMENT PARTNERS II, L.P.
GENERAL PARTNER

By: /s/ Donald J. Lothrop
   --------------------------------
Print Name: Donald J. Lothrop
           ------------------------
Title:  General Partner
      -----------------------------

INVESTOR RIGHTS AGREEMENT SIGNATURE PAGE


IN WITNESS WHEREOF, the parties hereto have executed this AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT as of the date set forth in the first paragraph hereof.

COMPANY:                                   PURCHASERS:

OMNICELL.COM                               ABS CAPITAL PARTNERS III, L.P.
                                           BY:  ABS PARTNERS III, LLC
                                           ITS:  GENERAL PARTNER

By:                                        By:
   --------------------------------           ---------------------------------
                                                    John D. Stobo, Jr.
                                                    Managing Member

PURCHASER:

By:
Name:
Title:

PRIOR HOLDERS:

SHAREHOLDER: DELPHI BIOINVESTMENTS II, L.P.

BY: DELPHI MANAGEMENT PARTNERS II, L.P.
GENERAL PARTNER

By: /s/ Donald J. Lothrop
   --------------------------------
Print Name: Donald J. Lothrop
           ------------------------
Title:  General Partner
      -----------------------------

INVESTOR RIGHTS AGREEMENT SIGNATURE PAGE


IN WITNESS WHEREOF, the parties hereto have executed this AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT as of the date set forth in the first paragraph hereof.

COMPANY:                                   PURCHASERS:

OMNICELL.COM                               ABS CAPITAL PARTNERS III, L.P.
                                           BY:  ABS PARTNERS III, LLC
                                           ITS:  GENERAL PARTNER

By:                                        By:
   --------------------------------           ---------------------------------
                                                    John D. Stobo, Jr.
                                                    Managing Member

PURCHASER:

By:
Name:
Title:

PRIOR HOLDERS:

SHAREHOLDER: CHRISTOPHER J. DUNN

By: /s/ Christopher J. Dunn
   --------------------------------
Print Name: Christopher J. Dunn, MD
           ------------------------
Title: MD
      -----------------------------

INVESTOR RIGHTS AGREEMENT SIGNATURE PAGE


IN WITNESS WHEREOF, the parties hereto have executed this AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT as of the date set forth in the first paragraph hereof.

COMPANY:                                   PURCHASERS:

OMNICELL.COM                               ABS CAPITAL PARTNERS III, L.P.
                                           BY:  ABS PARTNERS III, LLC
                                           ITS:  GENERAL PARTNER

By:                                        By:
   --------------------------------           ---------------------------------
                                                    John D. Stobo, Jr.
                                                    Managing Member

PURCHASER:

By:
Name:
Title:

PRIOR HOLDERS:

SHAREHOLDER: JAMES C. GAITHER

By: /s/ James C. Gaither
   --------------------------------
Print Name: James C. Gaither
           ------------------------
Title:
      -----------------------------

INVESTOR RIGHTS AGREEMENT SIGNATURE PAGE


IN WITNESS WHEREOF, the parties hereto have executed this AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT as of the date set forth in the first paragraph hereof.

COMPANY:                                   PURCHASERS:

OMNICELL.COM                               ABS CAPITAL PARTNERS III, L.P.
                                           BY:  ABS PARTNERS III, LLC
                                           ITS:  GENERAL PARTNER

By:                                        By:
   --------------------------------           ---------------------------------
                                                    John D. Stobo, Jr.
                                                    Managing Member

PURCHASER:

By:
Name:
Title:

PRIOR HOLDERS:

SHAREHOLDER: THE INDIVIDUALS VENTURE FUND (1994) LP

By: /s/ Roger Barry
   --------------------------------
Print Name: Roger Barry
           ------------------------
Title: Managing Member
      -----------------------------

INVESTOR RIGHTS AGREEMENT SIGNATURE PAGE


IN WITNESS WHEREOF, the parties hereto have executed this AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT as of the date set forth in the first paragraph hereof.

COMPANY:                                   PURCHASERS:

OMNICELL.COM                               ABS CAPITAL PARTNERS III, L.P.
                                           BY:  ABS PARTNERS III, LLC
                                           ITS:  GENERAL PARTNER

By:                                        By:
   --------------------------------           ---------------------------------
                                                    John D. Stobo, Jr.
                                                    Managing Member

PURCHASER:

By:
Name:
Title:

PRIOR HOLDERS:

SHAREHOLDER: DELBERT A. LIPPS

By: /s/ Delbert A. Lipps
   --------------------------------
Print Name: Delbert A. Lipps
           ------------------------
Title:
      -----------------------------

INVESTOR RIGHTS AGREEMENT SIGNATURE PAGE


IN WITNESS WHEREOF, the parties hereto have executed this AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT as of the date set forth in the first paragraph hereof.

COMPANY:                                   PURCHASERS:

OMNICELL.COM                               ABS CAPITAL PARTNERS III, L.P.
                                           BY:  ABS PARTNERS III, LLC
                                           ITS:  GENERAL PARTNER

By:                                        By:
   --------------------------------           ---------------------------------
                                                    John D. Stobo, Jr.
                                                    Managing Member

PURCHASER:

By:
Name:
Title:

PRIOR HOLDERS:

SHAREHOLDER: RANDALL A. LIPPS

CUSTODIAN UNDER CUTMA FOR DAVID A. LIPPS

By: /s/ Randall A. Lipps
   --------------------------------
Print Name: Randall A. Lipps
           ------------------------
Title: Custodian/Trustee
      -----------------------------

INVESTOR RIGHTS AGREEMENT SIGNATURE PAGE


IN WITNESS WHEREOF, the parties hereto have executed this AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT as of the date set forth in the first paragraph hereof.

COMPANY:                                   PURCHASERS:

OMNICELL.COM                               ABS CAPITAL PARTNERS III, L.P.
                                           BY:  ABS PARTNERS III, LLC
                                           ITS:  GENERAL PARTNER

By:                                        By:
   --------------------------------           ---------------------------------
                                                    John D. Stobo, Jr.
                                                    Managing Member

PURCHASER:

By:
Name:
Title:

PRIOR HOLDERS:

SHAREHOLDER: RANDALL A. LIPPS

CUSTODIAN UNDER CUTMA FOR ELIZABETH A. LIPPS

By: /s/ Randall A. Lipps
   --------------------------------
Print Name: Randall A. Lipps
           ------------------------
Title: Custodian/Trustee
      -----------------------------

INVESTOR RIGHTS AGREEMENT SIGNATURE PAGE


IN WITNESS WHEREOF, the parties hereto have executed this AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT as of the date set forth in the first paragraph hereof.

COMPANY:                                   PURCHASERS:

OMNICELL.COM                               ABS CAPITAL PARTNERS III, L.P.
                                           BY:  ABS PARTNERS III, LLC
                                           ITS:  GENERAL PARTNER

By:                                        By:
   --------------------------------           ---------------------------------
                                                    John D. Stobo, Jr.
                                                    Managing Member

PURCHASER:

By:
Name:
Title:

PRIOR HOLDERS:

SHAREHOLDER: RANDALL A. LIPPS

CUSTODIAN UNDER CUTMA FOR JOSHUA A. LIPPS

By: /s/ Randall A. Lipps
   --------------------------------
Print Name: Randall A. Lipps
           ------------------------
Title: Custodian/Trustee
      -----------------------------

INVESTOR RIGHTS AGREEMENT SIGNATURE PAGE


IN WITNESS WHEREOF, the parties hereto have executed this AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT as of the date set forth in the first paragraph hereof.

COMPANY:                                   PURCHASERS:

OMNICELL.COM                               ABS CAPITAL PARTNERS III, L.P.
                                           BY:  ABS PARTNERS III, LLC
                                           ITS:  GENERAL PARTNER

By:                                        By:
   --------------------------------           ---------------------------------
                                                    John D. Stobo, Jr.
                                                    Managing Member

PURCHASER:

By:
Name:
Title:

PRIOR HOLDERS:

SHAREHOLDER: RANDALL A. LIPPS

CUSTODIAN UNDER CUTMA FOR MARY MARGARET A. LIPPS

By: /s/ Randall A. Lipps
   --------------------------------
Print Name: Randall A. Lipps
           ------------------------
Title: Custodian/Trustee
      -----------------------------

INVESTOR RIGHTS AGREEMENT SIGNATURE PAGE


IN WITNESS WHEREOF, the parties hereto have executed this AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT as of the date set forth in the first paragraph hereof.

COMPANY:                                   PURCHASERS:

OMNICELL.COM                               ABS CAPITAL PARTNERS III, L.P.
                                           BY:  ABS PARTNERS III, LLC
                                           ITS:  GENERAL PARTNER

By:                                        By:
   --------------------------------           ---------------------------------
                                                    John D. Stobo, Jr.
                                                    Managing Member

PURCHASER:

By:
Name:
Title:

PRIOR HOLDERS:

SHAREHOLDER: RANDALL A. LIPPS

CUSTODIAN UNDER CUTMA FOR NATHAN A. LIPPS

By: /s/ Randall A. Lipps
   --------------------------------
Print Name: Randall A. Lipps
           ------------------------
Title: Custodian/Trustee
      -----------------------------

INVESTOR RIGHTS AGREEMENT SIGNATURE PAGE


IN WITNESS WHEREOF, the parties hereto have executed this AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT as of the date set forth in the first paragraph hereof.

COMPANY:                                   PURCHASERS:

OMNICELL.COM                               ABS CAPITAL PARTNERS III, L.P.
                                           BY:  ABS PARTNERS III, LLC
                                           ITS:  GENERAL PARTNER

By:                                        By:
   --------------------------------           ---------------------------------
                                                    John D. Stobo, Jr.
                                                    Managing Member

PURCHASER:

By:
Name:
Title:

PRIOR HOLDERS:

SHAREHOLDER: RANDALL A. LIPPS

CUSTODIAN UNDER CUTMA FOR SARAH A. LIPPS

By: /s/ Randall A. Lipps
   --------------------------------
Print Name: Randall A. Lipps
           ------------------------
Title: Custodian/Trustee
      -----------------------------

INVESTOR RIGHTS AGREEMENT SIGNATURE PAGE


IN WITNESS WHEREOF, the parties hereto have executed this AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT as of the date set forth in the first paragraph hereof.

COMPANY:                                   PURCHASERS:

OMNICELL.COM                               ABS CAPITAL PARTNERS III, L.P.
                                           BY:  ABS PARTNERS III, LLC
                                           ITS:  GENERAL PARTNER

By:                                        By:
   --------------------------------           ---------------------------------
                                                    John D. Stobo, Jr.
                                                    Managing Member

PURCHASER:

By:
Name:
Title:

PRIOR HOLDERS:

SHAREHOLDER: RANDALL A. LIPPS

CUSTODIAN UNDER CUTMA FOR ZACHARY A. LIPPS

By: /s/ Randall A. Lipps
   --------------------------------
Print Name: Randall A. Lipps
           ------------------------
Title: Custodian/Trustee
      -----------------------------

INVESTOR RIGHTS AGREEMENT SIGNATURE PAGE


IN WITNESS WHEREOF, the parties hereto have executed this AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT as of the date set forth in the first paragraph hereof.

COMPANY:                                   PURCHASERS:

OMNICELL.COM                               ABS CAPITAL PARTNERS III, L.P.
                                           BY:  ABS PARTNERS III, LLC
                                           ITS:  GENERAL PARTNER

By:                                        By:
   --------------------------------           ---------------------------------
                                                    John D. Stobo, Jr.
                                                    Managing Member

PURCHASER:

By:
Name:
Title:

PRIOR HOLDERS:

SHAREHOLDER: BENJAMIN LIPPS IRREVOCABLE TRUST

By: /s/ Randall A. Lipps
   --------------------------------
Print Name: Randall A. Lipps
           ------------------------
Title:         Trustee
      -----------------------------

INVESTOR RIGHTS AGREEMENT SIGNATURE PAGE


IN WITNESS WHEREOF, the parties hereto have executed this AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT as of the date set forth in the first paragraph hereof.

COMPANY:                                   PURCHASERS:

OMNICELL.COM                               ABS CAPITAL PARTNERS III, L.P.
                                           BY:  ABS PARTNERS III, LLC
                                           ITS:  GENERAL PARTNER

By:                                        By:
   --------------------------------           ---------------------------------
                                                    John D. Stobo, Jr.
                                                    Managing Member

PURCHASER:

By:
Name:
Title:

PRIOR HOLDERS:

SHAREHOLDER: MEDICUS VENTURE PARTNERS 1993, A CALIFORNIA LIMITED PARTNERSHIP

By: MEDICUS MANAGEMENT PARTNERS,
GENERAL PARTNER

By: /s/ Frederick J. Dotzler
   --------------------------------
Print Name: Frederick J. Dotzler
           ------------------------
Title: General Partner
      -----------------------------

INVESTOR RIGHTS AGREEMENT SIGNATURE PAGE


IN WITNESS WHEREOF, the parties hereto have executed this AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT as of the date set forth in the first paragraph hereof.

COMPANY:                                   PURCHASERS:

OMNICELL.COM                               ABS CAPITAL PARTNERS III, L.P.
                                           BY:  ABS PARTNERS III, LLC
                                           ITS:  GENERAL PARTNER

By:                                        By:
   --------------------------------           ---------------------------------
                                                    John D. Stobo, Jr.
                                                    Managing Member

PURCHASER:

By:
Name:
Title:

PRIOR HOLDERS:

SHAREHOLDER: MEDICUS VENTURE PARTNERS 1994, A CALIFORNIA LIMITED PARTNERSHIP

BY: MEDICUS MANAGEMENT PARTNERS,
GENERAL PARTNER

By: /s/ Frederick J. Dotzler
   --------------------------------
Print Name: Frederick J. Dotzler
           ------------------------
Title: General Partner
      -----------------------------

INVESTOR RIGHTS AGREEMENT SIGNATURE PAGE


IN WITNESS WHEREOF, the parties hereto have executed this AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT as of the date set forth in the first paragraph hereof.

COMPANY:                                   PURCHASERS:

OMNICELL.COM                               ABS CAPITAL PARTNERS III, L.P.
                                           BY:  ABS PARTNERS III, LLC
                                           ITS:  GENERAL PARTNER

By:                                        By:
   --------------------------------           ---------------------------------
                                                    John D. Stobo, Jr.
                                                    Managing Member

PURCHASER:

By:
Name:
Title:

PRIOR HOLDERS:

SHAREHOLDER: MEDICUS VENTURE PARTNERS 1995, A CALIFORNIA LIMITED PARTNERSHIP

BY: MEDICUS MANAGEMENT PARTNERS,
GENERAL PARTNER

By: /s/ Frederick J. Dotzler
   --------------------------------
Print Name: Frederick J. Dotzler
           ------------------------
Title: General Partner
      -----------------------------

INVESTOR RIGHTS AGREEMENT SIGNATURE PAGE


IN WITNESS WHEREOF, the parties hereto have executed this AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT as of the date set forth in the first paragraph hereof.

COMPANY:                                   PURCHASERS:

OMNICELL.COM                               ABS CAPITAL PARTNERS III, L.P.
                                           BY:  ABS PARTNERS III, LLC
                                           ITS:  GENERAL PARTNER

By:                                        By:
   --------------------------------           ---------------------------------
                                                    John D. Stobo, Jr.
                                                    Managing Member

PURCHASER:

By:
Name:
Title:

PRIOR HOLDERS:

SHAREHOLDER: NASSAU CAPITAL PARTNERS L.P.

BY: NASSAU CAPITAL LLC, ITS GENERAL PARTNER

By: /s/ Randall A. Hack
   --------------------------------
Print Name: Randall A. Hack
           ------------------------
Title: Member
      -----------------------------

INVESTOR RIGHTS AGREEMENT SIGNATURE PAGE


IN WITNESS WHEREOF, the parties hereto have executed this AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT as of the date set forth in the first paragraph hereof.

COMPANY:                                   PURCHASERS:

OMNICELL.COM                               ABS CAPITAL PARTNERS III, L.P.
                                           BY:  ABS PARTNERS III, LLC
                                           ITS:  GENERAL PARTNER

By:                                        By:
   --------------------------------           ---------------------------------
                                                    John D. Stobo, Jr.
                                                    Managing Member

PURCHASER:

By:
Name:
Title:

PRIOR HOLDERS:

SHAREHOLDER: NAS PARTNERS I, LLC

By: /s/ Randall A. Hack
   --------------------------------
Print Name: Randall A. Hack
           ------------------------
Title: Member
      -----------------------------

INVESTOR RIGHTS AGREEMENT SIGNATURE PAGE


IN WITNESS WHEREOF, the parties hereto have executed this AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT as of the date set forth in the first paragraph hereof.

COMPANY:                                   PURCHASERS:

OMNICELL.COM                               ABS CAPITAL PARTNERS III, L.P.
                                           BY:  ABS PARTNERS III, LLC
                                           ITS:  GENERAL PARTNER

By:                                        By:
   --------------------------------           ---------------------------------
                                                    John D. Stobo, Jr.
                                                    Managing Member

PURCHASER:

By:
Name:
Title:

PRIOR HOLDERS:

SHAREHOLDER: OAK VI AFFILIATES FUND

By: /s/ Edward F. Glassmeyer
   --------------------------------
Print Name: Edward F. Glassmeyer
           ------------------------
Title:
      -----------------------------
Managing Member of Oak VI Affiliates, LLC.
The General Partner of
Oak VI Affiliates Fund,
Limited Partnership

INVESTOR RIGHTS AGREEMENT SIGNATURE PAGE


IN WITNESS WHEREOF, the parties hereto have executed this AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT as of the date set forth in the first paragraph hereof.

COMPANY:                                   PURCHASERS:

OMNICELL.COM                               ABS CAPITAL PARTNERS III, L.P.
                                           BY:  ABS PARTNERS III, LLC
                                           ITS:  GENERAL PARTNER

By:                                        By:
   --------------------------------           ---------------------------------
                                                    John D. Stobo, Jr.
                                                    Managing Member

PURCHASER:

By:
Name:
Title:

PRIOR HOLDERS:

SHAREHOLDER: OAK INVESTMENT PARTNERS, VI, LIMITED PARTNERSHIP

By: /s/ Edward F. Glassmeyer
   --------------------------------
Print Name: Edward F. Glassmeyer
           ------------------------
Title:
      -----------------------------

Managing Member of Oak Associates VI, LLC. The General Partner of
Oak Investment Partners VI,
Limited Partnership

INVESTOR RIGHTS AGREEMENT SIGNATURE PAGE


IN WITNESS WHEREOF, the parties hereto have executed this AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT as of the date set forth in the first paragraph hereof.

COMPANY:                                   PURCHASERS:

OMNICELL.COM                               ABS CAPITAL PARTNERS III, L.P.
                                           BY:  ABS PARTNERS III, LLC
                                           ITS:  GENERAL PARTNER

By:                                        By:
   --------------------------------           ---------------------------------
                                                    John D. Stobo, Jr.
                                                    Managing Member

PURCHASER:

By:
Name:
Title:

PRIOR HOLDERS:

SHAREHOLDER: PANTHEON INTERNATIONAL PARTICIPATIONS

By: /s/ R.M. Swire
   --------------------------------
Print Name: R.M. Swire
           ------------------------
Title:            Director
      -----------------------------

INVESTOR RIGHTS AGREEMENT SIGNATURE PAGE


IN WITNESS WHEREOF, the parties hereto have executed this AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT as of the date set forth in the first paragraph hereof.

COMPANY:                                   PURCHASERS:

OMNICELL.COM                               ABS CAPITAL PARTNERS III, L.P.
                                           BY:  ABS PARTNERS III, LLC
                                           ITS:  GENERAL PARTNER

By:                                        By:
   --------------------------------           ---------------------------------
                                                    John D. Stobo, Jr.
                                                    Managing Member

PURCHASER:

By:
Name:
Title:

PRIOR HOLDERS:

SHAREHOLDER: SEQUOIA CAPITAL VI

SEQUOIA TECHNOLOGY PARTNERS VI
SEQUOIA 1995

By: /s/ Thomas F. Stephenson
   --------------------------------
Print Name: Thomas F. Stephenson
           ------------------------
Title:
      -----------------------------

INVESTOR RIGHTS AGREEMENT SIGNATURE PAGE


IN WITNESS WHEREOF, the parties hereto have executed this AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT as of the date set forth in the first paragraph hereof.

COMPANY:                                   PURCHASERS:

OMNICELL.COM                               ABS CAPITAL PARTNERS III, L.P.
                                           BY:  ABS PARTNERS III, LLC
                                           ITS:  GENERAL PARTNER

By:                                        By:
   --------------------------------           ---------------------------------
                                                    John D. Stobo, Jr.
                                                    Managing Member

PURCHASER:

By:
Name:
Title:

PRIOR HOLDERS:

SHAREHOLDER: TIMOTHY J. AND OVEL G. SHEEHAN

By: /s/ Timothy J. Sheehan
   --------------------------------
Print Name: Timothy J. Sheehan
           ------------------------
Title:            Trustee
      -----------------------------

INVESTOR RIGHTS AGREEMENT SIGNATURE PAGE


IN WITNESS WHEREOF, the parties hereto have executed this AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT as of the date set forth in the first paragraph hereof.

COMPANY:                                   PURCHASERS:

OMNICELL.COM                               ABS CAPITAL PARTNERS III, L.P.
                                           BY:  ABS PARTNERS III, LLC
                                           ITS:  GENERAL PARTNER

By:                                        By:
   --------------------------------           ---------------------------------
                                                    John D. Stobo, Jr.
                                                    Managing Member

PURCHASER:

By:
Name:
Title:

PRIOR HOLDERS:

SHAREHOLDER: DENNIS J. SHEEHAN

By: /s/ Dennis J. Sheehan
   --------------------------------
Print Name: Dennis J. Sheehan
           ------------------------
Title:
      -----------------------------

INVESTOR RIGHTS AGREEMENT SIGNATURE PAGE


IN WITNESS WHEREOF, the parties hereto have executed this AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT as of the date set forth in the first paragraph hereof.

COMPANY:                                   PURCHASERS:

OMNICELL.COM                               ABS CAPITAL PARTNERS III, L.P.
                                           BY:  ABS PARTNERS III, LLC
                                           ITS:  GENERAL PARTNER

By:                                        By:
   --------------------------------           ---------------------------------
                                                    John D. Stobo, Jr.
                                                    Managing Member

PURCHASER:

By:
Name:
Title:

PRIOR HOLDERS:

SHAREHOLDER: ERIC F. SHEEHAN

By: /s/ Dennis J. Sheehan
   --------------------------------
Print Name: Dennis J. Sheehan
           ------------------------
Title:            Custodian
      -----------------------------

INVESTOR RIGHTS AGREEMENT SIGNATURE PAGE


IN WITNESS WHEREOF, the parties hereto have executed this AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT as of the date set forth in the first paragraph hereof.

COMPANY:                                   PURCHASERS:

OMNICELL.COM                               ABS CAPITAL PARTNERS III, L.P.
                                           BY:  ABS PARTNERS III, LLC
                                           ITS:  GENERAL PARTNER

By:                                        By:
   --------------------------------           ---------------------------------
                                                    John D. Stobo, Jr.
                                                    Managing Member

PURCHASER:

By:
Name:
Title:

PRIOR HOLDERS:

SHAREHOLDER: BENJAMIN SHEEHAN

By: /s/ Dennis J. Sheehan
   --------------------------------
Print Name: Dennis J. Sheehan
           ------------------------
Title:            Custodian
      -----------------------------

INVESTOR RIGHTS AGREEMENT SIGNATURE PAGE


IN WITNESS WHEREOF, the parties hereto have executed this AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT as of the date set forth in the first paragraph hereof.

COMPANY:                                   PURCHASERS:

OMNICELL.COM                               ABS CAPITAL PARTNERS III, L.P.
                                           BY:  ABS PARTNERS III, LLC
                                           ITS:  GENERAL PARTNER

By:                                        By:
   --------------------------------           ---------------------------------
                                                    John D. Stobo, Jr.
                                                    Managing Member

PURCHASER:

By:
Name:
Title:

PRIOR HOLDERS:

SHAREHOLDER: SHARON A. SHEEHAN

By: /s/ Sharon A. Sheehan
   --------------------------------
Print Name: Sharon A. Sheehan
           ------------------------
Title:
      -----------------------------

INVESTOR RIGHTS AGREEMENT SIGNATURE PAGE


IN WITNESS WHEREOF, the parties hereto have executed this AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT as of the date set forth in the first paragraph hereof.

COMPANY:                                   PURCHASERS:

OMNICELL.COM                               ABS CAPITAL PARTNERS III, L.P.
                                           BY:  ABS PARTNERS III, LLC
                                           ITS:  GENERAL PARTNER

By:                                        By:
   --------------------------------           ---------------------------------
                                                    John D. Stobo, Jr.
                                                    Managing Member

PURCHASER:

By:
Name:
Title:

PRIOR HOLDERS:

SHAREHOLDER: SUTTER HILL VENTURES, A CALIFORNIA LIMITED PARTNERSHIP

By: /s/ William H. Younger, Jr.
   --------------------------------
Print Name: William H. Younger, Jr.
           ------------------------
Title: Managing Director of the General Partner
      -----------------------------------------

INVESTOR RIGHTS AGREEMENT SIGNATURE PAGE


IN WITNESS WHEREOF, the parties hereto have executed this AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT as of the date set forth in the first paragraph hereof.

COMPANY:                                   PURCHASERS:

OMNICELL.COM                               ABS CAPITAL PARTNERS III, L.P.
                                           BY:  ABS PARTNERS III, LLC
                                           ITS:  GENERAL PARTNER

By:                                        By:
   --------------------------------           ---------------------------------
                                                    John D. Stobo, Jr.
                                                    Managing Member

PURCHASER:

By:
Name:
Title:

PRIOR HOLDERS:

SHAREHOLDER: TOW PARTNERS, L.P.

By: /s/ Paul M. Wythes
   --------------------------------
Print Name: Paul M. Wythes
           ------------------------
Title:   General Partner
      -----------------------------

INVESTOR RIGHTS AGREEMENT SIGNATURE PAGE


IN WITNESS WHEREOF, the parties hereto have executed this AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT as of the date set forth in the first paragraph hereof.

COMPANY:                                   PURCHASERS:

OMNICELL.COM                               ABS CAPITAL PARTNERS III, L.P.
                                           BY:  ABS PARTNERS III, LLC
                                           ITS:  GENERAL PARTNER

By:                                        By:
   --------------------------------           ---------------------------------
                                                    John D. Stobo, Jr.
                                                    Managing Member

PURCHASER:

By:
Name:
Title:

PRIOR HOLDERS:

SHAREHOLDER: WILLIAM H. YOUNGER, JR.

By: /s/ William H. Younger, Jr.
   --------------------------------
Print Name: William H. Younger, Jr.
           ------------------------
Title:
      -----------------------------

INVESTOR RIGHTS AGREEMENT SIGNATURE PAGE


IN WITNESS WHEREOF, the parties hereto have executed this AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT as of the date set forth in the first paragraph hereof.

COMPANY:                                   PURCHASERS:

OMNICELL.COM                               ABS CAPITAL PARTNERS III, L.P.
                                           BY:  ABS PARTNERS III, LLC
                                           ITS:  GENERAL PARTNER

By:                                        By:
   --------------------------------           ---------------------------------
                                                    John D. Stobo, Jr.
                                                    Managing Member

PURCHASER:

By:
Name:
Title:

PRIOR HOLDERS:

SHAREHOLDER: THE YOUNGER LIVING TRUST

By: /s/ William H. Younger, Jr.
   --------------------------------
Print Name: William H. Younger, Jr.
           ------------------------
Title:   Trustee
      -----------------------------

INVESTOR RIGHTS AGREEMENT SIGNATURE PAGE


IN WITNESS WHEREOF, the parties hereto have executed this AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT as of the date set forth in the first paragraph hereof.

COMPANY:                                   PURCHASERS:

OMNICELL.COM                               ABS CAPITAL PARTNERS III, L. P.
                                           BY:  ABS PARTNERS III, LLC
                                           ITS:  GENERAL PARTNER


Signature:                                 By:
          -------------------------           ---------------------------------
          Earl E. Fry                                John D. Stobo, Jr.
          Vice President and Chief                    Managing Member
          Financial Officer


                                           SUTTER HILL VENTURES,
                                           A CALIFORNIA LIMITED PARTNERSHIP



                                           By: /s/ William H. Younger, Jr.
                                              ---------------------------------
                                           Name: William H. Younger, Jr.
                                                 Managing Director of the
                                                 General Partner

PRIOR HOLDERS:

SHAREHOLDER:
By:
Print Name:
Title:

INVESTOR RIGHTS AGREEMENT SIGNATURE PAGE


IN WITNESS WHEREOF, the parties hereto have executed this AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT as of the date set forth in the first paragraph hereof.

COMPANY:                                   PURCHASERS:

OMNICELL.COM                               ABS CAPITAL PARTNERS III, L. P.
                                           BY:  ABS PARTNERS III, LLC
                                           ITS:  GENERAL PARTNER


Signature:                                 By:
          -------------------------           ---------------------------------
           Earl E. Fry                                John D. Stobo, Jr.
           Vice President and Chief                     Managing Member
           Financial Officer


                                           SUTTER HILL ENTREPRENEURS FUND (AI),
                                           L.P.

                                           By: /s/ William H. Younger, Jr.

                                           Name: William H. Younger, Jr.
                                                 Managing Director of the
                                                 General Partner

PRIOR HOLDERS:

SHAREHOLDER:
By:
Print Name:
Title:

INVESTOR RIGHTS AGREEMENT SIGNATURE PAGE


IN WITNESS WHEREOF, the parties hereto have executed this AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT as of the date set forth in the first paragraph hereof.

COMPANY:                                   PURCHASERS:

OMNICELL.COM                               ABS CAPITAL PARTNERS III, L. P.
                                           BY:  ABS PARTNERS III, LLC
                                           ITS:  GENERAL PARTNER


Signature:                                 By:
          -------------------------           ---------------------------------
           Earl E. Fry                                John D. Stobo, Jr.
           Vice President and Chief                    Managing Member
           Financial Officer


                                           SUTTER HILL ENTREPRENEURS FUND (QP),
                                           L.P.

                                           By: /s/ William H. Younger, Jr.

                                           Name: William H. Younger, Jr.
                                                 Managing Director of the
                                                 General Partner

PRIOR HOLDERS:

SHAREHOLDER:
By:
Print Name:
Title:

INVESTOR RIGHTS AGREEMENT SIGNATURE PAGE


IN WITNESS WHEREOF, the parties hereto have executed this AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT as of the date set forth in the first paragraph hereof.

COMPANY:                                   PURCHASERS:

OMNICELL.COM                               ABS CAPITAL PARTNERS III, L. P.
                                           BY:  ABS PARTNERS III, LLC
                                           ITS:  GENERAL PARTNER


Signature:                                 By:
          -------------------------           ---------------------------------
           Earl E. Fry                                John D. Stobo, Jr.
           Vice President and Chief                    Managing Member
           Financial Officer


                                           THE ANDERSON LIVING TRUST, U/A/D
                                           1/22/98

                                           By: /s/ David L. Anderson
                                                   David L. Anderson, Trustee

PRIOR HOLDERS:

SHAREHOLDER:
By:
Print Name:
Title:

INVESTOR RIGHTS AGREEMENT SIGNATURE PAGE


IN WITNESS WHEREOF, the parties hereto have executed this AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT as of the date set forth in the first paragraph hereof.

COMPANY:                                   PURCHASERS:

OMNICELL.COM                               ABS CAPITAL PARTNERS III, L. P.
                                           BY:  ABS PARTNERS III, LLC
                                           ITS:  GENERAL PARTNER


Signature:                                 By:
          -------------------------           ---------------------------------
            Earl E. Fry                                John D. Stobo, Jr.
            Vice President and Chief                     Managing Member
            Financial Officer


                                           ANVEST, L.P.

                                           By: /s/ David L. Anderson
                                                   David  L.  Anderson,
                                                   General Partner

PRIOR HOLDERS:

SHAREHOLDER:
By:
Print Name:
Title:

INVESTOR RIGHTS AGREEMENT SIGNATURE PAGE


IN WITNESS WHEREOF, the parties hereto have executed this AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT as of the date set forth in the first paragraph hereof.

COMPANY:                                   PURCHASERS:

OMNICELL.COM                               ABS CAPITAL PARTNERS III, L. P.
                                           BY:  ABS PARTNERS III, LLC
                                           ITS:  GENERAL PARTNER


Signature:                                 By:
          -------------------------           ---------------------------------
            Earl E. Fry                                John D. Stobo, Jr.
            Vice President and Chief                     Managing Member
            Financial Officer


                                           G. LEONARD BAKER, JR.

                                           By: /s/ G. Leonard Baker Jr.

PRIOR HOLDERS:

SHAREHOLDER:
By:
Print Name:
Title:

INVESTOR RIGHTS AGREEMENT SIGNATURE PAGE


IN WITNESS WHEREOF, the parties hereto have executed this AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT as of the date set forth in the first paragraph hereof.

COMPANY:                                   PURCHASERS:

OMNICELL.COM                               ABS CAPITAL PARTNERS III, L. P.
                                           BY:  ABS PARTNERS III, LLC
                                           ITS:  GENERAL PARTNER


Signature:                                 By:
          -------------------------           ---------------------------------
            Earl E. Fry                                John D. Stobo, Jr.
            Vice President and Chief                     Managing Member
            Financial Officer


                                           SAUNDERS HOLDINGS, L.P.

                                           By: /s/ G. Leonard Baker, Jr.
                                                   G. Leonard Baker, Jr.,
                                                   General Partner

PRIOR HOLDERS:

SHAREHOLDER:
By:
Print Name:
Title:

INVESTOR RIGHTS AGREEMENT SIGNATURE PAGE


IN WITNESS WHEREOF, the parties hereto have executed this AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT as of the date set forth in the first paragraph hereof.

COMPANY:                                   PURCHASERS:

OMNICELL.COM                               ABS CAPITAL PARTNERS III, L. P.
                                           BY:  ABS PARTNERS III, LLC
                                           ITS:  GENERAL PARTNER


Signature:                                 By:
          -------------------------           ---------------------------------
            Earl E. Fry                                John D. Stobo, Jr.
            Vice President and Chief                     Managing Member
            Financial Officer


                                           THE YOUNGER LIVING TRUST, U/A/D
                                           1/20/95

                                           By: /s/ William H. Younger, Jr.
                                                   William H. Younger, Jr.,
                                                   Trustee

PRIOR HOLDERS:

SHAREHOLDER:
By:
Print Name:
Title:

INVESTOR RIGHTS AGREEMENT SIGNATURE PAGE


IN WITNESS WHEREOF, the parties hereto have executed this AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT as of the date set forth in the first paragraph hereof.

COMPANY:                                   PURCHASERS:

OMNICELL.COM                               ABS CAPITAL PARTNERS III, L. P.
                                           BY:  ABS PARTNERS III, LLC
                                           ITS:  GENERAL PARTNER


Signature:                                 By:
          -------------------------           ---------------------------------
            Earl E. Fry                                John D. Stobo, Jr.
            Vice President and Chief                     Managing Member
            Financial Officer


                                           TENCH COXE, TRUSTEE,
                                           THE TAMERLANE CHARITABLE REMAINDER
                                           UNITRUST

                                           By: /s/ Tenche Coxe
                                                   Tenche Coxe, Trustee

PRIOR HOLDERS:

SHAREHOLDER:
By:
Print Name:
Title:

INVESTOR RIGHTS AGREEMENT SIGNATURE PAGE


IN WITNESS WHEREOF, the parties hereto have executed this AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT as of the date set forth in the first paragraph hereof.

COMPANY:                                   PURCHASERS:

OMNICELL.COM                               ABS CAPITAL PARTNERS III, L. P.
                                           BY:  ABS PARTNERS III, LLC
                                           ITS:  GENERAL PARTNER


Signature:                                 By:
          -------------------------           ---------------------------------
            Earl E. Fry                                John D. Stobo, Jr.
            Vice President and Chief                     Managing Member
            Financial Officer


                                           PAUL M. & MARSHA R. WYTHES, TRUSTEES
                                           THE WYTHES LIVING TRUST (7/21/87)

                                           By: /s/ Sherryl W. Hossack
                                           Sherryl W. Hossack under Power of
                                           Attorney

PRIOR HOLDERS:

SHAREHOLDER:
By:
Print Name:
Title:

INVESTOR RIGHTS AGREEMENT SIGNATURE PAGE


IN WITNESS WHEREOF, the parties hereto have executed this AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT as of the date set forth in the first paragraph hereof.

COMPANY:                                   PURCHASERS:

OMNICELL.COM                               ABS CAPITAL PARTNERS III, L. P.
                                           BY:  ABS PARTNERS III, LLC
                                           ITS:  GENERAL PARTNER


Signature:                                 By:
          -------------------------           ---------------------------------
            Earl E. Fry                                John D. Stobo, Jr.
            Vice President and Chief                     Managing Member
            Financial Officer


                                           TOW PARTNERS,
                                           A CALIFORNIA LIMITED PARTNERSHIP

                                           By: /s/ Sherryl W. Hossack
                                           Sherryl W. Hossack under Power of
                                           Attorney

PRIOR HOLDERS:

SHAREHOLDER:
By:
Print Name:
Title:

INVESTOR RIGHTS AGREEMENT SIGNATURE PAGE


IN WITNESS WHEREOF, the parties hereto have executed this AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT as of the date set forth in the first paragraph hereof.

COMPANY:                                   PURCHASERS:

OMNICELL.COM                               ABS CAPITAL PARTNERS III, L. P.
                                           BY:  ABS PARTNERS III, LLC
                                           ITS:  GENERAL PARTNER


Signature:                                 By:
          -------------------------           ---------------------------------
            Earl E. Fry                                John D. Stobo, Jr.
            Vice President and Chief                     Managing Member
            Financial Officer


                                           WYTHES 1999 GRANDCHILDREN'S TRUST
                                           JENNIFER W. VETTEL, PAUL M. WYTHES,
                                           LINDA W. KNOLL, TRUSTEES

                                           By: /s/ Sherryl W. Hossack
                                           Sherryl W. Hossack under Power of
                                           Attorney

PRIOR HOLDERS:

SHAREHOLDER:
By:
Print Name:
Title:

INVESTOR RIGHTS AGREEMENT SIGNATURE PAGE


IN WITNESS WHEREOF, the parties hereto have executed this AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT as of the date set forth in the first paragraph hereof.

COMPANY:                                   PURCHASERS:

OMNICELL.COM                               ABS CAPITAL PARTNERS III, L. P.
                                           BY:  ABS PARTNERS III, LLC
                                           ITS:  GENERAL PARTNER


Signature:                                 By:
          -------------------------           ---------------------------------
            Earl E. Fry                                John D. Stobo, Jr.
            Vice President and Chief                     Managing Member
            Financial Officer


                                           GREGORY P. SANDS

                                           By: /s/ Gregory P. Sands

PRIOR HOLDERS:

SHAREHOLDER:
By:
Print Name:
Title:

INVESTOR RIGHTS AGREEMENT SIGNATURE PAGE


IN WITNESS WHEREOF, the parties hereto have executed this AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT as of the date set forth in the first paragraph hereof.

COMPANY:                                   PURCHASERS:

OMNICELL.COM                               ABS CAPITAL PARTNERS III, L. P.
                                           BY:  ABS PARTNERS III, LLC
                                           ITS:  GENERAL PARTNER


Signature:                                 By:
          -------------------------           ---------------------------------
            Earl E. Fry                                John D. Stobo, Jr.
            Vice President and Chief                     Managing Member
            Financial Officer


                                           LAWRENCE EBRINGER

                                           By: /s/ Lawrence Ebringer

PRIOR HOLDERS:

SHAREHOLDER:
By:
Print Name:
Title:

INVESTOR RIGHTS AGREEMENT SIGNATURE PAGE


IN WITNESS WHEREOF, the parties hereto have executed this AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT as of the date set forth in the first paragraph hereof.

COMPANY:                                   PURCHASERS:

OMNICELL.COM                               ABS CAPITAL PARTNERS III, L. P.
                                           BY:  ABS PARTNERS III, LLC
                                           ITS:  GENERAL PARTNER


Signature:                                 By:
          -------------------------           ---------------------------------
            Earl E. Fry                                John D. Stobo, Jr.
            Vice President and Chief                     Managing Member
            Financial Officer


                                           JAMES C. GAITHER

                                           By: /s/ Sherryl W. Hossack
                                           Sherryl W. Hossack under Power of
                                           Attorney

PRIOR HOLDERS:

SHAREHOLDER:
By:
Print Name:
Title:

INVESTOR RIGHTS AGREEMENT SIGNATURE PAGE


IN WITNESS WHEREOF, the parties hereto have executed this AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT as of the date set forth in the first paragraph hereof.

COMPANY:                                   PURCHASERS:

OMNICELL.COM                               ABS CAPITAL PARTNERS III, L. P.
                                           BY:  ABS PARTNERS III, LLC
                                           ITS:  GENERAL PARTNER


Signature:                                 By:
          -------------------------           ---------------------------------
            Earl E. Fry                                John D. Stobo, Jr.
            Vice President and Chief                     Managing Member
            Financial Officer


                                           RONALD L. PERKINS

                                           By: /s/ Sherryl W. Hossack
                                           Sherryl W. Hossack under Power of
                                           Attorney

PRIOR HOLDERS:

SHAREHOLDER:
By:
Print Name:
Title:

INVESTOR RIGHTS AGREEMENT SIGNATURE PAGE


IN WITNESS WHEREOF, the parties hereto have executed this AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT as of the date set forth in the first paragraph hereof.

COMPANY:                                   PURCHASERS:

OMNICELL.COM                               ABS CAPITAL PARTNERS III, L. P.
                                           BY:  ABS PARTNERS III, LLC
                                           ITS:  GENERAL PARTNER


Signature:                                 By:
          -------------------------           ---------------------------------
            Earl E. Fry                                John D. Stobo, Jr.
            Vice President and Chief                     Managing Member
            Financial Officer


                                           WELLS FARGO BANK, TRUSTEE
                                           SHV M/P/T FBO SHERRYL W. HOSSACK

                                           By: /s/ Vicki M. Bandel
                                                    Vicki M. Bandel
                                                    Asst. V.P. and Trust Officer

                                           By: /s/ S. Matson
                                                    S. Matson
                                                    Asst. V.P. and Trust Officer

PRIOR HOLDERS:

SHAREHOLDER:
By:
Print Name:
Title:

INVESTOR RIGHTS AGREEMENT SIGNATURE PAGE


IN WITNESS WHEREOF, the parties hereto have executed this AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT as of the date set forth in the first paragraph hereof.

COMPANY:                                   PURCHASERS:

OMNICELL.COM                               ABS CAPITAL PARTNERS III, L. P.
                                           BY:  ABS PARTNERS III, LLC
                                           ITS:  GENERAL PARTNER


Signature:                                 By:
          -------------------------           ---------------------------------
            Earl E. Fry                                John D. Stobo, Jr.
            Vice President and Chief                     Managing Member
            Financial Officer


                                           WELLS FARGO BANK, TRUSTEE
                                           SHV M/P/T FBO MICHELE Y. PHUA

                                           By: /s/ Vicki M. Bandel
                                                    Vicki M. Bandel
                                                    Asst. V.P. and Trust Officer

                                           By: /s/ S. Matson
                                                    S. Matson
                                                    Asst. V.P. and Trust Officer

PRIOR HOLDERS:

SHAREHOLDER:
By:
Print Name:
Title:

INVESTOR RIGHTS AGREEMENT SIGNATURE PAGE


IN WITNESS WHEREOF, the parties hereto have executed this AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT as of the date set forth in the first paragraph hereof.

COMPANY:                                   PURCHASERS:

OMNICELL.COM                               ABS CAPITAL PARTNERS III, L. P.
                                           BY:  ABS PARTNERS III, LLC
                                           ITS:  GENERAL PARTNER


Signature:                                 By:
          -------------------------           ---------------------------------
            Earl E. Fry                                John D. Stobo, Jr.
            Vice President and Chief                     Managing Member
            Financial Officer


                                           GENSTAR INVESTMENT CORPORATION

                                           By: /s/ Richard D. Paterson

                                           Name: Richard D. Paterson

                                           Title: Executive Vice President

PRIOR HOLDERS:

SHAREHOLDER:
By:
Print Name:
Title:

INVESTOR RIGHTS AGREEMENT SIGNATURE PAGE


IN WITNESS WHEREOF, the parties hereto have executed this AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT as of the date set forth in the first paragraph hereof.

COMPANY:                                   PURCHASERS:

OMNICELL.COM                               ABS CAPITAL PARTNERS III, L. P.
                                           BY:  ABS PARTNERS III, LLC
                                           ITS:  GENERAL PARTNER


Signature:                                 By:
          -------------------------           ---------------------------------
            Earl E. Fry                                John D. Stobo, Jr.
            Vice President and Chief                     Managing Member
            Financial Officer


                                           NAS PARTNERS I

                                           By: /s/ Randall A. Hack

                                           Name: Randall A. Hack

                                           Title: Member

PRIOR HOLDERS:

SHAREHOLDER:
By:
Print Name:
Title:

INVESTOR RIGHTS AGREEMENT SIGNATURE PAGE


IN WITNESS WHEREOF, the parties hereto have executed this AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT as of the date set forth in the first paragraph hereof.

COMPANY:                                   PURCHASERS:

OMNICELL.COM                               ABS CAPITAL PARTNERS III, L. P.
                                           BY:  ABS PARTNERS III, LLC
                                           ITS:  GENERAL PARTNER


Signature:                                 By:
          -------------------------           ---------------------------------
            Earl E. Fry                                John D. Stobo, Jr.
            Vice President and Chief                     Managing Member
            Financial Officer


                                           NASSAU CAPITAL PARTNERS

                                           By: /s/ Randall A. Hack

                                           Name: Randall A. Hack

                                           Title: Member

PRIOR HOLDERS:

SHAREHOLDER:
By:
Print Name:
Title:

INVESTOR RIGHTS AGREEMENT SIGNATURE PAGE


IN WITNESS WHEREOF, the parties hereto have executed this AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT as of the date set forth in the first paragraph hereof.

COMPANY:                                   PURCHASERS:

OMNICELL.COM                               ABS CAPITAL PARTNERS III, L. P.
                                           BY:  ABS PARTNERS III, LLC
                                           ITS:  GENERAL PARTNER


Signature:                                 By:
          -------------------------           ---------------------------------
            Earl E. Fry                                John D. Stobo, Jr.
            Vice President and Chief                     Managing Member
            Financial Officer


                                           FRED A. DOTZLER

                                           By: /s/ Fred Dotzler
                                                  Fred Dotzler
                                                  as an individual

PRIOR HOLDERS:

SHAREHOLDER:
By:
Print Name:
Title:

INVESTOR RIGHTS AGREEMENT SIGNATURE PAGE


IN WITNESS WHEREOF, the parties hereto have executed this AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT as of the date set forth in the first paragraph hereof.

COMPANY:                                   PURCHASERS:

OMNICELL.COM                               ABS CAPITAL PARTNERS III, L. P.
                                           BY:  ABS PARTNERS III, LLC
                                           ITS:  GENERAL PARTNER


Signature:                                 By:
          -------------------------           ---------------------------------
            Earl E. Fry                                John D. Stobo, Jr.
            Vice President and Chief                     Managing Member
            Financial Officer


                                           COMMERCE ONCE, INC.

                                           By: /s/ Robert M. Tarkoff

                                           Name: Robert M. Tarkoff

                                           Title: Senior VP & General Counsel

PRIOR HOLDERS:

SHAREHOLDER:
By:
Print Name:
Title:

INVESTOR RIGHTS AGREEMENT SIGNATURE PAGE


IN WITNESS WHEREOF, the parties hereto have executed this AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT as of the date set forth in the first paragraph hereof.

COMPANY:                                   PURCHASERS:

OMNICELL.COM                               ABS CAPITAL PARTNERS III, L. P.
                                           BY:  ABS PARTNERS III, LLC
                                           ITS:  GENERAL PARTNER


Signature:                                 By:
          -------------------------           ---------------------------------
            Earl E. Fry                                John D. Stobo, Jr.
            Vice President and Chief                     Managing Member
            Financial Officer


                                           FFT PARTNERS II, L.P.

                                           By: FFT GP II, LLC

                                           Its: General Partner

                                           By: /s/ Carlos A. Ferrer
                                                  Carlos A. Ferrer
                                                  Member

PRIOR HOLDERS:

SHAREHOLDER:
By:
Print Name:
Title:

INVESTOR RIGHTS AGREEMENT SIGNATURE PAGE


IN WITNESS WHEREOF, the parties hereto have executed this AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT as of the date set forth in the first paragraph hereof.

COMPANY:                               PURCHASERS:

OMNICELL.COM                           ABS CAPITAL PARTNERS III, L.P.
                                       BY:  ABS PARTNERS III, LLC
                                       ITS: GENERAL PARTNER

By:________________________________    By:________________________________
                                                John D. Stobo, Jr.
                                                Managing Member

                                       PURCHASER:_________________________

                                       By:________________________________

                                       Name:______________________________

                                       Title:_____________________________

PRIOR HOLDERS:

SHAREHOLDER: PANTHEON INTERNATIONAL PARTICIPATIONS

By: /s/ R.M. Swire
   --------------------------------

Print Name: R.M. Swire
           ------------------------

Title:            Director
      -----------------------------

INVESTOR RIGHTS AGREEMENT SIGNATURE PAGE


IN WITNESS WHEREOF, the parties hereto have executed this AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT as of the date set forth in the first paragraph hereof.

COMPANY:                               PURCHASERS:

OMNICELL.COM                           ABS CAPITAL PARTNERS III, L.P.
                                       BY:  ABS PARTNERS III, LLC
                                       ITS:  GENERAL PARTNER

By:________________________________    By:________________________________
                                                John D. Stobo, Jr.
                                                Managing Member

                                       PURCHASER:_________________________

                                       By:________________________________

                                       Name:______________________________

                                       Title:_____________________________

PRIOR HOLDERS:

SHAREHOLDER: SEQUOIA CAPITAL VI

SEQUOIA TECHNOLOGY PARTNERS VI
SEQUOIA 1995

By: /s/ Thomas F. Stephenson
   --------------------------------

Print Name: Thomas F. Stephenson
           ------------------------

Title:_____________________________

INVESTOR RIGHTS AGREEMENT SIGNATURE PAGE


IN WITNESS WHEREOF, the parties hereto have executed this AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT as of the date set forth in the first paragraph hereof.

COMPANY:                               PURCHASERS:

OMNICELL.COM                           ABS CAPITAL PARTNERS III, L.P.
                                       BY:  ABS PARTNERS III, LLC
                                       ITS:  GENERAL PARTNER

By:________________________________    By:________________________________
                                                John D. Stobo, Jr.
                                                Managing Member

                                       PURCHASER:_________________________

                                       By:________________________________

                                       Name:______________________________

                                       Title:_____________________________

PRIOR HOLDERS:

SHAREHOLDER: TIMOTHY J. AND OVEL G. SHEEHAN

By: /s/ Timothy J. Sheehan
   --------------------------------

Print Name: Timothy J. Sheehan
           ------------------------

Title:            Trustee
      -----------------------------

INVESTOR RIGHTS AGREEMENT SIGNATURE PAGE


IN WITNESS WHEREOF, the parties hereto have executed this AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT as of the date set forth in the first paragraph hereof.

COMPANY:                               PURCHASERS:

OMNICELL.COM                           ABS CAPITAL PARTNERS III, L.P.
                                       BY:  ABS PARTNERS III, LLC
                                       ITS:  GENERAL PARTNER

By:________________________________    By:________________________________
                                                John D. Stobo, Jr.
                                                Managing Member

                                       PURCHASER:_________________________

                                       By:________________________________

                                       Name:______________________________

                                       Title:_____________________________

PRIOR HOLDERS:

SHAREHOLDER: Dennis J. Sheehan

By: /s/ Dennis J. Sheehan
-----------------------------------

Print Name: Dennis J. Sheehan
-----------------------------------

Title:_____________________________

INVESTOR RIGHTS AGREEMENT SIGNATURE PAGE


IN WITNESS WHEREOF, the parties hereto have executed this AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT as of the date set forth in the first paragraph hereof.

COMPANY:                               PURCHASERS:

OMNICELL.COM                           ABS CAPITAL PARTNERS III, L.P.
                                       BY:  ABS PARTNERS III, LLC
                                       ITS:  GENERAL PARTNER

By:________________________________    By:________________________________
                                                John D. Stobo, Jr.
                                                Managing Member

                                       PURCHASER:_________________________

                                       By:________________________________

                                       Name:______________________________

                                       Title:_____________________________

PRIOR HOLDERS:

SHAREHOLDER: MATTHEW J. SHEEHAN

By: /s/ Dennis J. Sheehan
   --------------------------------

Print Name: Dennis J. Sheehan
           ------------------------

Title:            Custodian
      -----------------------------

INVESTOR RIGHTS AGREEMENT SIGNATURE PAGE


IN WITNESS WHEREOF, the parties hereto have executed this AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT as of the date set forth in the first paragraph hereof.

COMPANY:                               PURCHASERS:

OMNICELL.COM                           ABS CAPITAL PARTNERS III, L.P.
                                       BY:  ABS PARTNERS III, LLC
                                       ITS:  GENERAL PARTNER

By:________________________________    By:________________________________
                                                John D. Stobo, Jr.
                                                Managing Member

                                       PURCHASER:_________________________

                                       By:________________________________

                                       Name:______________________________

                                       Title:_____________________________

PRIOR HOLDERS:

SHAREHOLDER: DENNIS AND SHARON SHEEHAN

By: /s/ Dennis J. Sheehan
   --------------------------------

Print Name: Dennis J. Sheehan
           ------------------------

Title:_____________________________

INVESTOR RIGHTS AGREEMENT SIGNATURE PAGE


IN WITNESS WHEREOF, the parties hereto have executed this AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT as of the date set forth in the first paragraph hereof.

COMPANY:                               PURCHASERS:

OMNICELL.COM                           ABS CAPITAL PARTNERS III, L.P.
                                       BY:  ABS PARTNERS III, LLC
                                       ITS:  GENERAL PARTNER

By:________________________________    By:________________________________
                                                John D. Stobo, Jr.
                                                Managing Member

                                       PURCHASER:_________________________

                                       By:________________________________

                                       Name:______________________________

                                       Title:_____________________________

PRIOR HOLDERS:

SHAREHOLDER: ERIC F. SHEEHAN

By: /s/ Dennis J. Sheehan
   --------------------------------

Print Name: Dennis J. Sheehan
           ------------------------

Title:            Custodian
      -----------------------------

INVESTOR RIGHTS AGREEMENT SIGNATURE PAGE


IN WITNESS WHEREOF, the parties hereto have executed this AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT as of the date set forth in the first paragraph hereof.

COMPANY:                               PURCHASERS:

OMNICELL.COM                           ABS CAPITAL PARTNERS III, L.P.
                                       BY:  ABS PARTNERS III, LLC
                                       ITS:  GENERAL PARTNER

By:________________________________    By:________________________________
                                                John D. Stobo, Jr.
                                                Managing Member

                                       PURCHASER:_________________________

                                       By:________________________________

                                       Name:______________________________

                                       Title:_____________________________

PRIOR HOLDERS:

SHAREHOLDER: BENJAMIN SHEEHAN

By: /s/ Dennis J. Sheehan
   --------------------------------

Print Name: Dennis J. Sheehan
           ------------------------

Title:            Custodian
      -----------------------------

INVESTOR RIGHTS AGREEMENT SIGNATURE PAGE


IN WITNESS WHEREOF, the parties hereto have executed this AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT as of the date set forth in the first paragraph hereof.

COMPANY:                               PURCHASERS:

OMNICELL.COM                           ABS CAPITAL PARTNERS III, L.P.
                                       BY:  ABS PARTNERS III, LLC
                                       ITS:  GENERAL PARTNER

By:________________________________    By:________________________________
                                                John D. Stobo, Jr.
                                                Managing Member

                                       PURCHASER:_________________________

                                       By:________________________________

                                       Name:______________________________

                                       Title:_____________________________

PRIOR HOLDERS:

SHAREHOLDER: SHARON A. SHEEHAN

By: /s/ Sharon A. Sheehan
   --------------------------------

Print Name: Sharon A. Sheehan
           ------------------------

Title:_____________________________

INVESTOR RIGHTS AGREEMENT SIGNATURE PAGE


IN WITNESS WHEREOF, the parties hereto have executed this AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT as of the date set forth in the first paragraph hereof.

COMPANY:                               PURCHASERS:

OMNICELL.COM                           ABS CAPITAL PARTNERS III, L.P.
                                       BY:  ABS PARTNERS III, LLC
                                       ITS:  GENERAL PARTNER

By:________________________________    By:________________________________
                                                John D. Stobo, Jr.
                                                Managing Member

                                       PURCHASER:_________________________

                                       By:________________________________

                                       Name:______________________________

                                       Title:_____________________________

PRIOR HOLDERS:

SHAREHOLDER: SUTTER HILL VENTURES, A CALIFORNIA LIMITED PARTNERSHIP

By: /s/ William H. Younger, Jr.
   --------------------------------

Print Name: William H. Younger, Jr.
           ------------------------

Title:   Managing Director Of The General Partner
      -------------------------------------------

INVESTOR RIGHTS AGREEMENT SIGNATURE PAGE


IN WITNESS WHEREOF, the parties hereto have executed this AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT as of the date set forth in the first paragraph hereof.

COMPANY:                               PURCHASERS:

OMNICELL.COM                           ABS CAPITAL PARTNERS III, L.P.
                                       BY:  ABS PARTNERS III, LLC
                                       ITS:  GENERAL PARTNER

By:________________________________    By:________________________________
                                                John D. Stobo, Jr.
                                                Managing Member

                                       PURCHASER:_________________________

                                       By:________________________________

                                       Name:______________________________

                                       Title:_____________________________

PRIOR HOLDERS:

SHAREHOLDER: TOW PARTNERS, L.P.

By: /s/ Paul M. Wythes
   --------------------------------

Print Name: Paul M. Wythes
           ------------------------

Title:   General Partner
      -----------------------------

INVESTOR RIGHTS AGREEMENT SIGNATURE PAGE


IN WITNESS WHEREOF, the parties hereto have executed this AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT as of the date set forth in the first paragraph hereof.

COMPANY:                               PURCHASERS:

OMNICELL.COM                           ABS CAPITAL PARTNERS III, L.P.
                                       BY:  ABS PARTNERS III, LLC
                                       ITS:  GENERAL PARTNER

By:________________________________    By:________________________________
                                                John D. Stobo, Jr.
                                                Managing Member

                                       PURCHASER:_________________________

                                       By:________________________________

                                       Name:______________________________

                                       Title:_____________________________

PRIOR HOLDERS:

SHAREHOLDER: William H. Younger, Jr.

By: /s/ William H. Younger, Jr.
   --------------------------------

Print Name: William H. Younger, Jr.
           ------------------------

Title:_____________________________

INVESTOR RIGHTS AGREEMENT SIGNATURE PAGE


IN WITNESS WHEREOF, the parties hereto have executed this AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT as of the date set forth in the first paragraph hereof.

COMPANY:                               PURCHASERS:

OMNICELL.COM                           ABS CAPITAL PARTNERS III, L.P.
                                       BY:  ABS PARTNERS III, LLC
                                       ITS:  GENERAL PARTNER

By:________________________________    By:________________________________
                                                John D. Stobo, Jr.
                                                Managing Member

                                       PURCHASER:_________________________

                                       By:________________________________

                                       Name:______________________________

                                       Title:_____________________________

PRIOR HOLDERS:

SHAREHOLDER: THE YOUNGER LIVING TRUST

By: /s/ William H. Younger, Jr.
   --------------------------------

Print Name: William H. Younger, Jr.
           ------------------------

Title:   Trustee
      -----------------------------

INVESTOR RIGHTS AGREEMENT SIGNATURE PAGE


IN WITNESS WHEREOF, the parties hereto have executed this AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT as of the date set forth in the first paragraph hereof.

COMPANY:                               PURCHASERS:

OMNICELL.COM                           ABS CAPITAL PARTNERS III, L.P.
                                       BY:  ABS PARTNERS III, LLC
                                       ITS:  GENERAL PARTNER

Signature:_________________________    By:________________________________
           Earl E. Fry                           John D. Stobo, Jr.
           Vice President and                    Managing Member
           Chief Financial Officer


                                       SUTTER HILL VENTURES,
                                       A CALIFORNIA LIMITED PARTNERSHIP

                                       By: /s/ William H. Younger, Jr.

                                       Name: William H. Younger, Jr.
                                             Managing Director of
                                             the General Partner

PRIOR HOLDERS:

SHAREHOLDER:_______________________

By:________________________________

Print Name:________________________

Title:_____________________________

INVESTOR RIGHTS AGREEMENT SIGNATURE PAGE


IN WITNESS WHEREOF, the parties hereto have executed this AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT as of the date set forth in the first paragraph hereof.

COMPANY:                               PURCHASERS:

OMNICELL.COM                           ABS CAPITAL PARTNERS III, L.P.
                                       BY:  ABS PARTNERS III, LLC
                                       ITS:  GENERAL PARTNER

Signature:_________________________    By:________________________________
           Earl E. Fry                           John D. Stobo, Jr.
           Vice President and                    Managing Member
           Chief Financial Officer


                                       SUTTER HILL ENTREPRENEURS FUND (AI), L.P.

                                       By: /s/ William H. Younger, Jr.

                                       Name: William H. Younger, Jr.
                                             Managing Director of
                                             the General Partner

PRIOR HOLDERS:

SHAREHOLDER:_______________________

By:________________________________

Print Name:________________________

Title:_____________________________

INVESTOR RIGHTS AGREEMENT SIGNATURE PAGE


IN WITNESS WHEREOF, the parties hereto have executed this AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT as of the date set forth in the first paragraph hereof.

COMPANY:                               PURCHASERS:

OMNICELL.COM                           ABS CAPITAL PARTNERS III, L.P.
                                       BY:  ABS PARTNERS III, LLC
                                       ITS:  GENERAL PARTNER

Signature:_________________________    By:________________________________
           Earl E. Fry                           John D. Stobo, Jr.
           Vice President and                    Managing Member
           Chief Financial Officer


                                       SUTTER HILL ENTREPRENEURS FUND (QP), L.P.

                                       By: /s/ William H. Younger, Jr.

                                       Name: William H. Younger, Jr.
                                             Managing Director of
                                             the General Partner

PRIOR HOLDERS:

SHAREHOLDER:_______________________

By:________________________________

Print Name:________________________

Title:_____________________________

INVESTOR RIGHTS AGREEMENT SIGNATURE PAGE


EXHIBIT 4.3

THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED, OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL (WHICH MAY BE COMPANY COUNSEL) REASONABLY SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933.

WARRANT AGREEMENT

To Purchase Shares of the Series C Preferred Stock of

OmniCell Technologies, Inc.

Dated as of September 30, 1993

Whereas, OmniCell Technologies, Inc., a California corporation (the "Company") has entered into a Master Lease Agreement dated as of September 30, 1993, Equipment Schedule No. VL-1, and related Summary Equipment Schedules (the "Leases") with COMDISCO, Inc., a Delaware corporation (the "Warrantholder"); and

Whereas, the Company desires to grant to Warrantholder, in consideration for such Leases, the right to purchase shares of its Series C Preferred Stock;

Now, Therefore, in consideration of the Warrantholder executing and delivering such Leases and in consideration of mutual covenants and agreements contained herein, the Company and Warrantholder certify and agree as follows:

1. GRANT OF THE RIGHT TO PURCHASE PREFERRED STOCK.

For value received, the Company hereby grants to the Warrantholder, and the Warrantholder is entitled, upon the terms and subject to the conditions hereinafter set forth, to subscribe for and purchase, from the Company 12,500 fully paid and non-assessable shares of the Company's Series C Preferred Stock ("Preferred Stock") The exercise price ("Exercise Price") shall be equal to $1.60 per share. Notwithstanding the above, if the Company completes the Series D Preferred Stock financing ("Next Round") by December 1, 1993, then this Warrant shall be exercisable for 9,217 fully paid and assessable shares of the Company's Series D Preferred Stock at the an Exercise Price equal to $2.17 per share. The number and purchase price of such shares are subject to adjustment as provided in Section 8 hereof.

2. TERM OF THE WARRANT AGREEMENT.

Except as otherwise provided for herein, the term of this Warrant Agreement and the right to purchase Preferred Stock as granted herein shall commence on the date of execution hereof and shall be exercisable for a period of (i) seven
(7) years after the date of execution hereof, or (ii) three (3) years from the effective date of the Company's initial public offering (the "IPO") whichever is longer.

Notwithstanding the term of this Warrant Agreement fixed pursuant to
Section 2 hereof, the right to purchase Preferred Stock as granted herein shall expire, if not previously exercised

1.


immediately upon the closing of a merger or consolidation of the Company with or into another corporation when the Company is not the surviving corporation, or the sale of all or substantially all of the Company's properties and assets or outstanding stock to any other person (the "Merger"), provided in which Warrantholder realizes a value for its shares equal to or greater than $6.40 per share.

Notwithstanding anything to the contrary in this Warrant Agreement, the rights to purchase the Company's Preferred Stock shall not expire until the Company complies with such notice provisions. Such notice shall also contain such details of the proposed Merger as are reasonable in the circumstances. If such closing does not take place, the Company shall promptly notify the Warrantholder that such proposed transaction has been terminated, and the Warrantholder may rescind any exercise of its purchase rights promptly after such notice of termination of the proposed transaction. In the event of such rescission, the Warrants will continue to be exercisable on the same terms and conditions contained herein.

3. EXERCISE OF THE PURCHASE RIGHTS.

The purchase rights set forth in this Warrant Agreement are exercisable by the Warrantholder, in whole or in part, at any time, or from time to time, prior to the expiration of the term set forth in Section 2 above, by tendering to the Company at its principal office a notice of exercise in the form attached hereto as Exhibit I (the "Notice of Exercise"), duly completed and executed. Upon receipt of the Notice of Exercise and the payment of the purchase price in accordance with the terms set forth below, the Company shall issue to the Warrantholder a certificate for the number of shares of Preferred Stock purchased and shall execute the Notice of Exercise indicating the number of shares which remain subject to future purchases, if any.

Notwithstanding anything to the contrary contained in Section 2 above or this Section 3, the Warrantholder shall either (i) exercise all outstanding warrants by paying to the Company, by cash or check, an amount equal to the aggregate Warrant Price of the shares being purchased, or (ii) receive shares equal to the value (as determined below) of this Warrant by surrender of the Warrant at the principal office of the Company together with notice of such election in which event the Company shall issue to the Warrantholder a number of shares of Preferred computed using the following formula:

X = Y(A-B)

A

Where: X = The number of shares of Preferred to be issued to the Warrantholder.

Y = The number of shares of Preferred under this Warrant.

A = The fair market value of one share of Common.

B = The Exercise Price.

As used herein, current fair market value of Common Stock shall mean with respect to each share of Common Stock the average of the closing prices of the Company's Common Stock sold on all securities exchanges on which the Common Stock may at the time be listed, or, if

2.


there have been no sales on any such exchange on any day, the average of the highest bid and lowest asked prices on all such exchanges at the end of such day, or, if on any day the Common Stock is not so listed, the average of the representative bid and asked prices quoted in the NASDAQ System as of 4:00 p.m., New York City time, or, if on any day the Common Stock is not quoted in the NASDAQ System, the average of the highest bid and lowest asked price on such day in the domestic over-the-counter market as reported by the National Quotation Bureau, Incorporated, or any similar successor organization, in each such case averaged over a period of 21 days consisting of the day as of which the current fair market value of Common Stock is being determined and the 20 consecutive business days prior to such day. If at any time the Common Stock is not listed on any securities exchange or quoted in the NASDAQ System or the over-the- counter market, the current fair market value of Preferred Stock shall be the highest price per share which the Company could obtain from a willing buyer (not a current employee or director) for shares of Preferred Stock sold by the Company, from authorized but unissued shares, as determined in good faith by the Board of Directors of the Company, unless (i) the Company shall become subject to a merger, acquisition or other consolidation pursuant to which the Company is not the surviving party, in which case the current fair market value of the Stock shall be deemed to be the value received by the holders of the Company's Stock for each share of Stock pursuant to the Company's acquisition; or (ii) the Warrantholder shall purchase such shares in conjunction with the initial underwritten public offering of the Company's Common Stock pursuant to a registration statement filed under the Securities Act of 1933, in which case, the fair market value of the shares of stock subject to this Warrant shall be the price at which all registered shares are sold to the public in such offering.

4. RESERVATION OF SHARES.

(a) Authorization and Reservation of Shares. During the term of this Warrant Agreement, the Company will at all times have authorized and reserved a sufficient number of shares of its Preferred Stock to provide for the exercise of the rights to purchase Preferred Stock as provided for herein.

(b) Registration or Listing. If any shares of Preferred Stock required to be reserved for purposes of exercise of the Warrant Agreement hereunder require registration with or approval of any governmental authority under any Federal or State law (other than any registration under the Securities Act of 1933, as then in effect, or any similar Federal statute then enforced, or any state securities law, required by reason of any transfer involved in such conversion), or listing on any domestic securities exchange, before such shares may be issued upon conversion, the Company will, at its expense and as expeditiously as possible, use its best efforts to cause such shares to be duly registered, listed or approved for listing on such domestic securities exchange, as the case may be.

5. NO FRACTIONAL SHARES OR SCRIP.

No fractional shares or scrip representing fractional shares shall be issued upon the exercise of the Warrantholder's rights to purchase Preferred Stock, but in lieu of such fractional shares the Company shall make a cash payment therefor upon the basis of the Exercise Price then in effect.

3.


6. NO RIGHTS AS SHAREHOLDERS.

This Warrant Agreement does not entitle the Warrantholder to any voting rights or other rights as a shareholder of the Company prior to the exercise of the Warrantholder's rights to purchase Preferred Stock as provided for herein.

7. WARRANTHOLDER REGISTRY.

The Company shall maintain a registry showing the name and address of the registered holder of this Warrant Agreement.

8. ADJUSTMENT RIGHTS.

The purchase price per share, the number of shares of Preferred Stock purchasable hereunder are subject to adjustment from time to time, as follows:

(a) Merger and Sale of Assets. If at any time there shall be a capital reorganization of the shares of the Company's stock (other than a combination, reclassification, exchange or subdivision of shares otherwise provided for herein), or a merger or consolidation of the Company with or into another corporation when the Company is not the surviving corporation, or the sale of all or substantially all of the Company's properties and assets to any other person, (other than a Merger) then, as a part of such reorganization, merger, consolidation or sale, lawful provision shall be made so that the Warrantholder shall thereafter be entitled to receive upon exercise of its rights to purchase Preferred Stock, the number of shares of Preferred Stock or other securities of the successor corporation resulting from such merger or consolidation, to which a holder of the Preferred Stock deliverable upon exercise of the right to purchase Preferred Stock hereunder would have been entitled in such capital reorganization, merger, consolidation or sale if the right to purchase such Preferred Stock hereunder had been exercised immediately prior to such capital reorganization, merger, consolidation or sale. In any such case, appropriate adjustment (as determined in good faith by the Company's Board of Directors) shall be made in the application of the provisions of this Warrant Agreement with respect to the rights and interest of the Warrantholder after the reorganization, merger, consolidation or sale to the end that the provisions of this Warrant Agreement (including adjustments of the Exercise Price and number of shares of Preferred Stock purchasable pursuant to the terms and conditions of this Warrant Agreement) shall be applicable after that event, as near as reasonably may be, in relation to any shares deliverable after that event upon the exercise of the Warrantholder's rights to purchase Preferred Stock pursuant to this Warrant Agreement.

(b) Reclassification of Shares. If the Company at any time shall, by combination, reclassification, exchange or subdivision of securities or otherwise, change any of the securities as to which purchase rights under this Warrant Agreement exist into the same or a different number of securities of any other class or classes, this Warrant Agreement shall thereafter represent the right to acquire such number and kind of securities as would have been issuable as the result of such change with respect to the securities which were subject to the purchase rights under this Warrant Agreement immediately prior to such combination, reclassification, exchange, subdivision or other change.

4.


(c) Subdivision or Combination of Shares. If the Company at any time shall combine or subdivide its Preferred Stock, the Exercise Price shall be proportionately decreased in the case of a subdivision, or proportionately increased in the case of a combination.

(d) Right to Purchase Additional Stock. If, for any reason, the total Warrantholder's cost of equipment leased pursuant to the Leases should exceed $200,000.00, Warrantholder shall have the right to purchase from the Company, at the Exercise Price per share specified in Section 1 (which price may be subject to adjustment from time to time as provided for in this Section 8), an additional number of shares of Series C Preferred Stock, which number shall be determined by (i) multiplying the amount by which the Warrantholder's total equipment cost exceeds $200,000.00 by 10% and (ii) dividing the product thereof by the Exercise Price per share referenced above.

(e) Notice of Adjustments. In the event that: (i) the Company shall declare any dividend or distribution upon its stock, whether in cash, property, stock or other securities; (ii) the Company shall offer for subscription prorata to the holders of any class of its Preferred or other convertible stock any additional shares of stock of any class or other rights; (iii) there shall be any capital reorganization, reclassification, consolidation, merger or sale of all or substantially all of the Company's assets; or (iv) there shall be any voluntary or involuntary dissolution, liquidation or winding up of the Company; then, in connection with each such event, the Company shall send to the Warrantholder:

(i) At least 20 days' prior written notice of the date on which the books of the Company shall close or a record shall be taken for such dividend, distribution, subscription rights (specifying the date on which the holders of Preferred Stock shall be entitled thereto) or for determining rights to vote in respect of such capital reorganization, reclassification, consolidation, merger or sale of all or substantially all of the Company's assets, dissolution, liquidation or winding up; and

(ii) In the case of any such capital reorganization, reclassification consolidation, merger or sale of all or substantially all of the Company's assets, dissolution, liquidation or winding up, at least 20 days' prior written notice of the date when the same shall take place (and specifying the date on which the holders of Preferred Stock shall be entitled to exchange their Preferred Stock for securities or other property deliverable upon such capital reorganization, reclassification, consolidation, merger or sale of all or substantially all of the Company's assets, dissolution, liquidation or winding up).

Each such written notice shall set forth, in reasonable detail, (i) the event requiring the adjustment, (ii) the amount of the adjustment, (iii) the method by which such adjustment was calculated, (iv) the Exercise Price, and (v) the number of shares subject to purchase hereunder after giving effect to such adjustment, and shall be given by first class mail, postage prepaid, addressed to the Warrantholder, at the address as shown on the books of the Company.

(f) Registration and Listing. The Company will take all such actions as may be necessary to assure that all shares of Preferred Stock issuable pursuant to this Warrant Agreement may be so issued without violation of any applicable law or regulation or any requirements of any domestic stock exchange (except for official notice of issuance, which will

5.


be immediately transmitted by the Company upon issuance) upon which shares of Preferred Stock or other shares of the same class may be listed. The Company will not take any action which will result in any adjustment of the number of shares of Preferred Stock issuable upon exercise of this Warrant Agreement if the total number of shares of Preferred Stock issuable after such action upon exercise of the Warrant Agreement then outstanding, together with the total number of shares of Preferred Stock then outstanding, would exceed the total number of shares of Preferred Stock then authorized and not reserved for any purpose other than the purpose of issue upon exercise of the Warrant Agreement.

9. REPRESENTATIONS. WARRANTIES AND COVENANTS OF THE COMPANY.

(a) Reservation of Preferred Stock. The Preferred Stock issuable upon exercise of the Warrantholder's rights has been duly and validly reserved and, when issued in accordance with the provisions of this Warrant Agreement, will be validly issued, fully paid and non-assessable, and will be free of any taxes, liens, charges or encumbrances of any nature whatsoever; provided, however, that the Preferred Stock issuable pursuant to this Warrant Agreement may be subject to restrictions on transfer under state and/or Federal securities laws. The Company has made available to the Warrantholder true, correct and complete copies of its Articles of Incorporation. The issuance of certificates for shares of Preferred Stock upon exercise of the Warrant Agreement shall be made without charge to the Warrantholder for any issuance tax in respect thereof, or other cost incurred by the Company in connection with such exercise and the related issuance of shares of Preferred Stock; provided that the Company shall not be required to pay any tax which may be payable in respect of any transfer involved and the issuance and delivery of any certificate in a name other than that of the Warrantholder. The Company will not close its books against the transfer of the Warrant Agreement or of any share of Preferred Stock issued or issuable upon exercise of the Warrant and any agreement in any manner which interferes with the timely exercise of the Warrant.

(b) Due Authority. The execution and delivery by the Company of the Leases, and this Warrant Agreement and the performance of all obligations of the Company thereunder and hereunder, including the issuance to Warrantholder of the right to acquire the shares of Preferred Stock set forth in Section 1 above (which number of shares may be from time to time adjusted pursuant to the terms of
Section 8 above) have been duly authorized by all necessary corporate action on the part of the Company, and the Leases and this Warrant Agreement are not inconsistent with the Company's Certificate of Incorporation or By-Laws, do not contravene any law or governmental rule, regulation or order applicable to it, do not and will not contravene any provision of, or constitute a default under, any indenture, mortgage, contract or other instrument to which it is a party or by which it is bound, and the Leases and the Warrant Agreement constitute legal, valid, and binding agreements of the Company, enforceable in accordance with their respective terms, subject to applicable bankruptcy, insolvency and other laws affecting creditor rights and to general principles of equity.

(c) Consents and Approvals. No consent or approval of, giving of notice to, registration with, or taking of any other action in respect of any state, Federal or other governmental authority or agency is required with respect to the execution, delivery and performance by the Company of its obligations under this Warrant Agreement, except for the filing of notices pursuant to Regulation D under the Securities Exchange Act of 1933, as

6.


amended, (the "1933 Act") and Section 25102(f) of the California Corporate Securities Law, which filings will be effective by the time required thereby.

(d) Litigation. There are no actions, suits, audits, investigations or proceedings pending or, to the knowledge of the Company, threatened against or affecting the Company in any court or before any governmental commission, board or authority which, if adversely determined, will have a material adverse effect on the ability of the Company to perform its obligations under the Leases and this Warrant Agreement.

(e) Subsidiaries or Affiliates. The Company has no subsidiaries or affiliated companies and does not otherwise own or control, directly or indirectly, any other corporation, association or business entity.

(f) Issued Securities. All issued and outstanding shares of Common Stock, Preferred Stock or any other securities of the Company have been duly authorized and validly issued and are fully paid and nonassessable. All outstanding shares of Common Stock, Preferred Stock and any other securities were issued in full compliance with all Federal and state securities laws. In addition:

(i) The authorized capital of the Company consists of (A) 15,000,000 shares of Common Stock, of which 627,400 shares are issued and outstanding, and (B) 5,000,000 shares of preferred stock, of which 300,000 shares are designated Series A Preferred Stock and 300,000 are designated Series B Preferred Stock, and 1,000,000 are designated Series C Preferred Stock. 240,000 shares of Series A Preferred Stock are issued and outstanding and are convertible into 240,000 shares of Common Stock. 160,333 shares of Series B Preferred Stock are issued and outstanding and are convertible into 160,333 shares of Common Stock. 850,000 shares of Series C Preferred Stock are issued and outstanding and are convertible into 850,000 shares of Common Stock.

(ii) There are 460,000 shares of Common Stock authorized for issuance pursuant to the Company's Incentive Stock Plan of which 218,000 shares have been issued

(iii) There are no other options, warrants, conversion privileges or other options or other rights presently outstanding to purchase or otherwise acquire any authorized but unissued shares of the Company's capital stock or other securities of the Company.

(iv) In accordance with the Company's Restated Articles of Incorporation, no shareholder of the Company has preemptive rights to purchase new issuances of the Company's capital stock.

(g) Financial Statements. The Company has delivered to the Warrantholder its unaudited Consolidated Balance Sheet and Consolidated Statement of Income for the period ending August 31, 1993 (the "Financial Statements"). The Financial Statements are complete and correct in all material respects and have been prepared in accordance with generally accepted accounting principles applied on a consistent basis throughout the periods indicated. The condition and operating results of the Company as of the dates and during the periods indicated therein are true and correct in all material aspects, subject as to the Consolidated Finance Sheet and Consolidated Statement of income for the period then ending August 31, 1993 to normal

7.


year-end audit adjustments. Since August 31, 1993 there has been no change in the assets, liabilities, financial condition or operations of the Company from that reflected in the Financial Statements other than changes in the ordinary course of business which have not been, individually or in the aggregate, materially adverse.

The Company shall deliver to the Warrantholder (i) within one hundred twenty (120) days after the end of the Company's fiscal year, statements of income for such fiscal year, a consolidated balance sheet of the Company as of the end of such year and consolidated statement of the sources and application of funds for such year, which year-end financial reports shall be in reasonable detail and certified by independent public accountants of nationally recognized standing selected by the Company, and (ii) within forty-five (45) days after the end of each fiscal quarter other than the last fiscal quarter, unaudited consolidated statements of income and sources and application of funds for such quarter and a consolidated balance sheet as of the end of such quarter.

(h) Contingent and Absolute Liabilities. The Company has no material liabilities or obligations, absolute or contingent except the liabilities and obligations of the Company as set forth in the Financial Statements and liabilities and obligations which have occurred in the ordinary course of business, and which have not been materially adverse.

(i) Licenses, Patents and Copyrights. To the best of the Company's knowledge, the Company owns, possesses, has access to, or can become licensed on reasonable terms under, all patents, patent applications, trademarks, trade names, inventions, franchises, licenses, permits, computer software and copyrights necessary for the operation of its business as now conducted, with no known infringement of, or conflict with, the rights of others.

(j) Employee Contracts. To the best of the Company's knowledge, no employee of the Company is in violation of any material term of any employment contract, patent disclosure agreement or any other contract or agreement relating to the relationship of any such employee with the Company or any prior employer because of the nature of the business conducted by the Company.

(k) Insurance. The Company has in full force and effect insurance policies, with extended coverage, insuring the Company and its property and business against such losses and risks, and in such amounts, as are customary for corporations engaged in a similar business and similarly situated and as otherwise may be required pursuant to the terms of any other contract or agreement.

(l) Other Commitments to Register Securities. Except as set forth in this Warrant Agreement, the Company is not, pursuant to the terms of any other agreement currently in existence, under any obligation to register under the 1933 Act, any of its presently outstanding securities or any of its securities which may hereafter be issued other than the shares of the outstanding Preferred Stock of the Company.

(m) Exempt Transaction. Subject to the accuracy of the Warrantholder's representations in Section 10 hereof, the issuance of the Preferred Stock upon exercise of the Warrantholder's right to purchase such Preferred Stock will constitute transactions exempt from

8.


(i) the registration requirements of Section 5 of the 1933 Act, in reliance upon
Section 4(2) thereof, and (ii) the qualification requirements of the California Corporate Securities Law, in reliance upon Section 25102(f) thereof.

(n) Compliance with Rule 144. At the written request of the Warrantholder, who proposes to sell Preferred Stock issuable upon the exercise of the Warrant in compliance with Rule 144 promulgated by the Securities and Exchange Commission under the 1933 Act, the Company shall furnish to the Warrantholder, within ten days after receipt of such request, a written statement confirming the Company's compliance with the filing requirements of the Securities and Exchange Commission as set forth in such Rule, than applicable to the Company, as such Rule may be amended from time to time.

(o) Brokers' Fees. The Company has not incurred, and will not incur, directly or indirectly, any liability for brokerage or finders' fees or agents' commissions or any similar charges in connection with the Warrant Agreement or any other transaction contemplated thereby.

(p) Untrue, Misleading Statements. No representation or warranty of the Company contained in the Leases, and this Warrant Agreement or any certificate or exhibit furnished or to be furnished to Warrantholder pursuant thereto or in connection with the transactions contemplated thereby (when read together) contains any untrue statement of a material fact or omits to state a material fact necessary in order to make the statements contained therein not misleading.

10. REPRESENTATIONS AND COVENANTS OF THE WARRANTHOLDER.

This Warrant Agreement has been entered into by the Company in reliance upon the following representations and covenants of the Warrantholder, which by its execution hereof the Warrantholder hereby confirms:

(a) Investment Purpose. The right to acquire Preferred Stock or the Preferred Stock issuable upon exercise of the Warrantholder's rights contained herein will be acquired for investment and not with a view to the sale or distribution of any part thereof, and the Warrantholder has no present intention of selling or engaging in any public distribution of the same except pursuant to a registration or exemption.

(b) Private Issue. The Warrantholder understands (i) that the Preferred Stock issuable upon exercise of the Warrantholder's rights contained herein is not registered under the 1933 Act or qualified under applicable state securities laws on the ground that the issuance contemplated by this Warrant Agreement will be exempt from the registration and qualifications requirements thereof, and
(ii) that the Company's reliance on such exemption is predicated on the representations set forth in this Section 10.

(c) Disposition of Warrantholder's Rights. In no event will the Warrantholder make a disposition of any of its rights to acquire Preferred Stock or Preferred Stock issuable upon exercise of such rights unless and until (i) it shall have notified the Company of the proposed disposition, and (ii) if requested by the Company, it shall have furnished the Company with an opinion of counsel (which counsel may either be inside or outside counsel to the

9.


Warrantholder) satisfactory to the Company and its counsel to the effect that (A) appropriate action necessary for compliance with the 1933 Act has been taken, or (B) an exemption from the registration requirements of the 1933 Act is available. Notwithstanding the foregoing, the restrictions imposed upon the transferability of any of its rights to acquire Preferred Stock or Preferred Stock issuable on the exercise of such rights do not apply to transfers from the beneficial owner of any of the aforementioned securities to its nominee or from such nominee to its beneficial owner, and shall terminate as to any particular share of Preferred Stock when (1) such security shall have been effectively registered under the 1933 Act and sold by the holder thereof in accordance with such registration or (2) such security shall have been sold without registration in compliance with Rule 144 under the 1933 Act, or (3) a letter shall have been issued to the Warrantholder at its request by the staff of the Securities and Exchange Commission or a ruling shall have been issued to the Warrantholder at its request by such Commission stating that no action shall be recommended by such staff or taken by such Commission, as the case may be, if such security is transferred without registration under the 1933 Act in accordance with the conditions set forth in such letter or ruling and such letter or ruling specifies that no subsequent restrictions or transfer are required. Whenever the restrictions imposed hereunder shall terminate, as hereinabove provided, the Warrantholder or holder of a share of Preferred Stock then outstanding as to which such restrictions have terminated shall be entitled to receive from the Company, without expense to such holder, one or more new certificates for the Warrant or for such shares of Preferred Stock not bearing any restrictive legend.

(d) Financial Risk. The Warrantholder has such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of its investment and has the ability to bear the economic risks of its investment.

(e) Risk of No Registration. The Warrantholder understands that if the Company does not register with the Securities and Exchange Commission pursuant to Section 12 of the 1933 Act, or file reports pursuant to Section 15(d), of the Securities Exchange Act of 1934 (the " 1934 Act"), or if a registration statement covering the securities under the 1933 Act is not in effect when it desires to sell (i) the rights to purchase Preferred Stock pursuant to this Warrant Agreement, or (ii) the Preferred Stock issuable upon exercise of the right to purchase, it may be required to hold such securities for an indefinite period. The Warrantholder also understands that any sale of its rights of the Warrantholder to purchase Preferred Stock or Preferred Stock which might be made by it in reliance upon Rule 144 under the 1933 Act may be made only in accordance with the terms and conditions of that Rule.

11. TRANSFERS.

Subject to the terms and conditions contained in Section 10 hereof, this Warrant Agreement and all rights hereunder are transferable in whole or in part by the Warrantholder and any successor transferee, provided, however, that in no event shall the number of transfers of the rights and interests in all of the Warrants exceed three (3) transfers. The transfer shall be recorded on the books of the Company upon receipt by the Company of a notice of transfer in the form attached hereto as Exhibit 11 (the "Transfer Notice"), at its principal offices and the payment to the Company of all transfer taxes and other governmental charges imposed on such transfer.

10.


12. MISCELLANEOUS.

(a) Effective Date. The provisions of this Warrant Agreement shall be construed and shall be given effect in all respects as if it had been executed and delivered by the Company on the date hereof. This Warrant Agreement shall be binding upon any successors or assigns of the Company.

(b) Attorneys' Fees. In any litigation, arbitration or court proceeding between the Company and the Warrantholder relating hereto, the prevailing party shall be entitled to attorneys' fees and expenses and all costs of proceedings incurred in enforcing this Warrant Agreement.

(c) Governing Law. This Warrant Agreement shall be governed by and construed for all purposes under and in accordance with the laws of the State of California.

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

(e) Titles and Subtitles. The titles of the paragraphs and subparagraphs of this Warrant Agreement are for convenience and are not to be considered in construing this Agreement.

(f) Notices. Any notice required or permitted hereunder shall be given in writing and shall be deemed effectively given upon personal delivery or upon deposit in the United States mail, by registered or certified mail, addressed (i) to the Warrantholder at 61___ North River Road, Rosemont, Illinois 60018, attention: James Labe, President, Venture Leasing Division, cc: Legal Department, and (ii) to the Company at 4640 Campbell Drive, Menlo Park, California 94025 or at such other address as any such party may subsequently designate by written notice to the other party.

(g) Specific Performance. The Company recognizes and agrees that the Warrantholder will not have an adequate remedy if the Company fails to comply with this Agreement and that damages will not be readily ascertainable, and the Company expressly agrees that, in the event of such failure, it shall not oppose an application by the Warrantholder or any other person entitled to the benefit of this Agreement requiring specific performance of any or all provisions hereof or enjoining the Company from continuing to commit any such breach of this Agreement.

(h) Survival. The representations, warranties, covenants and conditions of the respective parties contained herein or made pursuant to this Warrant Agreement shall survive the execution and delivery of this Warrant Agreement.

(i) Severability. In the event any one or more of the provisions of this Warrant Agreement shall for any reason be held invalid, illegal or unenforceable, the remaining provisions of this Warrant Agreement shall be unimpaired, and the invalid, illegal or unenforceable

11.


provision shall be replaced by a mutually acceptable valid, legal and enforceable provision, which comes closest to the intention of the parties underlying the invalid, illegal or unenforceable provision.

(j) Amendments. Any provision of this Warrant Agreement may be amended by a written instrument signed by the Company and by the Warrantholder.

(k) Additional Documents. The Company, upon execution of this Warrant Agreement, shall provide the Warrantholder with certified resolutions with respect to the representations, warranties and covenants set forth in subparagraphs (a) through (f) and subparagraphs (1), (m) and (o) of Section 9 above and shall also supply such other documents as the Warrantholder may from time to time reasonably request.

In Witness Whereof, the parties hereto have caused this Warrant Agreement to be executed by its officers thereunto duly authorized.

                                      Company:

                                      OmniCell Technologies Inc.

Dated: October 22, 1993               By: /s/ William H. Younger, Jr.
      --------------------------         --------------------------------

                                      Title:    Acting CFO
                                            -----------------------------

                                      Warrantholder:

                                      COMDISCO, Inc.

                                      By:________________________________

Title: President

12.


Exhibit I
NOTICE OF EXERCISE

To:___________________________

(1) The undersigned Warrantholder hereby elects to purchase ________ shares of the Preferred Stock of OMNICELL TECHNOLOGIES, INC., pursuant to the terms of the Warrant Agreement dated the 1st day of September 1993 (the "Warrant Agreement") between OMNICELL TECHNOLOGIES, INC., and the Warrantholder, and tenders herewith payment of the purchase price for such shares in full, together with all applicable transfer taxes, if any.

(2) In exercising its rights to purchase the Preferred Stock of OMNICELL TECHNOLOGIES, INC., the undersigned hereby confirms and acknowledges the investment representations and warranties made in Section 10 of the Warrant Agreement.

(3) Please issue a certificate or certificates representing said shares of Preferred Stock in the name of the undersigned or in such other name as is specified below.


(Name)


(Address)

Warrantholder: COMDISCO, INC.

By:__________________________________

Title:_______________________________

Date:________________________________

1.


ACKNOWLEDGEMENT OF EXERCISE

The undersigned ____________________, hereby acknowledge receipt of the "Notice of Exercise" from COMDISCO, INC., to purchase ___________ shares of the Preferred Stock of OMNICELL TECHNOLOGIES, INC., pursuant to the terms of the Warrant Agreement, and further acknowledges that _______ shares remain subject to purchase under the terms of the Warrant Agreement.

Company:

By:_____________________________

Title:__________________________

Date:___________________________

1.


Exhibit II
TRANSFER NOTICE

(To transfer or assign the foregoing Warrant Agreement execute this form and supply required information. Do not use this form to purchase shares.)

For Value Received, the foregoing Warrant Agreement and all rights evidenced thereby are hereby transferred and assigned to _______________________


(Please Print)

whose address is _______________________________________________________________


Dated:_________________________________

Holder's Signature:____________________

Holder's Address:______________________


Signature Guaranteed:__________________

NOTE: The signature to this Transfer Notice must correspond with the name as it appears on the face of the Warrant Agreement, without alteration or enlargement or any change whatever. Officers of corporations and those acting in a fiduciary or other representative capacity should file proper evidence of authority to assign the foregoing Warrant Agreement.

1.


EXHIBIT 4.4

THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED, OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL (WHICH MAY BE COMPANY COUNSEL) REASONABLY SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933.

WARRANT AGREEMENT

To Purchase Shares of the Series F Preferred Stock of

OmniCell Technologies, Inc.

Dated as of January 23, 1995

WHEREAS, OmniCell Technologies, Inc., a California corporation (the "Company") has entered into a Master Lease Agreement dated as of September 30, 1993, Equipment Schedule No. VL-2, and related Summary Equipment Schedules (the "Leases") with COMDISCO, INC., a Delaware corporation (the "Warrantholder"); and

WHEREAS, the Company desires to grant to Warrantholder, in consideration for such Leases, the right to purchase shares of its Series F Preferred Stock;

NOW, THEREFORE, in consideration of the Warrantholder executing and delivering such Leases and in consideration of mutual covenants and agreements contained herein, the Company and Warrantholder certify and agree as follows:

1. GRANT OF THE RIGHT TO PURCHASE PREFERRED STOCK.

For value received, the Company hereby grants to the Warrantholder, and the Warrantholder is entitled, upon the terms and subject to the conditions hereinafter set forth, to subscribe for and purchase, from the Company 8,130 fully paid and non-assessable shares of the Company's Series F Preferred Stock ("Preferred Stock"). The exercise price ("Exercise Price") shall be equal to $6.15 per share. The number and purchase price of such shares are subject to adjustment as provided in Section 8 hereof.

2. TERM OF THE WARRANT AGREEMENT.

Except as otherwise provided for herein, the term of this Warrant Agreement and the right to purchase Preferred Stock as granted herein shall commence on the date of execution hereof and shall be exercisable for a period of (i) seven
(7) years after the date of execution hereof, or (ii) three (3) years from the effective date of the Company's initial public offering (the "IPO") whichever is longer.

Notwithstanding the term of this Warrant Agreement fixed pursuant to
Section 2 hereof, the right to purchase Preferred Stock as granted herein shall expire, if not previously exercised

1.


immediately upon the closing of a merger or consolidation of the Company with or into another corporation when the Company is not the surviving corporation, or the sale of all or substantially all of the Company's properties and assets or outstanding stock to any other person (the "Merger"), provided in which Warrantholder realizes a value, for its shares equal to or greater than $6.40 per share.

The Company shall notify the Warrantholder if the Merger is proposed in accordance with the terms of Subsection 8(g) hereof, and if the Company fails to deliver such notice, then notwithstanding anything to the contrary in this Warrant Agreement, the rights to purchase the Company's Preferred Stock shall not expire until the Company complies with such notice provisions. Such notice shall also contain such details of the proposed Merger as are reasonable in circumstances. If such closing does not take place, the Company shall promptly notify the Warrantholder that such proposed transaction has been terminated, and the Warrantholder may rescind any exercise of its purchase rights promptly after such notice of termination of the proposed transaction. In the event of such rescission, the Warrants will continue to be exercisable on the same terms and conditions contained herein.

3. EXERCISE OF THE PURCHASE RIGHTS.

The purchase rights set forth in this Warrant Agreement are exercisable by the Warrantholder, in whole or in part, at any time, or from time to time, prior to the expiration of the term set forth in Section 2 above, by tendering to the Company at its principal office a notice of exercise in the form attached hereto as Exhibit I (the "Notice of Exercise"), duly completed and executed. Upon receipt of the Notice of Exercise and the payment of the purchase price in accordance with the terms set forth below, the Company shall issue to the Warrantholder a certificate for the number of shares of Preferred Stock purchased and shall execute the Notice of Exercise indicating the number of shares which remain subject to future purchases, if any.

Notwithstanding anything to the contrary contained in Section 2 above or this Section 3, the Warrantholder shall either (i) exercise all outstanding warrants by paying to the Company, by cash or check, an amount equal to the aggregate Warrant Price of the shares being purchased, or (ii) receive shares equal to the value (as determined below) of this Warrant by surrender of the Warrant at the principal office of the Company together with notice of such election in which event the Company shall issue to the Warrantholder a number of shares of Preferred computed using the following formula:

X = Y(A-B)

A

Where: X = The number of shares of Preferred to be issued to the Warrantholder.

Y = The number of shares of Preferred under this Warrant.

A = The fair market value of one share of Common.

B = The Exercise Price.

2.


As used herein, current fair market value of Common Stock shall mean with respect to each share of Common Stock the average of the closing prices of the Company's Common Stock sold on all securities exchanges on which the Common Stock may at the time be listed, or, if there have been no sales on any such exchange on any day, the average of the highest bid and lowest asked prices on all such exchanges at the end of such day, or, if on any day the Common Stock is not so listed, the average of the representative bid and asked prices quoted in the NASDAQ System as of 4:00 p.m., New York City time, or, if on any day the Common Stock is not quoted in the NASDAQ System, the average of the highest bid and lowest asked price on such day in the domestic over-the-counter market as reported by the National Quotation Bureau, Incorporated, or any similar successor organization, in each such case averaged over a period of 21 days consisting of the day as of which the current fair market value of Common Stock is being determined and the 20 consecutive business days prior to such day. If at any time the Common Stock is not listed on any securities exchange or quoted in the NASDAQ System or the over-the-counter market, the current fair market value of Preferred Stock shall be the highest price per share which the Company could obtain from a willing buyer (not a current employee or director) for shares of Preferred Stock sold by the Company, from authorized but unissued shares, as determined in good faith by the Board of Directors of the Company, unless (i) the Company shall become subject to a merger, acquisition or other consolidation pursuant to which the Company is not the surviving party, in which case the current fair market value of the Stock shall be deemed to be the value received by the holders of the Company's Stock for each share of Stock pursuant to the Company's acquisition; or (ii) the Warrantholder shall purchase such shares in conjunction with the initial underwritten public offering of the Company's Common Stock pursuant to a registration statement filed under the Securities Act of 1933, in which case, the fair market value of the shares of stock subject to this Warrant shall be the price at which all registered shares are sold to the public in such offering.

4. RESERVATION OF SHARES.

(a) Authorization and Reservation of Shares. During the term of this Warrant Agreement, the Company will at all times have authorized and reserved a sufficient number of shares of its Preferred Stock to provide for the exercise of the rights to purchase Preferred Stock as provided for herein.

(b) Registration or Listing. If any shares of Preferred Stock required to be reserved for purposes of exercise of the Warrant Agreement hereunder require registration with or approval of any governmental authority under any Federal or State law (other than any registration under the Securities Act of 1933, as then in effect, or any similar Federal statute then enforced, or any state securities law, required by reason of any transfer involved in such conversion), or listing on any domestic securities exchange, before such shares may be issued upon conversion, the Company will, at its expense and as expeditiously as possible, use its best efforts to cause such shares to be duly registered, listed or approved for listing on such domestic securities exchange, as the case may be.

5. NO FRACTIONAL SHARES OR SCRIP.

No fractional shares or scrip representing fractional shares shall be issued upon the exercise of the Warrantholder's rights to purchase Preferred Stock, but in lieu of such fractional

3.


shares the Company shall make a cash payment therefor upon the basis of the Exercise Price then in effect.

6. NO RIGHTS AS SHAREHOLDERS.

This Warrant Agreement does not entitle the Warrantholder to any voting rights or other rights as a shareholder of the Company prior to the exercise of the Warrantholder's rights to purchase Preferred Stock as provided for herein.

7. WARRANTHOLDER REGISTRY.

The Company shall maintain a registry showing the name and address of the registered holder of this Warrant Agreement.

8. ADJUSTMENT RIGHTS.

The purchase price per share, the number of shares of Preferred Stock purchasable hereunder are subject to adjustment from time to time, as follows:

(a) Merger and Sale of Assets. If at any time there shall be a capital reorganization of the shares of the Company's stock (other than a combination, reclassification, exchange or subdivision of shares otherwise provided for herein), or a merger or consolidation of the Company with or into another corporation when the Company is not the surviving corporation, or the sale of all or substantially all of the Company's properties and assets to any other person, (other than a Merger) then, as a part of such reorganization, merger, consolidation or sale, lawful provision shall be made so that the Warrantholder shall thereafter be entitled to receive upon exercise of its rights to purchase Preferred Stock, the number of shares of Preferred Stock or other securities of the successor corporation resulting from such merger or consolidation, to which a holder of the Preferred Stock deliverable upon exercise of the right to purchase Preferred Stock hereunder would have been entitled in such capital reorganization, merger, consolidation or sale if the right to purchase such Preferred Stock hereunder had been exercised immediately prior to such capital reorganization, merger, consolidation or sale. In any such case, appropriate adjustment (as determined in good faith by the Company's Board of Directors) shall be made in the application of the provisions of this Warrant Agreement with respect to the rights and interest of the Warrantholder after the reorganization, merger, consolidation or sale to the end that the provisions of this Warrant Agreement (including adjustments of the Exercise Price and number of shares of Preferred Stock purchasable pursuant to the terms and conditions of this Warrant Agreement) shall be applicable after that event, as near as reasonably may be, in relation to any shares deliverable after that event upon the exercise of the Warrantholder's rights to purchase Preferred Stock pursuant to this Warrant Agreement.

(b) Reclassification of Shares. If the Company at any time shall, by combination, reclassification, exchange or subdivision of securities or otherwise, change any of the securities as to which purchase rights under this Warrant Agreement exist into the same or a different number of securities of any other class or classes, this Warrant Agreement shall thereafter represent the right to acquire such number and kind of securities as would have been issuable as the result of such change with respect to the securities which were subject to the purchase rights

4.


under this Warrant Agreement immediately prior to such combination, reclassification, exchange, subdivision or other change.

(c) Subdivision or Combination of Shares. If the Company at any time shall combine or subdivide its Preferred Stock, the Exercise Price shall be proportionately decreased in the case of a subdivision, or proportionately increased in the case of a combination.

(d) Right to Purchase Additional Stock. If, for any reason, the total Warrantholder's cost of equipment leased pursuant to the Leases should exceed $500,000.00, Warrantholder shall have the right to purchase from the Company, at the Exercise Price per share specified in Section 1 (which price may be subject to adjustment from time to time as provided for in this Section 8), an additional number of shares of Series F Preferred Stock, which number shall be determined by (i) multiplying the amount by which the Warrantholder's total equipment cost exceeds $500,000.00 by 10%, and (ii) dividing the product thereof by the Exercise Price per share referenced above.

(e) Notice of Adiustments. In the event that: (i) the Company shall declare any dividend or distribution upon its stock, whether in cash, property, stock or other securities; (ii) the Company shall offer for subscription prorata to the holders of any class of its Preferred or other convertible stock any additional shares of stock of any class or other rights; (iii) there shall be any capital reorganization, reclassification, consolidation, merger or sale of all or substantially all of the Company's assets; or (iv) there shall be any voluntary or involuntary dissolution, liquidation or winding up of the Company; then, in connection with each such event, the Company shall send to the Warrantholder:

(i) At least 20 days' prior written notice of the date on which the books of the Company shall close or a record shall be taken for such dividend, distribution, subscription rights (specifying the date on which the holders of Preferred Stock shall be entitled thereto) or for determining rights to vote in respect of such capital reorganization, reclassification, consolidation, merger or sale of all or substantially all of the Company's assets, dissolution, liquidation or winding up; and

(ii) In the case, upon any such capital reorganization, reclassification, consolidation, merger or sale of all or substantially all of the Company's assets, dissolution, liquidation or winding up, at least 20 days' prior written notice of the date when the same shall take place (and specifying the date on which the holders of Preferred Stock shall be entitled to exchange their Preferred Stock for securities or other property deliverable upon such capital reorganization, reclassification, consolidation, merger or sale of all or substantially all of the Company's assets, dissolution, liquidation or winding up).

Each such written notice shall set forth, in reasonable detail, (i) the event requiring the adjustment, (ii) the amount of the adjustment, (iii) the method by which such adjustment was calculated, (iv) the Exercise Price, and (v) the number of shares subject to purchase hereunder after giving effect to such adjustment, and shall be given by first class mail, postage prepaid, addressed to the Warrantholder, at the address as shown on the books of the Company.

5.


(f) Registration and Listing. The Company will take all such actions as may be necessary to assure that all shares of Preferred Stock issuable pursuant to this Warrant Agreement may be so issued without violation of any applicable law or regulation or any requirements of any domestic stock exchange (except for official notice of issuance, which will be immediately transmitted by the Company upon issuance) upon which shares of Preferred Stock or other shares of the same class may be listed. The Company will not take any action which will result in any adjustment of the number of shares of Preferred Stock issuable upon exercise of this Warrant Agreement if the total number of shares of Preferred Stock issuable after such action upon exercise of the Warrant Agreement then outstanding, together with the total number of shares of Preferred Stock then outstanding, would exceed the total number of shares of Preferred Stock then authorized and not reserved for any purpose other than the purpose of issue upon exercise of the Warrant Agreement.

9. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY.

(a) Reservation of Preferred Stock. The Preferred Stock issuable upon exercise of the Warrantholder's rights has been duly and validly reserved and, when issued in accordance with the provisions of this Warrant Agreement, will be validly issued, fully paid and non-assessable, and will be free of any taxes, liens, charges or encumbrances of any nature whatsoever; provided, however, that the Preferred Stock issuable pursuant to this Warrant Agreement may be subject to restrictions on transfer under state and/or Federal securities laws. The Company has made available to the Warrantholder true, correct and complete copies of its Articles of Incorporation. The issuance of certificates for shares of Preferred Stock upon exercise of the Warrant Agreement shall be-made without charge to the Warrantholder for any issuance tax in respect thereof, or other cost incurred by the Company in connection with such exercise and the related issuance of shares of Preferred Stock; provided that the Company shall not be required to pay any tax which may be payable in respect of any transfer involved and the issuance and delivery of any certificate in a name other than that of the Warrantholder. The Company will not close its books against the transfer of the Warrant Agreement or of any share of Preferred Stock issued or issuable upon exercise of the Warrant and any agreement in any manner which interferes with the timely exercise of the Warrant.

(b) Due Authority. The execution and delivery by the Company of the Leases, and this Warrant Agreement and the performance of all obligations of the Company thereunder and hereunder, including the issuance to Warrantholder of the right to acquire the shares of Preferred Stock set forth in Section 1 above (which number of shares may be from time to time adjusted pursuant to the terms of
Section 8 above) have been duly authorized by all necessary corporate action on the part of the Company, and the Leases and this Warrant Agreement are not inconsistent with the Company's Certificate of Incorporation or By-Laws, do not contravene any law or governmental rule, regulation or order applicable to it, do not and will not contravene any provision of, or constitute a default under, any indenture, mortgage, contract or other instrument to which it is a party or by which it is bound, and the Leases and this Warrant Agreement constitute legal, valid and binding agreements of the Company, enforceable in accordance with their respective terms, subject to applicable bankruptcy, insolvency and other laws affecting creditor rights and to general principles of equity.

6.


(c) Consents and Approvals. No consent or approval of, giving of notice to, registration with, or taking of any other action in respect of any state, Federal or other governmental authority or agency is required with respect to the execution, delivery and performance by the Company of its obligations under this Warrant Agreement, except for the filing of notices pursuant to Regulation D under the Securities Exchange Act of 1933, as amended, (the "1933 Act") and
Section 25102(f) of the California Corporate Securities Law, which filings will be effective by the time required thereby.

(d) Litigation. There are no actions, suits, audits, investigations or proceedings pending or, to the knowledge of the Company, threatened against or affecting the Company in any court or before any governmental commission, board or authority which, if adversely determined, will have a material adverse effect on the ability of the Company to perform its obligations under the Leases and this Warrant Agreement.

(e) Subsidiaries or Affiliates. The Company has no subsidiaries or affiliated companies and does not otherwise own or control, directly or indirectly, any other corporation, association or business entity.

(f) Issued Securities. All issued and outstanding shares of Common Stock, Preferred Stock or any other securities of the Company have been duly authorized and validly issued and are fully paid and nonassessable. All outstanding shares of Common Stock, Preferred Stock and any other securities were issued in full compliance with all Federal and state securities laws. In addition:

(i) The authorized capital of the Company consists of (a) 20,000,000 shares of Common Stock, of which 1,592,924 shares are issued and outstanding, and (b) 7,000,000 shares of Preferred Stock of which 240,000 are designated Series A Preferred Stock, 160,333 are designated Series B Preferred Stock, 850,000 are designated Series C Preferred Stock, 664,000 are designated Series D Preferred Stock, 983,000 are designated Series E Preferred Stock and 2,000,000 are designated Series F Preferred Stock. 240,000 shares of Series A Preferred Stock are issued and outstanding and convertible into 480,000 shares of Common Stock, 160,333 shares of Series B Preferred Stock are issued and outstanding and convertible into 320,666 shares of Common Stock. 850,000 shares of Series C Preferred Stock are issued and outstanding and convertible into 1,700,000 shares of Common Stock. 654,742 shares of Series D Preferred are issued and outstanding and convertible into 1,309,484 shares of Common Stock. 982,631 shares of Series E Preferred Stock are issued and outstanding and convertible into 1,965,262 shares of Common Stock. 1,948,090 shares of Series F Preferred Stock are issued and outstanding and convertible into 1,948,090 shares of Common Stock.

(ii) There are 2,610,000 shares of Common Stock authorized for issuance pursuant to the Company's Incentive Stock Plan of which 1,929,410 shares have been issued.

(iii) The Company has issued Comdiso, Inc. warrants exercisable for up to 9,217 shares of Series D Preferred Stock.

7.


(iv) The Company is planning to increase the authorized number of shares of Series F Preferred Stock by 1,000,0000 shares to a new total of 3,000,000 shares.

In addition, the Company is planning to split the outstanding shares of Series A Series B, Series C, Series D, and Series E Preferred Stock on a two-for-one basis in order to match the prior two-for-one split the Common Stock with a corresponding adjustment in the liquidation preference, dividend rate, and conversion rate of such shares. Because such shares are each presently convertible into two shares of Common Stock such action will not affect the capitalization of the Company or the rights of such shareholders.

(v) There are no other options, warrants, conversion privileges or other options or other rights presently outstanding to purchase or otherwise acquire any authorized but unissued shares of the Company's capital stock or other securities of the Company.

(vi) In accordance with the Company's Restated Articles of Incorporation, no shareholder of the Company has preemptive rights to purchase new issuances of the Company's capital stock.

(g) Financial Statements. The Company has delivered to the Warrantholder its unaudited Consolidated Balance Sheet and Consolidated Statement of Income for the period ending November 30, 1994 (the "Financial Statements"). The Financial Statements are complete and correct in all material respects and have been prepared in accordance with generally accepted accounting principles applied on a consistent basis throughout the periods indicated. The condition and operating results of the Company as of the dates and during the periods indicated therein are true and correct in all material aspects, subject as to the Consolidated Balance Sheet and Consolidated Statement of Income for the period then ending November 30, 1994 to normal year-end audit adjustments. Since November 30, 1994 there has been no change in the assets, liabilities, financial condition or operations of the Company from that reflected in the Financial Statements other than changes in the ordinary course of business which have not been, individually or in the aggregate, materially adverse.

The Company shall deliver to the Warrantholder (i) within one hundred twenty (120) days after the end of the Company's fiscal year, statements of income for such fiscal year, a consolidated balance sheet of the Company as of the end of such year and consolidated statement of the sources and application of funds for such year, which year-end financial reports shall be in reasonable detail and certified by independent public accountants of nationally recognized standing selected by the Company, and (ii) within forty-five (45) days after the end of each fiscal quarter other than the last fiscal quarter, unaudited consolidated statements of income and sources and application of funds for such quarter and a consolidated balance sheet as of the end of such quarter.

(h) Contingent and Absolute Liabilities. The Company has no material liabilities or obligations, absolute or contingent except the liabilities and obligations of the Company as set forth-in the Financial Statements and liabilities and obligations which have occurred in the ordinary course of business, and which have not been materially adverse.

8.


(i) Licenses, Patents and Copyrights. To the best of the Company's knowledge, the Company owns, possesses, has access to, or can become licensed on reasonable terms under, all patents, patent applications, trademarks, trade names, inventions, franchises, licenses, permits, computer software and copyrights necessary for the operation of its business as now conducted, with no known infringement of, or conflict with, the rights of others.

(j) Employee Contracts. To the best of the Company's knowledge, no employee of the Company is in violation of any material term of any employment contract, patent disclosure agreement or any other contract or agreement relating to the relationship of any such employee with the Company or any prior employer because of the nature of the business conducted by the Company.

(k) Insurance. The Company has in full force and effect insurance policies, with extended coverage, insuring the Company and its property and business against such losses and risks, and in such amounts, as are customary corporations engaged in a similar business and similarly [_____] and as otherwise may be required pursuant to the terms of any other contract or agreement.

(l) Other Commitments to Register Securities. Except as set forth in this Warrant Agreement, the Company is not, pursuant to the terms of any other agreement currently in existence, under any obligation to register under the 1933 Act, any of its presently outstanding securities or any of its securities which may hereafter be issued other than the shares of the outstanding Preferred Stock of the Company.

(m) Exempt Transaction. Subject to the accuracy of the Warrantholder's representations in Section 10 hereof, the issuance of the Preferred Stock upon exercise of the Warrantholder's right to purchase such Preferred Stock will constitute transactions exempt from (i) the registration requirements of Section 5 of the 1933 Act, in reliance upon Section 4(2) thereof, and (ii) the qualification requirements of the California Corporate Securities Law, in reliance upon Section 25102(f) thereof.

(n) Compliance with Rule 144. At the written request of the Warrantholder, who proposes to sell Preferred Stock issuable upon the exercise of the Warrant in compliance with Rule 144 promulgated by the Securities and Exchange Commission under the 1933 Act, the Company shall furnish to the Warrantholder, within ten days after receipt of such request, a written statement confirming the Company's compliance with the filing requirements of the Securities and Exchange Commission as set forth in such Rule, than applicable to the Company, as such Rule may be amended from time to time.

(o) Brokers' Fees. The Company has not incurred, and will not incur, directly or indirectly, any liability for brokerage or finders' fees or agents' commissions or any similar charges in connection with the Warrant Agreement or any other transaction contemplated thereby.

(p) Untrue, Misleading Statements. No representation or warranty of the Company contained in the Leases, and this Warrant Agreement or any certificate or exhibit furnished or to be furnished to Warrantholder pursuant thereto or in connection with the transactions

9.


contemplated thereby (when read together) contains any untrue statement of a material fact or omits to state a material fact necessary in order to make the statements contained therein not misleading.

10. REPRESENTATIONS AND COVENANTS OF THE WARRANTHOLDER.

This Warrant Agreement has been entered into by the Company in reliance upon the following representations and covenants of the Warrantholder, which by its execution hereof the Warrantholder hereby confirms:

(a) Investment Purpose. The right to acquire Preferred Stock or the Preferred Stock issuable upon exercise of the Warrantholder's rights contained herein will be acquired for investment and not with a view to the sale or distribution of any part thereof, and the Warrantholder has no present intention of selling or engaging in any public distribution of the same except pursuant to a registration or exemption.

(b) Private Issue. The Warrantholder understands (i) that the Preferred Stock issuable upon exercise of the Warrantholder's rights contained herein is not registered under the 1933 Act or qualified under applicable state securities laws on the ground that the issuance contemplated by this Warrant Agreement will be exempt from the registration and qualifications requirements thereof, and
(ii) that the Company's reliance on such exemption is predicated on the representations set forth in this Section 10.

(c) Disposition of Warrantholder's Rights. In no event will the Warrantholder make disposition of any of its rights to acquire Preferred Stock or Preferred Stock issuable upon exercise of such rights unless and until (i) it shall have notified the Company of the proposed disposition, and (ii) if requested by the Company, it shall have furnished the Company with an opinion of counsel (which counsel may either be inside or outside counsel to the Warrantholder) satisfactory to the Company and its counsel to the effect that (A) appropriate action necessary for compliance with the 1933 Act has been taken, or (B) an exemption from the registration requirements of the 1933 Act is available. Notwithstanding the foregoing, the restrictions imposed upon the transferability of any of its rights to acquire Preferred Stock or Preferred Stock issuable on the exercise of such rights do not apply to transfers from the beneficial owner of any of the aforementioned securities to its nominee or from such nominee to its beneficial owner, and shall terminate as to any particular share of Preferred Stock when (1) such security shall have been effectively registered under the 1933 Act and sold by the holder thereof in accordance with such registration or (2) such security shall have been sold without registration in compliance with Rule 144 under the 1933 Act, or (3) a letter shall have been issued to the Warrantholder at its request by the staff of the Securities and Exchange Commission or a ruling shall have been issued to the Warrantholder at its request by such Commission stating that no action shall be recommended by such staff or taken by such Commission, as the case may be, if such security is transferred without registration under the 1933 Act in accordance with the conditions set forth in such letter or ruling and such letter or ruling specifies that no subsequent restrictions on transfer are required. Whenever the restrictions imposed hereunder shall terminate, as hereinabove provided, the Warrantholder or holder of a share of Preferred Stock then outstanding as to which such restrictions have terminated shall be entitled to receive from the Company, without expense

10.


to such holder, one or more new certificates for the Warrant or for such shares of Preferred Stock not bearing any restrictive legend.

(d) Financial Risk. The Warrantholder has such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of its investment and has the ability to bear the economic risks of its investment.

(e) Risk of No Registration. The Warrantholder understands that if the Company does not register with the Securities and Exchange Commission pursuant to Section 12 of the 1933 Act, or file reports pursuant to Section 15(d), of the Securities Exchange Act of 1934 (the "1934 Act"), or if a registration statement covering the securities under the 1933 Act is not in effect when it desires to sell (i) the rights to purchase Preferred Stock pursuant to this Warrant Agreement, or (ii) the Preferred Stock issuable upon exercise of the right to purchase, it may be required to hold such securities for an indefinite period. The Warrantholder also understands that any sale of its rights of the Warrantholder to purchase Preferred Stock or Preferred Stock which might be made by it in reliance upon Rule 144 under the 1933 Act may be made only in accordance with the terms and conditions of that Rule.

11. TRANSFERS.

Subject to the terms and conditions contained in Section 10 hereof, this Warrant Agreement and all rights hereunder are transferable in whole or in part by the Warrantholder and any successor transferee, provided, however, that in no event shall the number of transfers of the rights and interests in all of the Warrants exceed three (3) transfers. The transfer shall be recorded on the books of the Company upon receipt by the Company of a notice of transfer in the form attached hereto as Exhibit II (the "Transfer Notice"), at its principal offices and the payment to the Company of all transfer taxes and other governmental charges imposed on such transfer.

12. MISCELLANEOUS.

(a) Effective Date. The provisions of this Warrant Agreement shall be construed and shall be given effect in all respects as if it had been executed and delivered by the Company on the date hereof. This Warrant Agreement shall be binding upon any successors or assigns of the Company.

(b) Attorneys' Fees. In any litigation, arbitration or court proceeding between the Company and the Warrantholder relating hereto, the prevailing party shall be entitled to attorneys' fees and expenses and all costs of proceedings incurred in enforcing this Warrant Agreement.

(c) Governing Law. This Warrant Agreement shall be governed by and construed for all purposes under and in accordance with the laws of the State of California.

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

11.


(e) Titles and Subtitles. The titles of the paragraphs and subparagraphs of this Warrant Agreement are for convenience and are not to be considered in construing this Agreement.

(f) Notices. Any notice required or permitted hereunder shall be given in writing and shall be deemed effectively given upon personal delivery or upon deposit in the United States mail, by registered or certified mail, addressed (i) to the Warrantholder at 6111 North River Road, Rosemont, Illinois 60018, attention: James Labe, President, Venture Leasing Division, cc: Legal Department, and (ii) to the Company at 4040 Campbell Drive, Menlo Park, California 94025 or at such other address as any such party may subsequently designate by written notice to the other party.

(g) Specific Performance. The Company recognizes and agrees that the Warrantholder will not have an adequate remedy if the Company fails to comply with this Agreement and that damages will not be readily ascertainable, and the Company expressly agrees that, in the event of such failure, it shall not oppose an application by the Warrantholder or any other person entitled to the benefit of this Agreement requiring specific performance of any or all provisions hereof or enjoining the Company from continuing to commit any such breach of this Agreement.

(h) Survival. The representations, warranties, covenants and conditions of the respective parties contained herein or made pursuant to this Warrant Agreement shall survive the execution and delivery of this Warrant Agreement.

(i) Severability. In the event any one or more of the provisions of this Warrant Agreement shall for any reason be held invalid, illegal or unenforceable, the remaining provisions of this Warrant Agreement shall be unimpaired, and the invalid, illegal or unenforceable provision shall be replaced by a mutually acceptable valid, legal and enforceable provision, which comes closest to the intention of the parties underlying the invalid, illegal or unenforceable provision.

(j) Amendments. Any provision of this Warrant Agreement may be amended by a written instrument signed by the Company and by the Warrantholder.

(k) Additional Documents. The Company, upon execution of this Warrant Agreement, shall provide the Warrantholder with certified resolutions with respect to the representations, warranties and covenants set forth in subparagraphs (a) through (f) and subparagraphs (l), (m) and (o) of Section 9 above and shall also supply such other documents as the Warrantholder may from time to time reasonably request.

12.


IN WITNESS WHEREOF, the parties hereto have caused this Warrant Agreement to be executed by its officers thereunto duly authorized.

Company:

OMNICELL TECHNOLOGIES, INC.

Dated February 16, 1995             By: /s/ Randall A. Lipps
     ---------------------------       -------------------------------------
                                    Title:  Chairman
                                          ----------------------------------

                                    Warrantholder:

                                    COMDISCO, INC.

                                    By: /s/ James P. Labe
                                       -------------------------------------
                                    Title:  President
                                          ----------------------------------
                                      13.


EXHIBIT I

NOTICE OF EXERCISE

To:______________________

(1) The undersigned Warrantholder hereby elects to purchase _____ shares of the Preferred Stock of OMNICELL TECHNOLOGIES, INC., pursuant to the terms of the Warrant Agreement dated the 1st day of September 1993 (the "Warrant Agreement") between OMNICELL TECHNOLOGIES, INC., and the Warrantholder, and tenders herewith payment of the purchase price for such shares in full, together with all applicable transfer taxes, if any.

(2) In exercising its rights to purchase the Preferred Stock of OMNICELL TECHNOLOGIES, INC., the undersigned hereby confirms and acknowledges the investment representations and warranties made in Section 10 of the Warrant Agreement.

(3) Please issue a certificate or certificates representing said shares of Preferred Stock in the name of the undersigned or in such other name as is specified below.


(Name)


(Address)

Warrantholder: COMDISCO, INC.

By:________________________________

Title:_____________________________

Date:______________________________

14.


ACKNOWLEDGEMENT OF EXERCISE

The undersigned ____________________________, hereby acknowledge receipt of the "Notice of Exercise" from COMDISCO, INC., to purchase _____ shares of the Preferred Stock of OMNICELL TECHNOLOGIES, INC., pursuant to the terms of the Warrant Agreement, and further acknowledges that _______ shares remain subject to purchase under the terms of the Warrant Agreement.

Company:

By:________________________________

Title:_____________________________

Date:______________________________

15.


EXHIBIT II

TRANSFER NOTICE

(To transfer or assign the foregoing Warrant Agreement execute this form and supply required information. Do not use this form to purchase shares.)

FOR VALUE RECEIVED, the foregoing Warrant Agreement and all rights evidenced thereby are here by transferred and assigned to ______________________


(Please Print)

whose address is _______________________________________________________________


Dated __________________________________

Holder's Signature _____________________

Holder's Address _______________________


Signature Guaranteed: __________________

NOTE: The signature to this Transfer Notice must correspond with the name as it appears on the face of the Warrant Agreement, without alteration or enlargement or any Change whatever. Officers of corporations and those acting in a fiduciary or other representative capacity should file proper evidence of authority to assign the foregoing Warrant Agreement.

16.


EXHIBIT 4.5

THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AS AMENDED, OR ANY STATE SECURITIES LAWS. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED, OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL (WHICH MAY BE COMPANY COUNSEL) REASONABLY SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933 OR APPLICABLE STATE SECURITIES LAWS.

WARRANT AGREEMENT

To Purchase Shares of the Series G Preferred Stock of

OmniCell Technologies, Inc.

Dated as of July 7, 1995 (the "Effective Date")

WHEREAS, Omnicell Technologies, Inc., a California corporation (the "Company") has entered into a Receivables Loan and Security Agreement dated as of July 7, 1995, (the "Loan Agreement") and a Promissory Note dated July 7, 1995 (the "Note") with Comdicso, Inc., a Delaware corporation (the "Warrantholder"); and

WHEREAS, the Company desires to grant to Warrantholder, in consideration for such Loan Agreement and Promissory Note, the right to purchase shares of its Series Preferred Stock;

NOW, THEREFORE, in consideration of the Warrantholder executing and delivering such Loan Agreement and Promissory Note and in consideration of mutual covenants and agreements contained herein, the Company and Warrantholder agree as follows:

1. GRANT OF THE RIGHT TO PURCHASE PREFERRED STOCK.

The Company hereby grants to the Warrantholder, and the Warrantholder is entitled, upon the terms and subject to the conditions hereinafter set forth, to subscribe to and purchase from the Company, 11,102 fully paid and non-assessable shares of the Company's Series G Preferred Stock ("Preferred Stock") at a purchase price of $6.15 per share (the "Exercise Price"). The number and purchase price of such shares are subject to adjustment as provided in Section 8 hereof.

2. TERM OF THE WARRANT AGREEMENT.

Except as otherwise provided for herein, the term of this Warrant Agreement and the right to purchase Series G Preferred Stock as granted herein shall commence on the Effective Date and shall be exercisable for a period of
(i) ten (10) years or (ii) five (5) years from the effective date of the Company's initial public offering, whichever is longer.

3. EXERCISE OF THE PURCHASE RIGHTS.

The purchase rights set forth in this Warrant Agreement are exercisable by the Warrantholder, in whole or in part, at any time, or from time to time, prior to the expiration of the term set forth in Section 2 above, by tendering to the Company at its principal office a notice of exercise in the form attached hereto as Exhibit I (the "Notice of Exercise"), duly completed and executed. Promptly upon receipt of the Notice of Exercise and the payment of the purchase price in accordance with the terms set forth below, and in no event later than twenty-one (21) days thereafter, the Company shall issue to the Warrantholder a certificate for the number of shares of Preferred Stock purchased and shall execute the Notice of Exercise indicating the number of shares which remain subject to future purchases, if any and an acknowledgment of exercise duly completed and executed in the form attached hereto as Exhibit III.

1

The Exercise Price may be paid at the Warrantholder's election either (i) by cash or check, (ii) by cancellation by Warrantholder or indebtedness of the Company under the Loan Agreement and Note to Warrantholder, (iii) by surrender of Warrants ("Net Issuance") as determined below, or (iv) by a combination of
(i), (ii), and (iii). If the Warrantholder elects the Net Issuance method, the Company will issue Preferred Stock in accordance with the following formula:

X = Y(A-B)
A

Where: X = the number of shares of Preferred Stock to be issued to the Warrantholder.

Y = the number of shares of Preferred Stock requested to be exercised under this Warrant Agreement.

A = the fair market value of one (1) share of Preferred Stock (at the date of calculation).

B = the Exercise Price (as adjusted to the date of calculation).

For purposes of the above calculation, current fair market value of Preferred Stock shall mean with respect to each share of Preferred Stock:

(i) if the exercise is in connection with an initial public offering, and if the Company's Registration Statement relating to such public offering has been declared effective by the SEC, then the fair market value per share shall be the product of (x) the "Initial Price to Public" specified in the final prospectus with respect to the offering and (y) the number of shares of Common Stock into which each share of Preferred Stock is convertible at the time of such exercise:

(ii) If this Warrant is exercised after, and not in connection with the Company's initial public offering, and:

(a) if traded on a securities exchange, the fair market value shall be deemed to be the product of (x) the average of the closing prices over a twenty-one (21) day period ending three days before the day the current fair market value of the securities is being determined and (y) the number of shares of Common Stock into which each share of Preferred Stock is convertible at the time; or

(b) if actively traded over-the-counter, the fair market value shall be deemed to be the produce of (x) the average of the closing bid and asked prices quoted on the NASDAQ system (or similar system) over the twenty-one (21) day period ending three days before the day the current fair market value of the securities is being determined and (y) the number of shares of Common Stock into which each share of Preferred Stock is convertible at the time of such exercise;

(iii) if at any time the Common Stock is not listed on any securities exchange or quoted in the NASDAQ System or the over-the-counter market, the current fair market value of Preferred Stock shall be the product of (x) the highest price per share which the Company could obtain from a willing buyer (not a current employee or director) for shares of Common Stock sold by the Company, from authorized but unissued shares, as determined in good faith by its Board of Directors, and (y) the number of shares of Common Stock into which each share of Preferred Stock is convertible at the time of such exercise, unless the Company shall become subject to a merger, acquisition or other consolidation pursuant to which the Company is not the surviving party, in which case the fair market value of Common Stock shall be deemed to be the value received by the holders of the Company's Preferred Stock on a common equivalent basis pursuant to such merger or acquisition.

Upon partial exercise by any method, the Company shall promptly issue an amended Warrant Agreement representing the remaining number of shares purchasable hereunder. All other terms and conditions of such

2

amended Warrant Agreement shall be identical to those contained herein, including, but not limited to the Effective Date hereof.

4. RESERVATION OF SHARES.

(a) Authorization and Reservation of Shares. During the term of this Warrant Agreement, the Company will at all times have authorized and reserved a sufficient number of shares of its Preferred Stock to provide for the exercise of the rights to purchase Preferred Stock as provided for herein.

(b) Registration or Listing. If any shares of Preferred Stock required to be reserved hereunder require registration with or approval of any governmental authority under any Federal or State law (other than any registration under the 1933 Act, as then in effect, or any similar Federal statute then enforced, or any state securities law, required by reason of any transfer involved in such conversion), or listing on any domestic securities exchange, before such shares may be issued upon conversion, the Company will, at its expense and as expeditiously as possible, use its best efforts to cause such shares to be duly registered, listed or approved for listing on such domestic securities exchange, as the case may be.

5. NO FRACTIONAL SHARES OR SCRIP.

No fractional shares or scrip representing fractional shares shall be issued upon the exercise of the Warrant, but in lieu of such fractional shares the Company shall make a cash payment therefor upon the basis of the Exercise Price then in effect.

6. NO RIGHTS AS SHAREHOLDER.

This Warrant Agreement does not entitle the Warrantholder to any voting rights or other rights as a shareholder of the Company prior to the exercise of the Warrant.

7. WARRANTHOLDER REGISTRY.

The Company shall maintain a registry showing the name and address of the registered holder of this Warrant Agreement.

8. ADJUSTMENT RIGHTS.

The purchase price per share and the number of shares of Preferred Stock purchasable hereunder are subject to adjustment, as follows:

(a) Merger and Sale of Assets. If at any time there shall be a capital reorganization of the shares of the Company's stock (other than a combination, reclassification, exchange or subdivision of shares otherwise provided for herein), or a merger or consolidation of the Company with or into another corporation when the Company is not the surviving corporation, or the sale of all or substantially all of the Company's properties and assets to any other person (hereinafter referred to as a "Merger Event"), then, as a part of such Merger Event, lawful provision shall be made so that the Warrantholder shall thereafter be entitled to receive, upon exercise of the Warrant, the number of shares of preferred stock or other securities of the successor corporation resulting from such Merger Event, equivalent in value to that which would have been issuable if Warrantholder had exercised this Warrant immediately prior to the Merger Event. In any such case, appropriate adjustment (as determined in good faith by the Company's Board of Directors) shall be made in the application of the provisions of this Warrant Agreement with respect to the rights and interest of the Warrantholder after the Merger Event to the end that the provisions of this Warrant Agreement (including adjustments of the Exercise Price and number of shares of Preferred Stock purchasable) shall be applicable to the greatest extent possible.

(b) Reclassification of Shares. If the Company at any time shall, by combination, reclassification, exchange or subdivision of securities or otherwise, change any of the securities as to which purchase rights under this Warrant Agreement exist into the same or a different number of securities of any other class or classes, this Warrant Agreement shall thereafter represent the right to acquire such number and kind of securities as would have

3

been issuable as the result of such change with respect to the securities which were subject to the purchase rights under this Warrant Agreement immediately prior to such combination, reclassification, exchange, subdivision or other change.

(c) Subdivision or Combination of Shares. If the Company at any time shall combine or subdivide its Preferred Stock, the Exercise Price shall be proportionately decreased in the case of a subdivision, or proportionately increased in the case of a combination.

(d) Stock Dividends. If the Company at any time shall pay a dividend payable in, or make any other distribution (except any distribution specifically provided for in the foregoing subsections (a) or (b)) of the Company's stock, then the Exercise Price shall be adjusted, from and after the record date of such dividend or distribution, to that price determined by multiplying the Exercise Price in effect immediately prior to such record date by a fraction (i) the numerator of which shall be the total number of all shares of the Company's stock outstanding immediately prior to such dividend or distribution, and (ii) the denominator of which shall be the total number of all shares of the Company's stock outstanding immediately after such dividend or distribution. The Warrantholder shall thereafter be entitled to purchase, at the Exercise Price resulting from such adjustment, the number of shares of Preferred Stock (calculated to the nearest whole share) obtained by multiplying the Exercise Price in effect immediately prior to such adjustment by the number of shares of Preferred Stock issuable upon the exercise hereof immediately prior to such adjustment and dividing the product thereof by the Exercise Price resulting from such adjustment.

(e) Right to Purchase Additional Stock. If the principal under the Note is not repaid in full on or before _______________________, then on the first day of each month commencing on _________________, the Warrantholder shall have the right to purchase from the Company, at the Exercise Price per share specified in Section 1 (which price may be subject to adjustment from time to time as provided for in this Section 8), an additional number of shares of Preferred Stock, which number shall be determined by (i) multiplying the Principal Amount of the Note outstanding on each such date by one percent (1%), and (ii) dividing the product thereof by the Exercise Price per share referenced above. The Warrantholder shall be entitled to receive additional shares subject to Warrant pursuant to the above provision until such time as the principal is repaid in full. The above grant of rights to purchase additional shares of Preferred Stock does not, and is not intended to, replace or limit any other rights or remedies the Warrantholder, Lender or their affiliates may have with respect to the Company, under the Loan Agreement, the Note or otherwise.

(f) Antidilution Rights. Additional antidilution rights applicable to the Preferred Stock purchasable hereunder are as set forth in the Company's Articles of Incorporation, as amended through the Effective Date, a true and complete copy of which is attached hereto as Exhibit IV (the "Charter"). The Company shall promptly provide the Warrantholder with any restatement, amendment, modification or waiver of the Charter. The Company shall provide Warrantholder with prior written notice of any issuance of its stock or other equity security to occur after the Effective Date of this Warrant, which notice shall include (a) the price at which such stock or security is to be sold, (b) the number of shares to be issued, and (c) such other information as necessary for Warrantholder to determine if a dilutive event has occurred.

(g) Notice of Adjustments. If: (i) the Company shall declare any dividend or distribution upon its stock, whether in cash, property, stock or other securities; (ii) the Company shall offer for subscription prorata to the holders of any class of its Preferred or other convertible stock any additional shares of stock of any class or other rights; (iii) there shall be any Merger Event; (iv) there shall be a public offering; or (v) there shall be any voluntary or involuntary dissolution, liquidation or winding up of the Company; then, in connection with each such event, the Company shall send to the Warrantholder: (A) at least twenty (20) days' prior written notice of the date on which the books of the Company shall close or a record shall be taken for such dividend, distribution, subscription rights (specifying the date on which the holders of Preferred Stock shall be entitled thereto) or for determining rights to vote in respect of such Merger Event, dissolution, liquidation or winding up; (B) in the case of any such Merger Event, dissolution, liquidation or winding up, at least twenty (20) days' prior written notice of the date when the same shall take place (and specifying the date on which the holders of Preferred Stock shall be entitled to exchange their Preferred Stock for securities or other property deliverable upon such Merger Event, dissolution, liquidation or winding up); and (C) in the case of a public offering, the Company shall give Warrantholder at least twenty (20) days written notice prior to the effective date thereof.

4

Each such written notice shall set forth, in reasonable detail, (i) the event requiring the adjustment, (ii) the amount of the adjustment, (iii) the method by which such adjustment was calculated, (iv) the Exercise Price, and
(v) the number of shares subject to purchase hereunder after giving effect to such adjustment, and shall be given by first class mail, postage prepaid, addressed to the Warrantholder, at the address as shown on the books of the Company.

(h) Timely Notice. Failure to timely provide such notice required by subsection (g) above shall entitle Warrantholder to retain the benefit of the applicable notice period notwithstanding anything to the contrary contained in any insufficient notice received by Warrantholder. The notice period shall begin on the date Warrantholder actually receives a written notice containing all the information specified above.

9. REPRESENTAIONTS, WARRANTIES AND COVENANT S OF THE COMPANY.

(a) Reservation of Preferred Stock. The Preferred Stock issuable upon exercise of the Warrantholder's rights has been duly and validly reserved and, when issued in accordance with the provisions of this Warrant Agreement, will be validly issued, fully paid and non-assessable, and will be free of any taxes, liens, charges or encumbrances of any nature whatsoever; provided, however, that the Preferred Stock issuable pursuant to this Warrant Agreement may be subject to restrictions on transfer under state and/or Federal securities laws. The Company has made available to the Warrantholder true, correct and complete copies of its Charter and Bylaws, as amended, and minutes of the Board of Directors (including all committees of the Board of Directors, if any) meeting of April 4, 1995. The issuance of certificates for shares of Preferred Stock upon exercise of the Warrant Agreement shall be made without charge to the Warrantholder for any issuance tax in respect thereof, or other cost incurred by the Company in connection with such exercise and the related issuance of shares of Preferred Stock. The Company shall not be required to pay any tax which may be payable in respect of any transfer involved and the issuance and delivery of any certificate in a name other than that of the Warrantholder.

(b) Due Authority. The execution and delivery by the Company of this Warrant Agreement and the performance of all obligations of the Company hereunder, including the issuance to Warrantholder of the right to acquire the shares of Preferred Stock, have been duly authorized by all necessary corporate action on the part of the Company, and the Loan Agreement, Note and this Warrant Agreement are not inconsistent with the Company's Charter or Bylaws, do not contravene any law or governmental rule, regulation or order applicable to it, do not and will not contravene any provision of, or constitute a default under, any indenture, mortgage, contract or other instrument to which it is a party or by which it is bound, and the Loan Agreement, Note and this Warrant Agreement constitute legal, valid and binding agreements of the Company, enforceable in accordance with their respective terms.

(c) Consents and Approvals. No consent or approval of, giving of notice to, registration with, or taking of any other action in respect of any state, Federal or other governmental authority or agency is required with respect to the execution, delivery and performance by the Company of its obligations under this Warrant Agreement, except for the filing of notices pursuant to Regulation D under the 1933 Act, if any, and applicable state securities law, which filings will be effective by the time required thereby.

(d) Issued Securities. All issued and outstanding shares of Common Stock, Preferred Stock or any other securities of the Company have been duly authorized and validly issued and are fully paid and nonassessable. All outstanding shares of Common Stock, Preferred Stock and any other securities were issued in full compliance with all Federal and state securities laws. In addition:

(i) The authorized capital of the Company consists of (A) 20,000,000 shares of Common Stock, of which 1,602,557 shares are issued and outstanding, and (B) 7,000,000 shares of Preferred stock, of which 4,933,113 shares are issued and outstanding, such Preferred stock consisting of (1) 240,000 shares of Series A of which 240,000 are issued and outstanding; (2) 160,333 shares of Series B of which 160,333 are issued and outstanding; (3) 850,000 shares of Series C of which 850,000 are issued and outstanding; (4) 664,000 shares of Series D of which 654,742 are issued and outstanding; (5) 983,000 shares of series E of which 982,631 are issued and outstanding; (6) 2,000,000 shares of Series F of which 1,948,090 are outstanding; and (7) 1,000,000 shares of Series G of which 97,317 are issued and outstanding, and are convertible into 5,872,734 shares of Common Stock.

5

(ii) The Company has reserved 2,610,000 shares of Common Stock for issuance under its Incentive Stock Option Plan, under which 2,370,987 options are outstanding at an average price of $.50-.75 per share. There are no other options, warrants, conversion privileges or other rights presently outstanding to purchase or otherwise acquire any authorized but unissued shares of the Company's capital stock or other securities of the Company.

(iii) In accordance with the Company's Charter, no shareholder of the Company has preemptive rights to purchase new issuances of the Company's capital stock.

(e) Insurance. The Company has in full force and effect insurance policies, with extended coverage, insuring the Company and its property and business against such losses and risks, and in such amounts, as are customary for corporations engaged in a similar business and similarly situated and as otherwise may be required pursuant to the terms of any other contract or agreement.

(f) Other Commitments to Register Securities. Except as set forth in this Warrant Agreement, the Company is not, pursuant to the terms of any other agreement currently in existence, under any obligation to register under the 1933 Act any of its presently outstanding securities or any of its securities which may hereafter be issued.

(g) Exempt Transaction. Subject to the accuracy of the Warrantholder's representations in Section 10 hereof, the issuance of the Preferred Stock upon exercise of this Warrant will constitute a transaction exempt from (i) the registration requirements of Section 5 of the 1933 Act, in reliance upon Section 4(2) thereof, and (ii) the qualification requirements of the applicable state securities laws.

(h) Compliance with Rule 144. At the written request of the Warrantholder, who proposes to sell Preferred Stock issuable upon the exercise of the Warrant in compliance with Rule 144 promulgated by the Securities and Exchange Commission, the Company shall furnish to the Warrantholder, within ten days after receipt of such request, a written statement confirming the Company's compliance with the filing requirements of the Securities and Exchange Commission as set forth in such Rule, as such Rule may be amended from time to time.

10. REPRESENTATIONS AND COVENANT SOF THE WARRANTHOLDER.

This Warrant Agreement has been entered into by the Company in reliance upon the following representations and covenants of the Warrantholder:

(a) Investment Purpose. The right to acquire Preferred Stock or the Preferred Stock issuable upon exercise of the Warrantholder's rights contained herein will be acquired for investment and not with a view to the sale or distribution of any part thereof, and the Warrantholder has no present intention of selling or engaging in any public distribution of the same except pursuant to a registration or exemption.

(b) Private Issue. The Warrantholder understands (i) that the Preferred Stock issuable upon exercise of this Warrant is not registered under the 1933 Act or qualified under applicable state securities laws on the ground that the issuance contemplated by this Warrant Agreement will be exempt from the registration and qualifications requirements thereof, and (ii) that the Company's reliance on such exemption is predicated on the representations set forth in this Section 10.

(c) Disposition of Warrantholder's Rights. In no event will the Warrantholder make a disposition of any of its rights to acquire Preferred Stock or Preferred Stock issuable upon exercise of such rights unless and until (i) it shall have notified the Company of the proposed disposition, and (ii) if requested by the Company, it shall have furnished the Company with an opinion of counsel (which counsel may either be inside of outside counsel to the Warrantholder) satisfactory to the Company and its counsel to the effect that (A) appropriate action necessary for compliance with the 1933 Act has been taken, or (B) an exemption from the registration requirements of the 1933 Act is available. Notwithstanding the foregoing, the restrictions imposed upon the transferability of any of its rights to acquire Preferred Stock or Preferred Stock issuable on the exercise of such rights do not apply to transfers from the beneficial owner of any of the aforementioned securities to its nominee or from such nominee to its beneficial owner, and shall terminate as to any particular share of Preferred Stock when (1) such security shall have been effectively registered under the 1933 Act and sold by the holder thereof in accordance with such registration or (2) such security shall have been sold without registration in compliance with Rule 144 under the 1933 Act, or (3) a

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letter shall have been issued to the Warrantholder at its request by the staff of the Securities and Exchange Commission or a ruling shall have been issued to the Warrantholder at its request by such Commission stating that no action shall be recommended by such staff or taken by such Commission, as the case may be, if such security is transferred without registration under the 1933 Act in accordance with the conditions set forth in such letter or ruling and such letter or ruling specifies that no subsequent restrictions on transfer are required. Whenever the restrictions imposed hereunder shall terminate, as hereinabove provided, the Warrantholder or holder of a share of Preferred Stock then outstnding as to which such restrictions have terminated shall be entitled to receive from the Company, without expense to such holder, one or more new certificates for the Warrant or for such shares of Preferred Stock not bearing any restrictive legend.

(d) Financial Risk. The Warrantholder has such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of its investment, and has the ability to bear the economic risks of its investment.

(e) Risk of No Registration. The Warrantholder understands that if the Company does not register with the Securities and Exchange Commission pursuant to Section 12 of the 1933 Act, or file reports pursuant to Section
15(d), of the Securities Exchange Act of 1934 (the "1934 Act"), or if a registration statement covering the securities under the 1933 Act is not in effect when it desires to sell (i) the rights to purchase Preferred Stock pursuant to this Warrant Agreement, or (ii) the Preferred Stock issueable upon exercise of the right to purchase, it may be required to hold such securities for an indefinite period. The Warrantholder also understands that any sale of its rights of the Warrantholder to purchase Preferred Stock or Preferred Stock which might be made by it in reliance upon Rule 144 under the 1933 Act may be made only in accordance with the terms and conditions of that Rule.

(f) Accredited Investor. Warrantholder is an "accredited investor" within the meaning of the Securities and Exchange Rule 501 of Regulation D, as presently in effect.

11. TRANSFERS. Subject to the terms and conditions contained in Section 10 hereof, this Warrant Agreement and all rights hereunder are transferable in whole or in part by the Warrantholder and any successor transferee, provided, however, in no event shall the number of transfers of the rights and interests in all of the Warrants exceed three (3) transfers. The transfer shall be recorded on the books of the Company upon receipt by the Company of a notice of transfer in the form attached hereto as Exhibit II (the "Transfer Notice"), at its principal offices and the payment to the Company of all transfer taxes and other governmental charges imposed on such transfer.

12. MISCELLANEOUS.

(a) Effective Date. The provisions of this Warrant Agreement shall be construed and shall be given effect in all respects as if it had been executed and delivered by the Company on the date hereof. This Warrant Agreement shall be binding upon any successors or assigns of the Company.

(b) Attorney's Fees. In any litigation, arbitration or court proceeding between the Company and the Warrantholder relating hereto, the prevailing party shall be entitled to attorneys' fees and expenses and all costs of proceedings incurred in enforcing this Warrant Agreement.

(c) Governing Law. This Warrant Agreement shall be governed by and construed for all purposes under and in accordance with the laws of the State of Illinois.

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

(e) Notices. Any notice required or permitted hereunder shall be given in writing and shall be deemed effectively given upon personal delivery, facsimile transmission (provided that the original is sent by personal delivery or mail as hereinafter set forth) or seven (7) days after deposit in the United States mail, by registered or certified mail, addressed (i) to the Warrantholder at Comdisco Ventures, 6111 North River Road, Rosemont, Illinois 6001_, cc:
Legal Department, attention: General Counsel (and/or, if by facsimile, (708) 510-5465 and (708) 51_-5088) and (ii) to the Company at 1101 East Meadow Drive, Palo Alto, CA 94300, (and/or if by facsimile, (415)

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843-6294) or at such other address as any such party may subsequently designate by written notice to the other party.

(f) Remedies. In the event of any default hereunder, the non-defaulting party may proceed to protect and enforce its rights either by suit in equity and/or by action at law, including but not limited to an action for damages as a result of any such default, and/or an action for specific performance for any default where Warrantholder will not have an adequate remedy at law and where damages will not be readily ascertainable. The Company expressly agrees that it shall not oppose an application by the Warrantholder or any other person entitled to the benefit of this Agreement requiring specific performance of any or all provisions hereof or enjoining the Company from continuing to commit any such breach of this Agreement.

(g) No Impairment of Rights. The Company will not, by amendment of its Charter or through any other means, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions as may be necessary or appropriate in order to protect the rights of the Warrantholder against impairment.

(h) Survival. The representations, warranties, covenants and conditions of the respective parties contained herein or made pursuant to this Warrant Agreement shall survive the execution and delivery of this Warrant Agreement.

(i) Severability. In the event any one or more of the provisions of this Warrant Agreement shall for any reason be held invalid, illegal or unenforceable, the remaining provisions of this Warrant Agreement shall be unimpaired, and the invalid, illegal or unenforceable provision shall be replaced by a mutually acceptable valid, legal and enforceable provision, which comes closest to the intention of the parties underlying the invalid, illegal or unenforceable provision.

(j) Amendments. Any provision of this Warrant Agreement may be amended by a written instrument signed by the Company and by the Warrantholder.

(k) Additional Documents. The Company, upon execution of this Warrant Agreement, shall provide the Warrantholder with certified resolutions with respect to the representations, warranties and covenants set forth in subparagraphs (a) through (d), (f) and (g) of Section 9 above. The Company shall also supply such other documents as the Warrantholder may from time to time reasonably request.

IN WITNESS WHEREOF, the parties hereto have caused this Warrant Agreement to be executed by its officers thereunto duly authorized as of the Effective Date.

Company: OMNICELL TECHNOLGOIES, INC.

By: /s/ Chris Gardener
    ------------------------------------
Title: Corporate Controller
       ---------------------------------
Warrantholder:  COMDISCO, INC.

By: /s/ James P. Labe
    -------------------------------------
Title: President
       ----------------------------------

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EXHIBIT I

NOTICE OF EXERCISE

To: ______________________________

(1) The undersigned Warrantholder hereby elects to purchase ____ shares of the Series G Preferred Stock of ___________________, pursuant to the terms of the Warrant Agreement dated the ___ day of _______________, 19__ (the "Warrant Agreement") between ______________________________ and the Warrantholder, and tenders herewith payment of the purchase price for such shares in full, together with all applicable transfer taxes, if any.

(2) In exercising its rights to purchase the Series G Preferred Stock of ____________________________________, the undersigned hereby confirms and acknowledges the investment representations and warranties made in
Section 10 of the Warrant Agreement.

(3) Please issue a certificate or certificates representing said shares of Series G Preferred Stock in the name of the undersigned or in such other name as is specified below.


(Name)
(Address)

Warrantholder: COMDISCO, INC.

By: ____________________________

Title: ___________________________

Date: ___________________________

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EXHIBIT II

TRANSFER NOTICE

(To transfer or assign the foregoing Warrant Agreement execute this form and supply required information. Do not use this form to purchase shares.)

FOR VALUE RECEIVED, the foregoing Warrant Agreement and all rights evidenced thereby are hereby transferred and assigned to


(Please Print)

whose address is ___________________________________________


Dated _____________________________________________

Holder's Signature ___________________________________

Holder's Address ____________________________________


Signature Guaranteed: ________________________________________

NOTE: The signature to this Transfer Notice must correspond with the name as it appears on the face of the Warrant Agreement, without alteration or enlargement or any change whatever. Officers of corporations and those acting in a fiduciary or other representative capacity should file proper evidence of authority to assign the foregoing Warrant Agreement.

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EXHIBIT III

ACKNOWLEGEMENT OF EXERCISE

The undersigned _____________________________, hereby acknowledge receipt of the "Notice of Exercise" from Comdicso, Inc., to purchase ____ shares of the Series G Preferred Stock of ________________, pursuant to the terms of the Warrant Agreement, and further acknowledges that _____ shares remain subject to purchase under the terms of the Warrant Agreement.

Company:

By: _____________________________________

Title: ____________________________________

Date: ____________________________________

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EXHIBIT 4.6

THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AS AMENDED, OR ANY STATE SECURITIES LAWS. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED, OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL (WHICH MAY BE COMPANY COUNSEL) REASONABLY SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933 OR APPLICABLE STATE SECURITIES LAWS.

WARRANT AGREEMENT

To Purchase Shares of the Series H Preferred Stock of OmniCell Technologies, Inc. Dated as of September 29, 1995, (the "Effective Date")

WHEREAS, Omnicell Technologies, Inc., a California corporation (the "Company") has entered into a Loan and Security Agreement dated as of August 2, 1995, (the "Loan Agreement") and a Promissory Note dated August 2, 1995 (the "Note") with Comdicso, Inc., a Delaware corporation (the "Warrantholder"); and

WHEREAS, the Company desires to grant to Warrantholder, in consideration for such Loan Agreement and Promissory Note, the right to purchase shares of its Series H Stock;

NOW, THEREFORE, in consideration of the Warrantholder executing and delivering such Loan Agreement and Promissory Note and in consideration of mutual covenants and agreements contained herein, the Company and Warrantholder agree as follows:

1. GRANT OF THE RIGHT TO PURCHASE PREFERRED STOCK.

The Company hereby grants to the Warrantholder, and the Warrantholder is entitled, upon the terms and subject to the conditions hereinafter set forth, to subscribe to and purchase from the Company, 67,934 fully paid and non-assessable shares of the Company's Series H Preferred Stock ("Preferred Stock") at a purchase price of $3.68 per share (the "Exercise Price"). The number and purchase price of such shares are subject to adjustment as provided in Section 8 hereof. Notwithstanding anything herein to the contrary, upon the closing of a firm commitment underwritten public offering pursuant to an effective registration statement under the Securities Act of 1933, as amended, covering the offer and the sale of the Company's Common Stock (the "IPO Closing"), all rights to purchase Preferred Stock granted herein, and all corresponding obligations the Company to reserve and issue Preferred Stock assumed herein, shall become automatically rights to purchase, and obligations to reserve and issue, only Common Stock. The number of shares of Common Stock thereafter purchasable under this Warrant Agreement shall be equal to the number of whole shares of Common Stock into which all the shares of Preferred Stock issuable upon exercise of the Warrant Agreement would have converted if this Warrant Agreement had been exercised immediately prior to the IPO Closing.

2. TERM OF THE WARRANT AGREEMENT.

Except as otherwise provided for herein, the term of this Warrant Agreement and the right to purchase Series H Preferred Stock as granted herein shall commence on the Effective Date and shall be exercisable for a period of (i) seven (7) years from the effective date or (ii) three (3) years from the effective date of the Company's initial public offering, whichever is longer.

3. EXERCISE OF THE PURCHASE RIGHTS.

The purchase rights set forth in this Warrant Agreement are exercisable by the Warrantholder, in whole or in part, at any time, or from time to time, prior to the expiration of the term set forth in Section 2 above, by tendering to the Company at its principal office a notice of exercise in the form attached hereto as Exhibit I (the "Notice of Exercise"), duly completed and executed, and the original of this Warrant Agreement for cancellation. Promptly

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upon receipt of the Notice of Exercise and the payment of the purchase price in accordance with the terms set forth below, and in no event later than twenty-one (21) days thereafter, the Company shall issue to the Warrantholder a certificate for the number of shares of Preferred Stock purchased and shall execute the Notice of Exercise indicating the number of shares which remain subject to future purchases, if any and an acknowledgment of exercise duly completed and executed in the form attached hereto as Exhibit III.

The Exercise Price may be paid at the Warrantholder's election either
(i) by cash or check, (ii) by cancellation by Warrantholder or indebtedness of the Company under the Loan Agreement and Note to Warrantholder, (iii) by surrender of Warrants ("Net Issuance") as determined below, or (iv) by a combination of (i), (ii), and (iii). If the Warrantholder elects the Net Issuance method, the Company will issue Preferred Stock in accordance with the following formula:

X = Y(A-B)

A

Where:      X =     the number of shares of Preferred Stock to be issued to
                    the Warrantholder.

            Y =     the number of shares of Preferred Stock requested to be
                    exercised under this Warrant Agreement.

            A =     the fair market value of one (1) share of Preferred Stock
                    (at the date of calculation).

            B =     the Exercise Price (adjusted to the date of calculation).

The date of calculation shall be the date on which this Notice of Exercise and original Warrant Agreement shall have been actually received by the Company along with payment for such shares. For purposes of the above calculation, current fair market value of Preferred Stock shall mean with respect to each share of Preferred Stock:

(i) If the Company's Registration Statement relating to its initial public offering has been declared effective by the SEC, then the fair market value per share shall be the product of (x) the "Initial Price to Public" specified in the final prospectus with respect to the offering and (y) the number of shares of Common Stock into which each share of Preferred Stock is convertible at the time of such exercise;

(ii) if this Warrant is exercised after the Company's initial public offering has closed, and:

(a) if traded on a securities exchange, the fair market value shall be deemed to be the product of (x) the average of the closing prices over a twenty-one (21) day period ending three days before the day the current fair market value of the securities is being determined and (y) the number of shares of Common Stock into which each share of Preferred Stock is convertible at the time; or

(b) if actively traded over-the-counter, the fair market value shall be deemed to be the produce of (x) the average of the closing bid and asked prices quoted on the NASDAQ system (or similar system) over the twenty-one (21) day period ending three days before the day the current fair market value of the securities is being determined and (y) the number of shares of Common Stock into which each share of Preferred Stock is convertible at the time of such exercise;

(iii) if at any time the Common Stock is not listed on any securities exchange or quoted in the NASDAQ System or the over-the-counter market, the current fair market value of Preferred Stock shall be the product of (x) the highest price per share which the Company could obtain from a willing buyer (not a current employee or director) for shares of Common Stock sold by the Company, from authorized but unissued shares, as determined in good faith by its Board of Directors, and (y) the number of shares of Common Stock into which each share of Preferred Stock is convertible at the time of such exercise, unless the Company is then subject to a merger, acquisition or other consolidation pursuant to which the Company is not the surviving party, in

2

which case the fair market value of Common Stock shall be deemed to be the value received by the holders of the Company's Preferred Stock on a common equivalent basis pursuant to such merger or acquisition.

Upon partial exercise by any method, the Company shall promptly issue an amended Warrant Agreement representing the remaining number of shares purchasable hereunder. All other terms and conditions of such amended Warrant agreement shall be identical to those contained herein, including, but not limited to the Effective Date hereof.

4. RESERVATION OF SHARES.

(a) Authorization and Reservation of Shares. During the term of this Warrant Agreement, the Company will at all times have authorized and reserved a sufficient number of shares of its Preferred Stock to provide for the exercise of the rights to purchase Preferred Stock as provided for herein.

(b) Registration or Listing. If any shares of Preferred Stock required to be reserved hereunder require registration with or approval of any governmental authority under any Federal or State law (other than any registration under the 1933 Act, as then in effect, or any similar Federal statute then enforced, or any state securities law, required by reason of any transfer involved in such conversion), or listing on any domestic securities exchange, before such shares may be issued upon conversion, the Company will, at its expense and as expeditiously as possible, use its best efforts to cause such shares to be duly registered, listed or approved for listing on such domestic securities exchange, as the case may be.

5. NO FRACTIONAL SHARES OR SCRIP.

No fractional shares or scrip representing fractional shares shall be issued upon the exercise of the Warrant, but in lieu of such fractional shares the Company shall make a cash payment therefore upon the basis of the Exercise Price then in effect.

6. NO RIGHTS AS SHAREHOLDER.

This Warrant Agreement does not entitle the Warrantholder to any voting rights or other rights as a shareholder of the Company prior to the exercise of the Warrant.

7. WARRANTHOLDER REGISTRY.

The Company shall maintain a registry showing the name and address of the registered holder of this Warrant Agreement.

8. ADJUSTMENT RIGHTS.

The Exercise Price and the number of shares of Preferred Stock purchasable hereunder are subject to adjustment, as follows:

(a) Merger and Sale of Assets. If at any time there shall be a capital reorganization of the shares of the Company's stock (other than a combination, reclassification, exchange or subdivision of shares otherwise provided for herein), or a merger or consolidation of the Company with or into another corporation when the Company is not the surviving corporation, or the sale of all or substantially all of the Company's properties and assets to any other person (hereinafter referred to as a "Merger Event'), then, as a part of such Merger Event, lawful provision shall be made to that the Warrantholder shall thereafter be entitled to receive, upon exercise of the Warrant, the number of shares of preferred stock or other securities or other assets or property or cash of the successor corporation resulting from such Merger Event, equivalent in value to that which would have been issuable if Warrantholder had exercised this Warrant immediately prior to the Merger Event. In any such case, appropriate adjustment (as determined in good faith by the Company's Board of Directors) shall be made in the application of the provisions of this Warrant Agreement with respect to the rights and interest of the Warrantholder after the

3

Merger Event to the end that the provisions of this Warrant Agreement (including adjustments of the Exercise Price and number of shares of Preferred Stock purchasable) shall be applicable to the greatest extent possible.

(b) Reclassification or Conversion of Shares. If the Company at any time shall, by conversion, combination, reclassification, exchange or subdivision of securities or otherwise, change any of the securities as to which purchase rights under this Warrant Agreement exist into the same or a different number of securities of any other class or classes, this Warrant Agreement shall thereafter represent the right to acquire such number and kind of securities as would have been issuable as the result of such change with respect to the securities which were subject to the purchase rights under this Warrant Agreement immediately prior to such combination, reclassification, exchange, subdivision or other change.

(c) Subdivision or Combination of Shares. If the Company at any time shall combine or subdivide its Preferred Stock, the Exercise Price shall be proportionately decreased in the case of a subdivision, or proportionately increased in the case of a combination.

(d) Stock Dividends. If the Company at any time shall pay a dividend payable in, or make any other distribution (except any distribution specifically provided for in the foregoing subsections (a) or (b)) of the Company's stock), then the Exercise Price shall be adjusted, from and after the record date of such dividend or distribution, to that price determined by multiplying the Exercise Price in effect immediately prior to such record date by a fraction (i) the numerator of which shall be the total number of all shares of the Company's stock outstanding immediately prior to such dividend or distribution, and (ii) the denominator of which shall be the total number of all shares of the Company's stock outstanding immediately after such dividend or distribution. The Warrantholder shall thereafter be entitled to purchase, at the Exercise Price resulting from such adjustment, the number of shares of Preferred Stock (calculated to the nearest whole share) obtained by multiplying the Exercise Price in effect immediately prior to such adjustment by the number of shares of Preferred Stock issuable upon the exercise hereof immediately prior to such adjustment and dividing the product thereof by the Exercise Price resulting from such adjustment.

(f) Antidilution Rights. Additional antidilution rights applicable to the Preferred Stock purchasable hereunder are as set forth in the Company's Articles of Incorporation, as amended through the Effective Date, a true and complete copy of which is attached hereto as Exhibit IV (the "Charter"). The Company shall promptly provide the Warrantholder with any restatement, amendment, modification or waiver of the Charter. The Company shall provide Warrantholder with prior written notice of any issuance of its stock or other equity security to occur after the Effective Date of this Warrant, which notice shall include (a) the price at which such stock or security is to be sold, (b) the number of shares to be issued, and (c) such other information as necessary for Warrantholder to determine if a dilutive event has occurred.

(g) Notice of Adjustments. If: (i) the Company shall declare any dividend or distribution upon its stock without payment therefor, whether in cash, property, stock or other securities; (ii) the Company shall offer for subscription prorata to the holders of Preferred Stock any additional shares of stock of any class of other rights; (iii) there shall be any Merger Event;
(iv) there shall be a public offering; or (v) there shall be any voluntary or involuntary dissolution, liquidation or winding up of the Company; then, in connection with each such event, the Company shall send to the Warrantholder:
(A) at least twenty (20) days' prior written notice of the date on which the books of the Company shall close or a record shall be taken for such dividend, distribution, subscription rights (specifying the date on which the holders of Preferred Stock shall be entitled thereto) or for determining rights to vote in respect of such Merger Event, dissolution, liquidation or winding up; (B) in the case of any such Merger Event, dissolution, liquidation or winding up, at least twenty (20) days' prior written notice of the date when the same shall take place (and specifying the date on which the holders of Preferred Stock shall be entitled to exchange their Preferred Stock for securities or other property deliverable upon such Merger Event, dissolution, liquidation or winding up); and (C) in the case of a public offering, the Company shall give Warrantholder at least twenty (20) days written notice prior to the effective date thereof.

Each such written notice shall set forth, as applicable, in reasonable detail, (i) the event requiring the adjustment, (ii) the amount of the adjustment, (iii) the method by which such adjustment was calculated, (iv) the Exercise Price, and (v) the number of shares subject to purchase hereunder after giving effect to such adjustment,

4

and shall be given by first class mail, postage prepaid, addressed to the Warrantholder, at the address as shown on the books of the Company.

(h) Timely Notice. Failure to timely provide such notice required by subsection (g) above shall entitle Warrantholder to retain the benefit of the applicable notice period notwithstanding anything to the contrary contained in any insufficient notice received by Warrantholder. The notice period shall begin on the date Warrantholder actually receives a written notice containing all the information specified above.

9. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY.

(a) Reservation of Preferred Stock. The Preferred Stock issuable upon exercise of the Warrantholder's rights has been duly and validly reserved and, when issued in accordance with the provisions of this Warrant Agreement, will be validly issued, fully paid and non-assessable, and will be free of any taxes, liens, charges or encumbrances of any nature whatsoever; provided, however, that the Preferred Stock issuable pursuant to this Warrant Agreement may be subject to restrictions on transfer under state and/or Federal securities laws. The Company has made available to the Warrantholder true, correct and complete copies of its Charter and Bylaws, as amended, and minutes of the Board of Directors (including all committees of the Board of Directors, if any) meeting of April 4, 1995. The issuance of certificates for shares of Preferred Stock upon exercise of the Warrant Agreement shall be made without charge to the Warrantholder for any issuance tax in respect thereof, or other cost incurred by the Company in connection with such exercise and the related issuance of shares of Preferred Stock. The Company shall not be required to pay any tax which may be payable in respect of any transfer involved and the issuance and delivery of any certificate in a name other than that of the Warrantholder.

(b) Due Authority. The execution and delivery by the Company of this Warrant Agreement and the performance of all obligations of the Company hereunder, including the issuance to Warrantholder of the right to acquire the shares of Preferred Stock, have been duly authorized by all necessary corporate action on the part of the Company, and the Loan Agreement, Note and this Warrant Agreement are not inconsistent with the Company's Charter or Bylaws, do not contravene any law or governmental rule, regulation or order applicable to it, do not and will not contravene any provision of, or constitute a default under, any indenture, mortgage, contract or other instrument to which it is a party or by which it is bound, and the Loan Agreement, Note and this Warrant Agreement constitute legal, valid and binding agreements of the Company, enforceable in accordance with their respective terms, subject to applicable bankruptcy, insolvency and other laws affecting creditor rights and to general principles of equity.

(c) Consents and Approvals. No consent or approval of, giving of notice to, registration with, or taking of any other action in respect of any state, Federal or other governmental authority or agency is required with respect to the execution, delivery and performance by the Company of its obligations under this Warrant Agreement, except for the filing of notices pursuant to Regulation D under the 1933 Act, if any, and applicable state securities law, which filings will be effective by the time required thereby.

(d) Issued Securities. All issued and outstanding shares of Common Stock, Preferred Stock or any other securities of the Company have been duly authorized and validly issued and are fully paid and nonassessable. All outstanding shares of Common Stock, Preferred Stock and any other securities were issued in full compliance with all Federal and state securities laws. In addition:

(i) The authorized capital of the Company consists of (A) 25,000,000 shares of Common Stock, of which 1,608,216 shares are issued and outstanding, and (B) 15,000,000 shares of Preferred stock, of which 11,527,848 shares are issued and outstanding, such Preferred stock consisting of (1) 480,000 shares of Series A of which 480,000 are issued and outstanding; (2) 320,666 shares of Series B of which 320,666 are issued and outstanding; (3) 1,700,000 shares of Series C of which 1,700,000 are issued and outstanding; (4) 1,328,000 shares of Series D of which 1,309,484 are issued and outstanding; (5) 1,966,000 shares of series E of which 1,965,262 are issued and outstanding;
(6) 2,000,000 shares of Series F of which 1,948,090 are outstanding; and (7) 1,000,000 shares of Series G none of which are issued and outstanding; and
(9) 4,000,000 shares of Series H of which 3,804,346 are issued and outstanding.

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(ii) The Company has reserved 2,910,000 shares of Common Stock for issuance under its 1992 Incentive Stock Option Plan and 1995 Management Stock Option Plan, under which 2,442,752 options are outstanding at an average price of $.50-.75 per share. There are no other options, warrants, conversion privileges or other rights presently outstanding to purchase or otherwise acquire any authorized but unissued shares of the Company's capital stock or other securities of the Company, other than warrants issued to the Warrantholder.

(iii) Other than those rights granted to the preferred stock holders, no shareholder of the Company has rights of first refusal to purchase new issuances of the Company's capital stock.

(e) Insurance. The Company has in full force and effect insurance policies, with extended coverage, insuring the Company and its property and business against such losses and risks, and in such amounts, as are customary for corporations engaged in a similar business and similarly situated and as otherwise may be required pursuant to the terms of any other contract or agreement.

(f) Other Commitments to Register Securities. Except as set forth in this and other Warrant Agreement, the Company is not, pursuant to the terms of any other agreement currently in existence, under any obligation to register under the 1933 Act any of its presently outstanding securities other than registerable securities issuable upon conversion of the various series of the Company's Preferred Stock.

(g) Exempt Transaction. Subject to the accuracy of the Warrantholder's representations in Section 10 hereof both now and at the time of each exercise of this Warrant Agreement, the issuance of the Preferred Stock upon exercise of this Warrant will constitute a transaction exempt from
(i) the registration requirements of Section 5 of the 1933 Act, in reliance upon Section 4(2) thereof, and (ii) the qualification requirements of the applicable state securities laws.

(h) Compliance with Rule 144. At the written request of the Warrantholder, who proposes to sell Preferred Stock issuable upon the exercise of the Warrant in compliance with Rule 144 promulgated by the Securities and Exchange Commission, the Company shall furnish to the Warrantholder, within a reasonable period after receipt of such request, a written statement confirming the Company's compliance with the filing requirements of the Securities and Exchange Commission as set forth in such Rule, as such Rule may be amended from time to time.

10. REPRESENTATIONS AND COVENANTS OF THE WARRANTHOLDER.

This Warrant Agreement has been entered into by the Company in reliance upon the following representations and covenants of the Warrantholder:

(a) Investment Purpose. The right to acquire Preferred Stock or the Preferred Stock issuable upon exercise of the Warrantholder's rights contained herein will be acquired for investment and not with a view to the sale or distribution of any part thereof, and the Warrantholder has no present intention of selling or engaging in any public distribution of the same.

(b) Private Issue. The Warrantholder understands (i) that this Warrant Agreement, the Preferred Stock issuable upon exercise of this Warrant, and the Common Stock into which such Preferred Stock is convertible, are not registered under the 1933 Act or qualified under applicable state securities laws and (ii) that the Company's reliance on exemptions to otherwise applicable registration requirements is predicated on the representations set forth in this Section 10.

(c) Disposition of Warrantholder's Rights. In no event will the Warrantholder make a disposition of any of its rights to acquire Preferred Stock or Preferred Stock issuable upon exercise of such rights or the Common Stock into which such Preferred Stock is convertible unless and until (i) it shall have notified the Company of the proposed disposition, and (ii) if requested by the Company, it shall have furnished the Company with an opinion of counsel satisfactory to the Company and its counsel to the effect that (A) appropriate action necessary for compliance with the 1933 Act has been taken, or (B) an exemption from the registration requirements of the 1933 Act is available. Notwithstanding the foregoing, the restrictions imposed upon the transferability of any of its rights to acquire Preferred Stock or Preferred Stock issuable on the exercise of such rights do not apply to transfers from

6

the beneficial owner of any of the aforementioned securities to its nominee or from such nominee to its beneficial owner, and shall terminate as to any particular share of Preferred Stock when (1) such security shall have been effectively registered under the 1933 Act and sold by the holder thereof in accordance with such registration or (2) such security shall have been sold without registration in compliance with Rule 144 under the 1933 Act, or (3) a letter shall have been issued to the Warrantholder at its request by the staff of the Securities and Exchange Commission or a ruling shall have been issued to the Warrantholder at its request by such Commission stating that no action shall be recommended by such staff or taken by such Commission, as the case may be, if such security is transferred without registration under the 1933 Act in accordance with the conditions set forth in such letter or ruling and such letter or ruling specifies that no subsequent restrictions on transfer are required. Whenever the restrictions imposed hereunder shall terminate, as hereinabove provided, the Warrantholder or holder of a share of Preferred Stock then outstanding as o which such restrictions have terminated shall be entitled to receive from the Company, without expense to such holder, one or more new certificates for the Warrant or for such shares of Preferred Stock not bearing any restrictive legend.

(d) Financial Risk. The Warrantholder has such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of its investment, and has the ability to bear the economic risks of its investment.

(e) Risk of No Registration. The Warrantholder understands that if the Company does not register with the Securities and Exchange Commission pursuant to Section 12 of the 1933 Act, or file reports pursuant to Section
15(d), of the Securities Exchange Act of 1934 (the "1934 Act"), or if a registration statement covering the securities under the 1933 Act is not in effect when it desires to sell (i) the rights to purchase Preferred Stock pursuant to this Warrant Agreement, or (ii) the Preferred Stock issuable upon exercise of the right to purchase, or (iii) the Common Stock into which such Preferred Stock is convertible, it may be required to hold such securities for an indefinite period. The Warrantholder also understands that any sale of its rights to purchase Preferred Stock or the Common Stock into which might be made by it in reliance upon Rule 144 under the 1933 Act may be made only in accordance with the terms and conditions of that Rule.

(f) Accredited Investor. Warrantholder is an "accredited investor" within the meaning of the Securities and Exchange Rule 501 of Regulation D, as presently in effect.

11. TRANSFERS. Subject to applicable federal and state securities laws, the transfer restrictions set forth herein and the terms and conditions contained in Section 10 hereof, this Warrant Agreement and all rights hereunder are transferable in whole or in part by the Warrantholder and any successor transferee, provided, however, in no event shall the number of transfers of the rights and interests in all of the Warrants exceed three (3) transfers. The transfer shall be recorded on the books of the Company upon receipt by the Company of a notice of transfer in the form attached hereto as Exhibit II (the "Transfer Notice"), at its principal offices and the payment to the Company of all transfer taxes and other governmental charges imposed on such transfer.

12. MISCELLANEOUS.

(a) Effective Date. The provisions of this Warrant Agreement shall be construed and shall be given effect in all respects as if it had been executed and delivered by the Company on the date hereof. This Warrant Agreement shall be binding upon any successors or assigns of the Company.

(b) Attorney's Fees. In any litigation, arbitration or court proceeding between the Company and the Warrantholder relating hereto, the prevailing party shall be entitled to attorneys' fees and expenses and all costs of proceedings incurred in enforcing this Warrant Agreement.

(c) Governing Law. This Warrant Agreement shall be governed by and construed for all purposes under and in accordance with the laws of the State of Illinois.

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

7

(e) Notices. Any notice required or permitted hereunder shall be given in writing and shall be deemed effectively given upon personal delivery, facsimile transmission (provided that the original is sent by personal delivery or mail as hereinafter set forth) or seven (7) days after deposit in the United States mail, by registered or certified mail, addressed (i) to the Warrantholder at Comdisco Ventures, 6111 North River Road, Rosemont, Illinois 60018, cc: Legal Department, attention: General Counsel (and/or, if by facsimile, (847) 518-5465 and (847) 518-5088) and (ii) to the Company at 1101 East Meadow Drive, Palo Alto, CA 94303, (and/or if by facsimile, (415) 843-6294) or at such other address as any such party may subsequently designate by written notice to the other party.

(f) Remedies. In the event of any default hereunder, the non-defaulting party may proceed to protect and enforce its rights either by suit in equity and/or by action at law, including but not limited to an action for damages as a result of any such default, and/or an action for specific performance for any default where Warrantholder will not have an adequate remedy at law and where damages will not be readily ascertainable.

(g) No Impairment of Rights. The Company will not, by amendment of its Charter or through any other means, avoid or seek to avoid the observance or performance for any default of the material terms of this Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions as may be necessary or appropriate in order to protect the rights of the Warrantholder against impairment.

(h) Survival. The representations, warranties, covenants and conditions of the respective parties contained herein or made pursuant to this Warrant Agreement shall survive the execution and delivery of this Warrant Agreement.

(i) Severability. In the event any one or more of the provisions of this Warrant Agreement shall for any reason be held invalid, illegal or unenforceable, the remaining provisions of this Warrant Agreement shall be unimpaired, and the invalid, illegal or unenforceable provision shall be replaced by a mutually acceptable valid, legal and enforceable provision, which comes closest to the intention of the parties underlying the invalid, illegal or unenforceable provision.

(j) Amendments. Any provision of this Warrant Agreement may be amended by a written instrument signed by the Company and by the Warrantholder.

IN WITNESS WHEREOF, the parties hereto have caused this Warrant Agreement to be executed by its officers thereunto duly authorized as of the Effective Date.

Company: OMNICELL TECHNOLGOIES, INC.

By:    /s/ Earl E. Fry
       ---------------------------------

Title: CFO
       ---------------------------------

Warrantholder: COMDISCO, INC.

By:    /s/ James P. Labe
       ---------------------------------
Title: President
       ---------------------------------

8

EXHIBIT I

NOTICE OF EXERCISE

To: ______________________________

(1) The undersigned Warrantholder hereby elects to purchase ____ shares of the Series H Preferred Stock of ___________________, pursuant to the terms of the Warrant Agreement dated the ___ day of _______________, 19__ (the "Warrant Agreement") between ______________________________ and the Warrantholder, and tenders herewith payment of the purchase price for _____ shares in full, together with all applicable transfer taxes, if any and/or ___ hereby elects to convert _____ percent (___%) of the value of the Warrant pursuant to the provisions of Section 3 of the Warrant Agreement.

(2) In exercising its rights to purchase the Series H Preferred Stock of ____________________________________, the undersigned hereby confirms and acknowledges the investment representations and warranties made in
Section 10 of the Warrant Agreement.

(3) Please issue a certificate or certificates representing said shares of Series H Preferred Stock in the name of the undersigned or in such other name as is specified below.


(Name)


(Address)

Warrantholder: COMDISCO, INC.

By: ____________________________

Title: _________________________

Date: __________________________

9

EXHIBIT II

TRANSFER NOTICE

(To transfer or assign the foregoing Warrant Agreement execute this form and supply required information. Do not use this form to purchase shares.)

FOR VALUE RECEIVED, the foregoing Warrant Agreement and all rights evidenced thereby are hereby transferred and assigned to


(Please Print)

whose address is __________________________________


Dated ________________________________________

Holder's Signature ___________________________

Holder's Address______________________________


Signature Guaranteed: _____________________________

NOTE: The signature to this Transfer Notice must correspond with the name as it appears on the face of the Warrant Agreement, without alteration or enlargement or any change whatever. Officers of corporations and those acting in a fiduciary or other representative capacity should file proper evidence of authority to assign the foregoing Warrant Agreement.

10

EXHIBIT III

ACKNOWLEDGEMENT OF EXERCISE

The undersigned _____________________________________, hereby acknowledge receipt of the "Notice of Exercise" from Comdisco, Inc., to purchase _____ shares of the Series H Preferred Stock of ________________________, pursuant to the terms of the Warrant Agreement, and further acknowledges that _____ shares remain subject to purchase under the terms of the Warrant Agreement.

Company:

By: _________________________________

Title: ______________________________

Date: _______________________________

11

THIS CONVERTIBLE PROMISSORY NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. NO SALE OR DISPOSITION MAY BE EFFECTED EXCEPT IN COMPLIANCE WITH RULE 144 UNDER SAID ACT OR AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL FOR THE HOLDER, SATISFACTORY TO THE COMPNY, THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE ACT OR RECEIPT OF A NO-ACTION LETTER FROM THE SECURITIES AND EXCHANGE COMMISSION.

CONVERTIBLE PROMISSORY NOTE

$350,000 October 1, 1999 Palo Alto, California

For value received OMNICELL TECHNOLOGIES, INC., a California corporation ("PAYOR") promises to pay to HAROLD BALZER AND DAVID BALZER, or its assigns ("HOLDER") the principal sum of three hundred fifty thousand dollars ($350,000) with interest on the outstanding principal amount at the rate of 6.02% per annum. Interest shall commence thirty (30) days after date of the note and shall continue on the outstanding principal until paid in full.

1. This note (the "NOTE") is issued in connection with that certain loan transaction pursuant to which Holder has agreed to loan to Payor the aggregate principal amount of $350,000.

2. All payments of interest and principal shall be in lawful money of the United States of America. All payments shall be applied first to accrued interest, and thereafter to principal.

3. Unless converted as provided in Section 4, this Note will automatically mature and be due and payable on October 1, 2004 (the "MATURITY DATE"). Subject to Section 4 below, interest shall accrue on this Note and shall not be due and payable until the Maturity Date. Notwithstanding the foregoing, the entire unpaid principal sum of this Note, together will accrued and unpaid interest thereon, shall become immediately due and payable upon the insolvency of the Company, the commission of any act of bankruptcy by the company, the execution by the Company of a general assignment for the benefit of creditors, the filing by or against the Company of a petition in bankruptcy or any petition for relief under the federal bankruptcy act or the continuation of such petition without dismissal for a period of ninety (90) days or more, or the appointment of a receiver or trustee to take possession of the property or assets of the Company.

1.


4.

(a) At the closing of the Company's Initial Public Offering (as defined below), the entire principal amount of and accrued interest on this Note shall automatically be converted into fully-paid and non-assessable shares of the Company's Common Stock (the "COMMON STOCK"). Such shares shall be unregistered and shall not be issued pursuant to the Initial Public Offering. As used herein, "INITIAL PUBLIC OFFERING" shall mean a firmly underwritten public offering pursuant to an effective registration statement under the Securities Act of 1933, as amended, covering the offer and sale of Common Stock for the account of the Company. The number of shares of Common Stock to be issued upon the conversion of this Note shall be equal to the quotient obtained by dividing
(i) the entire outstanding principal amount of this Note plus accrued interest thereon by (ii) the price per share of the Common Stock, rounded to the nearest whole share.

(b) No fractional shares of the Company's Common Stock will be issued upon conversion of this Note. In lieu of any fractional share to which the Holder would otherwise be entitled, the Company will pay to the Holder in cash the amount of the unconverted principal and interest balance of this Note that would otherwise be converted into such fractional share. Upon conversion of this Note pursuant to this Section 2, the Holder shall surrender this Note, duly endorsed, at the principal offices of the Company or any transfer agent of the Company. At its expense, the Company will, as soon as practicable thereafter, issue and deliver to such Holder, at such principal office, a certificate or certificates for the number of shares to which such Holder is entitled upon such conversion, together with any other securities and property to which the Holder is entitled upon such conversion under the terms of this Note, including a check payable to the Holder for any cash amounts payable as described herein. Upon conversion of this Note, the Company will be forever released from all of its obligations and liabilities under this Note with regard to that portion of the principal amount and accrued interest being converted including without limitation the obligation to pay such portion of the principal amount and accrued interest.

5. Unless this Note has been converted in accordance with the terms of
Section 4 above, the entire outstanding principal balance and all unpaid accrued interest shall become fully due and payable on the Maturity Date.

6. In the event of any default hereunder, Payor shall pay all reasonable attorneys' fees and court costs incurred by Holder in enforcing and collecting this Note.

7. Payor hereby waives demand, notice, presentment, protest and notice of dishonor.

8. The terms of this Note shall be construed in accordance with the laws of the State of California, as applied to contracts entered into by California residents within the State of California, which contracts are to be performed entirely within the State of California.\

2.


9. Any term of this Note may be amended or waived with the written consent of Payor and Holder.

OMNICELL TECHNOLOGIES, INC.

By:  /s/ Earl E. Fry
Name: Earl E. Fry
Title:Vice President, Chief Financial
Officer

3.


AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION

STANDARD INDUSTRIAL/COMMERCIAL SINGLE-TENANT LEASE - NET

(DO NOT USE THIS FORM FOR MULTI-TENANT BUILDINGS)

1. BASIC PROVISIONS ("BASIC PROVISIONS")

1.1 PARTIES: This Lease ("LEASE"), dated for reference purposes only, September 24, 1999 is made by and between Marie A. Batton, Trustee of the W. F. Batton and Marie A. Batton Trust UTA January 12, 1988, as amended ("Lessor") and Omnicell Technologies, Inc., a California corporation ("Lessee"), (collectively the "PARTIES," or individually a "PARTY").

1.2 PREMISES: That certain real property, including all improvements therein or to be provided by Lessor under the terms of this Lease, and commonly known as 1085 EAST MEADOW CIRCLE, PALO ALTO, located In the County of SANTA CLARA, State of CALIFORNIA and generally described as (describe briefly the nature of the property and, If applicable, the "Project," if the property is located within a Project) A FREE STANDING BUILDING CONSISTING OF APPROXIMATELY
18,360 RENTABLE SQUARE FEET. ("Premises"). (See also Paragraph 2).

1.3 TERM: FIVE (5) years and - 0 - months ("ORIGINAL TERM") commencing DECEMBER 15, 1999, ("COMMENCEMENT DATE") and ending DECEMBER 14, 2004
("Expiration Date"). (See also Paragraph 3)

1.4 EARLY POSSESSION: DECEMBER 8, 1999 ("EARLY POSSESSION DATE").
(See also Paragraphs 3.2 and 3.3)

1.5 BASE RENT: $41,310.00 per month ("BASE RENT"), payable on the FIFTEENTH (15TH) day of each month commencing DECEMBER 15, 1999 - JANUARY 14, 2000. (See also Paragraph 4)

/X/ If this box Is checked, there am provisions in this Lease for the Base Rent to be adjusted and/or for common area maintenance charges.

1.6 BASE RENT PAID UPON EXECUTION: $41,310.00 as Base Rent for the period DECEMBER 15, 1999 - JANUARY 14, 2000.

1.7 SECURITY DEPOSIT: $41,310.00 ("Security Deposit"). (See also Paragraph 5)

1.8 AGREED USE: SOFTWARE RESEARCH AND DEVELOPMENT, ADMINISTRATIVE
OFFICES, AND STORAGE (See also Paragraph 6)

1.9 INSURING PARTY: Lessor is the "Insuring Party" unless otherwise stated herein (See also Paragraph 8)

1.10 REAL ESTATE BROKERS: (See also Paragraph 15)

(a) REPRESENTATION: The following real estate brokers (collectively, the "Brokers") and brokerage relationships exist in this transaction (check applicable boxes):

/ /___________________________represents Lessor exclusively ("Lessors Broker"); / /___________________________represents Lessee exclusively ("Lessee's Broker"); or
/X/ CORNISH & CAREY COMMERCIAL represents both Lessor and Lessee ("Dual Agency").

(b) PAYMENT TO BROKERS: Upon execution and delivery of this Lease by both Parties, Lessor shall pay to the Broker the fee agreed to in their separate written agreement (or if there is no such agreement, the sum of ______% of the total Base Rent for the Brokerage services rendered by said Broker).

1.11 GUARANTOR. The obligations of the Lessee under this Lease are to be guaranteed by N/A ("Guarantor). (See also Paragraph 37)

1.12 ADDENDA AND EXHIBITS. Attached hereto Is an Addendum or Addenda consisting of Paragraphs 50 through 65 and Exhibits A , all of which constitute a part of this Lease.

2. PREMISES.

2.1 LETTING. Lessor hereby leases to Lessee, and Lessee hereby leases from Lessor, the Premises, for the term, at the rental, and upon all of the terms, covenants and conditions set forth In this Lease. Unless otherwise provided herein, any statement of size


set forth in this Lease, or that may have been used in calculating rental, is an approximation which the Parties agree is reasonable and the rental based thereon is not subject to revision whether or not the actual size is more or less.

2.2 CONDITION. Lessor shall deliver the Premises to Lessee broom clean and free of debris on the Commencement Date or the Early Possession Date, whichever first occurs ("START DATE"), and so long as the required service contracts described in Paragraph 7.1(b) below are obtained by Lessee within thirty (30) days following the Start Date, warrants that the existing electrical, plumbing, fire sprinkler, lighting, heating, ventilating and air conditioning systems ("HVAC"), loading doors, if any, and all other such elements in the Premises, other than those constructed by Lessee, shall be in good operating condition on said date and that the structural elements of the roof, bearing walls and foundation of any buildings on the Premises (the "BUILDING") shall be free of material defects. If a non-compliance with said warranty exists as of the Start Date, Lessor shall, as Lessor's sole obligation with respect to such matter, except as otherwise provided in this Lease, promptly after receipt of written notice from Lessee setting forth with specificity the nature and extent of such non-compliance, rectify same at Lessees expense.

2.3 COMPLIANCE. Lessor warrants that the improvements on the Premise comply with all applicable laws, convenants or restrictions of record, building codes, regulations and ordinances ("APPLICABLE REQUIREMENTS") in effect on the Start Date. Said warranty does not apply to the use to which Lessee will put the Premises or to any Alterations or Utility Installations (as defined in Paragraph 7.3 (a)) made or to be made by Lessee. NOTE: Lessee is responsible for determining whether or not the zoning is appropriate for Lessee's intended use, and acknowledges that past uses of the Premises may no longer be allowed. If the Premises do not comply with said warranty, Lessor shall, except as otherwise provided, promptly after receipt of written notice from Lessee setting forth with specificity the nature and extent of such non-compliance, rectify the same at Lessor's expense. If Lessee does not give Lessor written notice of a non-compliance with this warranty within six (6) months following the Start Date, correction of that non-compliance shall be the obligation of Lessee at Lessee's sole cost and expense. If the Applicable Requirements are hereafter changed (as opposed to being in existence at the Start Date, which is addressed in Paragraph 6.2(e) below) so as to require during the term of this Lease the construction of an addition to or an alteration of the Building, the remediation of any Hazardous Substance, or the reinforcement or other physical modification of the Building ("CAPITAL EXPENDITURE"), Lessor and Lessee shall allocate the cost of such work as follows:

(a) Subject to Paragraph 2.3(c) below, if such Capital Expenditures are required as a result of the specific and unique use of the Premises by Lessee as compared with uses by tenants in general, Lessee shall be fully responsible for the cost thereof, provided, however, that if such Capital Expenditure is required during the last two (2) years of this Lease and the cost thereof exceeds six (6) months' Base Rent, Lessee may instead terminate this Lease unless Lessor notifies Lessee, in writing, within ten (10) days after receipt of Lessee's termination notice that Lessor has elected to pay the difference between the actual cost thereof and the amount equal to six (6) months' Base Rent. If Lessee elects termination, Lessee shall immediately cease the use of the Premises which requires such Capital Expenditure and deliver to Lessor written notice specifying a termination date at least ninety (90) days thereafter. Such termination date shall, however, in no event be earlier than the last day that Lessee could legally utilize the Premises without commencing such Capital Expenditure.

(b) If such Capital Expenditure is not the result of the specific and unique use of the Premises by Lessee (such as, governmentally mandated seismic modifications), then Lessor and Lessee shall allocate the obligation to pay for such costs pursuant to the provisions of Paragraph 7.1(c); provided, however, that if such Capital Expenditure is required during the last two years of this Lease or if Lessor reasonably determines that it is not economically feasible to pay its share thereof, Lessor shall have the option to terminate this Lease upon ninety (90) days prior written notice to Lessee unless Lessee notifies Lessor, in writing, within ten (10) days after receipt of Lessor's termination notice that Lessee will pay for such Capital Expenditure. If Lessor does not elect to terminate, and fails to tender its share of any such Capital Expenditure, Lessee may advance such funds and deduct same, with Interest from Rent until Lessor's share of such costs have been fully paid. If Lessee is unable to finance Lessor's share, or if the balance of the Rent due and payable for the remainder of this Lease is not sufficient to fully reimburse Lessee on an offset basis, Lessee shall have the right to terminate this Lease upon thirty (30) days written notice to Lessor.

(c) Notwithstanding the above, the provisions concerning Capital Expenditures are intended to apply only to non-voluntary, unexpected, and new Applicable Requirements. If the Capital Expenditures are instead triggered by Lessee as a result of an actual or proposed change in use, change in intensity of use, or modification to the Premises then, and in that event, Lessee shall be fully responsible for the cost thereof, and Lessee shall not have any right to terminate this Lease.

2.4 ACKNOWLEDGEMENTS. Lessee acknowledges that: (a) it has been advised by Lessor and/or Brokers to satisfy itself with respect to the condition of the Premises (including but not limited to the electrical, HVAC and fire sprinkler systems, security, environmental aspects, and compliance with Applicable Requirements), and their suitability for Lessee's intended use, (b) Lessee has made such investigation as it deems necessary with reference to such matters and assumes all responsibility therefor as the same relate to its occupancy of the Premises, and (c) neither Lessor, Lessor's agents, nor any Broker has made any oral or written representations or warranties with respect to said matters other than as set forth in this Lease. In addition, Lessor acknowledges that: (a) Broker has made no


representations, promises or warranties concerning Lessee's ability to honor the Lease or suitability to occupy the Premises, and (b) it is Lessor's sole responsibility to investigate the financial capability and/or suitability of all proposed tenants.

2.5 LESSEE AS PRIOR OWNER/OCCUPANT. The warranties made by Lessor in Paragraph 2 shall be of no force or effect if immediately prior to the Start Date Lessee was the owner or occupant of the Premises. In such event, Lessee shall be responsible for any necessary corrective work.

3. TERM.

3.1 TERM. The Commencement Date, Expiration Date and Original Term of this Lease are as specified in Paragraph 1.3.

3.2 EARLY POSSESSION. If Lessee totally or partially occupies the Premises prior to the Commencement Date, the obligation to pay Base Rent shall be abated for the period of such early possession. All other terms of this Lease shall, however, be in effect during such period. Any such early possession shall not affect the Expiration Date.

3.3 DELAY IN POSSESSION. Lessor agrees to use its best commercially reasonable efforts to deliver possession of the Premises to Lessee by the Commencement Date. If, despite said efforts, Lessor is unable to deliver possession as agreed, Lessor shall not be subject to any liability therefor, nor shall such failure affect the validity of this Lease. Lessee shall not, however, be obligated to pay Rent or perform its other obligations until it receives possession of the Premises. If possession is not delivered within sixty (60) days after the Commencement Date, Lessee may, at its option, by notice in writing within ten (10) days after the end of such sixty (60) day period, cancel this Lease, in which event the Parties shall be discharged from all obligations hereunder. If such written notice is not received by Lessor within said ten (10) day period, Lessee's right to cancel shall terminate. Except as otherwise provided, if possession is not tendered to Lessee by the Start Date and Lessee does not terminate this Lease, as aforesaid, any period of rent abatement that Lessee would otherwise have enjoyed shall run from the date of delivery of possession and continue for a period equal to what Lessee would otherwise have enjoyed under the terms hereof, but minus any days of delay caused by the acts or omissions of Lessee. If possession of the Premises is not delivered within four (4) months after the Commencement Date, this Lease shall terminate unless other agreements are reached between Lessor and Lessee, in writing.

3.4 LESSEE COMPLIANCE. Lessor shall not be required to tender possession of the Premises to Lessee until Lessee complies with its obligation to provide evidence of insurance (Paragraph 8.5). Pending delivery of such evidence, Lessee shall be required to perform all of its obligations under this Lease from and after the Start Date, including the payment of Rent, notwithstanding Lessor's election to withhold possession pending receipt of such evidence of insurance. Further, if Lessee is required to perform any other conditions prior to or concurrent with the Start Date, the Start Date shall occur but Lessor may elect to withhold possession until such conditions are satisfied.

4. RENT.

4.1 RENT DEFINED. All monetary obligations of Lessee to Lessor under the terms of this Lease (except for the Security Deposit) are deemed to be rent ("RENT").

4.2 PAYMENT. Lessee shall cause payment of Rent to be received by Lessor in lawful money of the United States, without offset or deduction (except as specifically permitted in this Lease), on or before the day on which it is due. Rent for any period during the term hereof which is for less than one (1) full calendar month shall be prorated based upon the actual number of days of said month. Payment of Rent shall be made to Lessor at its address stated herein or to such other persons or place as Lessor may from time to time designate in writing. Acceptance of a payment which is less than the amount then due shall not be a waiver of Lessor's rights to the balance of such Rent, regardless of Lessor's endorsement of any check so stating.

5. SECURITY DEPOSIT. Lessee shall deposit with Lessor upon execution hereof the Security Deposit as security for Lessee's faithful performance of its obligations under this Lease. If Lessee fails to pay Rent, or otherwise Defaults under this Lease, Lessor may use, apply or retain all or any portion of said Security Deposit for the payment of any amount due Lessor or to reimburse or compensate Lessor for any liability, expense, loss or damage which Lessor may suffer or incur by reason thereof. If Lessor uses or applies all or any portion of said Security Deposit, Lessee shall within ten (10) days after written request therefor deposit monies with Lessor sufficient to restore said Security Deposit to the full amount required by this Lease. Should the Agreed Use be amended to accommodate a material change in the business of Lessee or to accommodate a sublessee or assignee, Lessor shall have the right to increase the Security Deposit to the extent necessary, in Lessor's reasonable judgment, to account for any increased wear and tear that the Premises may suffer as a result thereof. If a change in control of Lessee occurs during this Lease and following such change the financial condition of Lessee is, in Lessor's reasonable judgment, significantly reduced, Lessee shall deposit such additional monies with Lessor as shall be sufficient to cause the Security Deposit to be at a commercially reasonable level based on said change in financial


condition. Lessor shall not be required to keep the Security Deposit separate from its general accounts. Within fourteen (14) days after the expiration or termination of this Lease, if Lessor elects to apply the Security Deposit only to unpaid Rent, and otherwise within thirty (30) days after the Premises have been vacated pursuant to Paragraph 7.4(c) below, Lessor shall return that portion of the Security Deposit not used or applied by Lessor. No part of the Security Deposit shall be considered to be held in trust, to bear interest or to be prepayment for any monies to be paid by Lessee under this Lease.

6. USE.

6.1 USE. Lessee shall use and occupy the Premises only for the Agreed Use, or any other legal use which is reasonably comparable thereto, and for no other purpose. Lessee shall not use or permit the use of the Premises in a manner that is unlawful, creates damage, waste or a nuisance, or that disturbs owners and/or occupants of, or causes damage to neighboring properties. Lessor shall not unreasonably withhold or delay its consent to any written request for a modification of the Agreed Use, so long as the same will not impair the structural integrity of the improvements on the Premises or the mechanical or electrical systems therein, or is not significantly more burdensome to the Premises. If Lessor elects to withhold consent, Lessor shall within five (5) business days after such request give written notification of same, which notice shall include an explanation of Lessor's objections to the change in use,

6.2 HAZARDOUS SUBSTANCES. See Addendum Paragraph 54.

(a)

(b)

(c)

(d)

(e)

(f)

(g)

6.3

6.4

7. MAINTENANCE; REPAIRS, UTILITY INSTALLATIONS; TRADE FIXTURES AND ALTERATIONS.

7.1 LESSEE'S OBLIGATIONS. See Addendum Paragraph 559a)

(a) IN GENERAL. Subject to the provisions of Paragraph
2.2 (Condition), 2.3 (Compliance with Covenants, Restrictions and Building Code), 6.3 (Lessee's Compliance with Applicable Requirements), 7.2 (Lessor's Obligations), 9 (Damage and Destruction), and 14 (Condemnation), Lessee shall, al Lessee's sole expense, keep the Premises, Utility Installations, and Alterations in good order, condition and repair (whether or not the portion of the Premises requiring repairs, or the means of repairing the same, are reasonably or readily accessible to Lessee, and whether or not the need for such repairs occurs as a result of Lessee's use, any prior use, the elements or the age of such portion of the Premises), including, but not limited to, all equipment or facilities, such as plumbing, heating, ventilating, air-conditioning, electrical, lighting facilities, boilers, pressure vessels, fire protection system, fixtures, walls (interior and exterior), ceilings, floors, windows, doors, skylights, landscaping, driveways, parking lots, fences, signs, sidewalks and parkways located in, on, or adjacent to the Premises. Lessee is also responsible for keeping the roof and roof drainage clean and free of debris. Lessor shall keep the surface and structural elements of the roof, foundations, and bearing walls in good repair (see Paragraph 7.2). Lessee, in keeping the Premises in good order, condition and repair shall exercise and perform good maintenance practices. Lessee's obligations


shall include restorations, replacements or renewals when necessary to keep the Premises and all improvements thereon or a part thereof in good order, condition and state of repair. Lessee shall, during the term of this Lease, keep the exterior appearance of the Building in a first-class condition (including, e.g., graffiti removal) consistent with the exterior appearance of other similar facilities of comparable age and size in the vicinity, including, when necessary, the exterior repainting of the Building.

(b) SERVICE CONTRACTS. Lessee shall, at Lessee's sole expense, procure and maintain contracts, with copies to Lessor, in customary form and substance for, and with contractors specializing and experienced in the maintenance of the following equipment and improvements ("Basic Elements"), if any, if and when installed on the Premises: (i) HVAC equipment, (ii) boiler and pressure vessels, (iii) fire extinguishing systems, including fire alarm and/or smoke detection, (iv) landscaping and irrigation systems, (v) driveways and parking lots, (vi) clarifies, (vii) basic utility feed to the perimeter of the Building, and (viii) any other equipment, if reasonably required by Lessor.

(c) REPLACEMENT. Subject to Lessee's indemnification of Lessor as set forth in Paragraph 8.7 below, and without relieving Lessee of liability resulting from Lessee's failure to exercise and perform good maintenance practices, if the Basic Elements described in Paragraph 7.1(b) cannot be repaired other than at a cost which is in excess of 50% of the cost of replacing such Basic Elements, then such Basic Elements shall be replaced by Lessor, and the cost thereof shall be prorated between the Parties and Lessee shall only be obligated to pay, each month during the remainder of the term of this Lease, on the date on which Base Rent is due, an amount equal to the product of multiplying the cost of such replacement by a fraction, the numerator of which is one and the denominator of which is the number of months of the useful life of such replacement as such useful life is specified pursuant to Federal income tax regulations or guidelines for depreciation thereof (including interest on the unamortized balance as is then commercially reasonable in the judgment of Lessor's accountants), with Lessee reserving the right to prepay its obligation at any time. See Addendum Paragraph 55(b).

7.2 LESSOR'S OBLIGATIONS. Subject to the provisions of Paragraphs
2.2 (Condition), 2.3 (Compliance with Covenants, Restrictions and Building Code), 9 (Damage or Destruction) and 14 (Condemnation), it is intended by the Parties hereto that Lessor have no obligation, in any manner whatsoever, to repair and maintain the Premises, or the equipment therein, all of which obligations are intended to be that of the Lessee, except for the surface and structural elements of the roof, foundations and bearing wails, the repair of which shall be the responsibility of Lessor upon receipt of written notice that such a repair is necessary. It is the intention of the Parties that the terms of this Lease govern the respective obligations of the Parties-as to maintenance and repair of the Premises, and they expressly waive the benefit of any statute now or hereafter in effect to the extent it is inconsistent with the terms of this Lease.

7.3 UTILITY INSTALLATIONS; TRADE FIXTURES; ALTERATIONS.

(a) DEFINITIONS; CONSENT REQUIRED. The term "UTILITY INSTALLATIONS" refers to all floor and window coverings, air lines, power panels, electrical distribution, security and fire protection systems and signs, communication systems, lighting fixtures, HVAC equipment, plumbing, and fencing in or on the Premises. The term "TRADE FIXTURES" shall mean Lessee's machinery and equipment that can be removed without doing material damage to the Premises. The term "ALTERATIONS" shall mean any modification of the improvements, other than Utility Installations or Trade Fixtures, whether by addition or deletion.
"LESSEE OWNED ALTERATIONS AND/OR UTILITY INSTALLATIONS" are defined as Alterations and/or Utility Installations made by Lessee that are not yet owned by Lessor pursuant to Paragraph 7.4(a). Lessee shall not make any Alterations or Utility Installations to the Premises without Lessor's prior written consent. Lessee may, however, make non-structural Utility Installations or non-structural alterations to the interior of the Premises (excluding the roof) without such consent but upon notice to Lessor, as long as they are not visible from the outside, do not involve puncturing, relocating or removing the roof or any existing walls, and the cumulative cost thereof during this Lease as extended does not exceed $50,000 in the aggregate or $10,000 in any one year.

(b) CONSENT. Any Alterations or Utility Installations that Lessee shall desire to make and which require the consent of the Lessor shall be presented to Lessor in written form with detailed plans. Consent shall be deemed conditioned upon Lessee's: (i) acquiring all applicable governmental permits, (ii) furnishing Lessor with copies of both the permits and the plans and specifications prior to commencement of the work, and (iii) compliance with all conditions of said permits and other Applicable Requirements in a prompt and expeditious manner. Any Alterations or Utility Installations shall be performed in a workmanlike manner with good and sufficient materials, Lessee shall promptly upon completion furnish Lessor with as-built plans and specifications. For work which costs an amount equal to the greater of one month's Base Rent, or $10,000, Lessor may condition its consent upon Lessee providing a lien and completion bond in an amount equal to one and one-half times the estimated cost of such Alteration or Utility Installation and/or upon Lessee's posting an additional Security Deposit with Lessor.

(c) INDEMNIFICATION. Lessee shall pay, when due, all claims for labor or materials furnished or alleged to have been furnished to or for Lessee at or for use on the Premises, which claims are or may be secured by any mechanic's or materialmen's lien against the Premises or any interest therein. Lessee shall give Lessor not less than ten (10) days' notice prior to the commencement of any work in, on or about the Premises, and Lessor shall have the right to post notices of non-responsibility. If Lessee shall contest the validity of any such lien, claim or demand, then Lessee shall, at its sole expense defend and protect itself, Lessor and the Premises against the same and shall pay and satisfy any such adverse judgment that may be rendered thereon before the enforcement thereof. If Lessor shall require, Lessee shall furnish a surely bond in an amount equal to one and one-half times the amount of such contested lien, claim or


demand, indemnifying Lessor against liability for the same. If Lessor elects to participate in any such action, Lessee shall pay Lessor's attorneys' fees and costs.

7.4 OWNERSHIP; REMOVAL; SURRENDER; AND RESTORATION.

(a) OWNERSHIP. Subject to Lessor's right to require removal or elect ownership as hereinafter provided, all Alterations and Utility Installations made by Lessee shall be the property of Lessee, but considered a part of the Premises. Unless otherwise instructed per Paragraph 7.4(b) hereof, all Lessee Owned Alterations and Utility Installations shall, at the expiration or termination of this lease, become the property of Lessor and be surrendered by Lessee with the Premises. See Addendum Paragraph 55(d).

(b) REMOVAL. By delivery to Lessee of written notice from Lessor not earlier than ninety (90) and not later than thirty (30) days prior to the end of the term of this Lease, Lessor may require that any or all Lessee Owned Alterations or Utility Installations be removed by the expiration or termination of this Lease. Lessor may require the removal at any time of all or any part of any Lessee Owned Alterations or Utility Installations made without the required consent.

(c) SURRENDER/RESTORATION. See Addendum Paragraph 55(e). "Ordinary wear and tear" shall not include any damage or deterioration that would have been prevented by good maintenance practice. Lessee shall repair any damage occasioned by the installation, maintenance or removal of Trade Fixtures, Lessee Owned Alterations and/or Utility Installations, furnishings, and equipment as well as the removal of any storage tank installed by or for Lessee, and the removal, replacement, or remediation of any soil, material or groundwater contaminated by Lessee. Trade Fixtures shall remain the property of Lessee and shall be removed by Lessee. The failure by Lessee to timely vacate the Premises pursuant to this Paragraph 7.4(c) without the express written consent of Lessor shall constitute a holdover under the provisions of Paragraph 26 below.

8. INSURANCE; INDEMNITY.

8.1 PAYMENT FOR INSURANCE. Lessee shall pay for all insurance required under Paragraph 8 except to the extent of the cost attributable to liability insurance carried by Lessor under Paragraph 8.2(b) in excess of $2,000,000 per occurrence. Premiums for policy periods commencing prior to or extending beyond the Lease term shall be prorated to correspond to the Lease term. Payment shall be made by lessee to Lessor within ten (10) days following receipt of an invoice.

8.2 LIABILITY INSURANCE.

(a) CARRIED BY LESSEE. Lessee shall obtain and keep in force a Commercial General Liability Policy of Insurance protecting Lessee and Lessor against claims for bodily injury, personal injury and property damage based upon or arising out of the ownership, use, occupancy or maintenance of the Premises and all areas appurtenant thereto. Such insurance shall be on an occurrence basis providing single limit coverage in an amount not less than $2,000,000 per occurrence with an "ADDITIONAL INSURED-MANAGERS OR LESSORS OF PREMISES ENDORSEMENT" and contain the "AMENDMENT OF THE POLLUTION EXCLUSION ENDORSEMENT" for damage caused by heat, smoke or fumes from a hostile fire. The Policy shall not contain any intra-insured exclusions as between insured persons or organizations, but shall include coverage for liability assumed under this Lease as an "insured contract" for the performance of Lessee's indemnity obligations under this Lease. The limits of said insurance shall not, however, limit the liability of Lessee nor relieve Lessee of any obligation hereunder. All insurance carried by Lessee shall be primary to and not contributory with any similar insurance carried by Lessor, whose insurance shall be considered excess insurance only.

(b) CARRIED BY LESSOR. Lessor shall maintain liability insurance as described in Paragraph 8.2(a), in addition to, and not in lieu of, the insurance required to be maintained by Lessee. Lessee shall not be named as an additional insured therein.

8.3 PROPERTY INSURANCE - BUILDING, IMPROVEMENTS AND RENTAL VALUE.

(a) BUILDING AND IMPROVEMENTS. The Insuring Party shall obtain and keep in force a policy or policies in the name of Lessor, with loss payable to Lessor, any groundlessor, and to any Lender(s) insuring loss or damage to the Premises. The amount of such insurance shall be equal to the full replacement cost of the Premises, as the same shall exist from time to time, or the amount required by any Lenders, but in no event more than the commercially reasonable and available insurable value thereof. If Lessor is the Insuring Party, however, Lessee Owned Alterations and Utility Installations Trade Fixtures, and Lessee's personal property shall be insured by Lessee under Paragraph 8.4 rather than by Lessor. If the coverage is available an( commercially appropriate, such policy or policies shall insure against all risks of direct physical loss or damage (except the perils of flood and/or earthquake unless required by a Lender or included in the Base Premium), including coverage for debris removal and the enforcement of any Applicable Requirements requiring the


upgrading, demolition, reconstruction or replacement of any portion of the Premises as the result of a covered loss. Said policy or policies shall also contain an agreed valuation provision in lieu of any coinsurance clause, waiver of subrogation, and inflation guard protection causing an increase in the annual property insurance coverage amount by a factor of not less than the adjusted U.S. Department of Labor Consumer Price Index for All Urban Consumers for the city nearest to where the Premises are located. If such insurance coverage has a deductible clause, the deductible amount shall not exceed $10,000 per occurrence, and lessee shall be liable for such deductible amount in the event of an Insured Loss.

(b) RENTAL VALUE. The Insuring Parties shall obtain and keep in force a policy or policies in the name of Lessor, with loss payable to Lessor and any Lender, insuring the loss of the full Rent for one (1) year. Said insurance shall provide that in the event the Lease is terminated by reason of an insured loss, the period of indemnity for such coverage shall be extended beyond the date of the completion of repairs or replacement of the Premises, to provide for one full year's loss of Rent from the date of any such loss. Said insurance shall contain an agreed valuation provision in lieu of any coinsurance clause, and the amount of coverage shall be adjusted annually to reflect the projected Rent otherwise payable by Lessee, for the next twelve (12) month period. Lessee shall be liable for any deductible amount in the event of such loss.

(c)

8.4 LESSEE'S PROPERTY/BUSINESS INTERRUPTION INSURANCE.

(a) PROPERTY DAMAGE. Lessee shall obtain and maintain insurance coverage on all of Lessee's personal property, Trade Fixtures, and Lessee Owned Alterations and Utility Installations. Such insurance shall be full replacement cost coverage with a deductible of not to exceed $10,000 per occurrence. The proceeds from any such insurance shall be used by Lessee for the replacement of personal property, Trade Fixtures and Lessee Owned Alterations and Utility Installations. Lessee shall provide Lessor with written evidence that such insurance is in force.

(b) BUSINESS INTERRUPTION. Lessee shall obtain and maintain loss of income and extra expense insurance in amounts as will reimburse Lessee for direct or indirect loss of earnings attributable to all perils commonly insured against by prudent lessees in the business of Lessee or attributable to prevention of access to the Premises as a result of such perils.

(c) NO REPRESENTATION OF ADEQUATE COVERAGE. Lessor makes no representation that the limits or forms of coverage of insurance specified herein are adequate to cover Lessee's property, business operations or obligations under this Lease.

8.5 INSURANCE POLICIES. Insurance required herein shall be by companies duly licensed or admitted to transact business in the state where the Premises are located, and maintaining during the policy term a "General Policyholders Rating" of at least B+, V, as set forth in the most current issue of "Best's Insurance Guide", or such other rating as may be required by a Lender. Lessee shall not do or permit to be done anything which invalidates the required insurance policies. Lessee shall, prior to the Start Date, deliver to Lessor certified copies of policies of such insurance or certificates evidencing the existence and amounts of the required insurance. No such policy shall be cancelable or subject to modification except after thirty (30) days prior written notice to Lessor. Lessee shall, at least thirty (30) days prior to the expiration of such policies, furnish Lessor with evidence of renewals or "insurance binders" evidencing renewal thereof, or Lessor may order such insurance and charge the cost thereof to Lessee, which amount shall be payable by Lessee to Lessor upon demand. Such policies shall be for a term of at least one year, or the length of the remaining term of this Lease, whichever is less. If either Party shall fail to procure and maintain the insurance required to be carried by it, the other Party may, but shall not be required to, procure and maintain the same.

8.6 WAIVER OF SUBROGATION. Without affecting any other rights or remedies, Lessee and Lessor each hereby release and relieve the other, and waive their entire right to recover damages against the other, for loss of or damage to its property arising out of or incident to the perils required to be insured against herein. The effect of such releases and waivers is not limited by the amount of insurance carried or required, or by any deductibles applicable hereto. The Parties agree to have their respective property damage insurance carriers waive any right to subrogation that such companies may have against Lessor or Lessee, as the case may be, so long as the insurance is not invalidated thereby.

8.7 INDEMNITY. Except for Lessor's gross negligence or willful misconduct, Lessee shall indemnify, protect, defend and hold harmless the Premises, Lessor and its agents, Lessor's master or ground lessor, partners and Lenders, from and against any and all claims, loss of rents and/or damages, liens, judgments, penalties, attorneys' and consultants' fees, expenses and/or liabilities arising out of, involving, or in connection with, the use and/or occupancy of the Premises by Lessee. If any action or proceeding is brought against Lessor by reason of any of the foregoing matters, Lessee shall upon notice defend the same at Lessee's expense by counsel reasonably satisfactory to Lessor and Lessor shall cooperate with Lessee in such defense. Lessor need not have first paid any such claim in order to be defended or indemnified.


8.8 EXEMPTION OF LESSOR FROM LIABILITY. Lessor shall not be liable for injury or damage to the person or goods, wares, merchandise or other property of Lessee, Lessee's employees, contractors, invitees, customers, or any other person in or about the Premises, whether such damage or injury is caused by or results from fire, steam, electricity, gas, water or rain, or from the breakage, leakage, obstruction or other defects of pipes, fire sprinklers, wires, appliances, plumbing, HVAC or lighting fixtures, or from any other cause, whether the said injury or damage results from conditions arising upon the Premises or upon other portions of the Building of which the Premises are a part, or from other sources or places. Lessor shall not be liable for any damages arising from any act or neglect of any other tenant of Lessor. Notwithstanding Lessor's negligence or breach of this Lease, Lessor shall under no circumstances be liable for injury to Lessee's business or for any loss of income or profit therefrom.

9. DAMAGE OR DESTRUCTION.

9.1 DEFINITIONS.

(a) "PREMISES PARTIAL DAMAGE" shall mean damage or destruction to the improvements on the Premises, other than Lessee Owned Alterations, Utility Installations and Trade Fixtures, which can reasonably be repaired in six (6) months or less from the date of the damage or destruction. Lessor shall notify Lessee in writing within thirty (30) days from the date of the damage or destruction as to whether or not the damage is Partial or Total.

(b) "PREMISES TOTAL DESTRUCTION" shall mean damage or destruction to the Premises, other than Lessee Owned Alterations and Utility Installations and Trade Fixtures, which cannot reasonably be repaired in six (6) months or less from the date of the damage or destruction. Lessor shall notify Lessee in writing within thirty (30) days from the date of the damage or destruction as to whether or not the damage is Partial or Total.

(c) "INSURED LOSS" shall mean damage or destruction to improvements on the Premises, other than Lessee Owned Alterations and Utility Installations and Trade Fixtures, which was caused by an event required to be covered by the insurance described in Paragraph 8.3(a), irrespective of any deductible amounts or coverage limits involved.

(d) "REPLACEMENT COST" shall mean the cost to repair or rebuild the improvements owned by Lessor at the time of the occurrence to their condition existing immediately prior thereto, including demolition, debris removal and upgrading required by the operation of Applicable Requirements, and without deduction for depreciation.

(e) "HAZARDOUS SUBSTANCE CONDITION" shall mean the occurrence or discovery of a condition involving the presence of, or a contamination by, a Hazardous Substance as defined in Paragraph 6.2(a), in, on, or under the Premises.

9.2 PARTIAL DAMAGE - INSURED LOSS. If a Premises Partial Damage that is an Insured Loss occurs, then Lessor shall, at Lessor's expense, repair such damage (but not Lessee's Trade Fixtures or Lessee Owned Alterations and Utility Installations) as soon as reasonably possible and this Lease shall continue in full force and effect; provided, however, that Lessee shall, at Lessor's election, make the repair of any damage or destruction the total cost to repair of which is $10,000 or less, and, in such event, Lessor shall make any applicable insurance proceeds available to Lessee on a reasonable basis for that purpose. Notwithstanding the foregoing, if the required insurance was not in force or the insurance proceeds are not sufficient to effect such repair, the Insuring Party shall promptly contribute the shortage in proceeds as and when required to complete said repairs. In the event, however, such shortage was due to the fact that, by reason of the unique nature of the improvements, full replacement cost insurance coverage was not commercially reasonable and available, Lessor shall have no obligation to pay for the shortage in insurance proceeds or to fully restore the unique aspects of the Premises unless Lessee provides Lessor with the funds to cover same, or adequate assurance thereof, within ten (10) days following receipt of written notice of such shortage and request therefor. If Lessor receives said funds or adequate assurance thereof within said ten (10) day period, the party responsible for making the repairs shall complete them as soon as reasonably possible and this Lease shall remain in full force and effect. If such funds or assurance are not received, Lessor may nevertheless elect by written notice to Lessee within ten (10) days thereafter to: (i) make such restoration and repair as is commercially reasonable with Lessor paying any shortage in proceeds, in which case this Lease shall remain in full force and effect; or (ii) have this Lease terminate thirty
(30) days thereafter. Lessee shall not be entitled to reimbursement of any funds contributed by Lessee to repair any such damage or destruction. Premises Partial Damage due to flood or earthquake shall be subject to Paragraph 9.3, notwithstanding that there may be some insurance coverage, but the net proceeds of any such insurance shall be made available for the repairs if made by either Party.

9.3 PARTIAL DAMAGE - UNINSURED LOSS. If a Premises Partial Damage that is not an Insured Loss occurs, unless caused by a negligent or willful act of Lessee (in which event Lessee shall make the repairs at Lessee's expense), Lessor may either: (i) repair such damage as soon as reasonably possible at Lessor's expense, in which event this Lease shall continue in full force and effect, or (ii) terminate this Lease by giving written notice to Lessee within thirty (30) days after receipt by Lessor of knowledge of the occurrence of such damage. Such termination shall be effective sixty (60) days following the date of such notice. In the event Lessor elects to terminate this Lease, Lessee shall have the right within ten (10) days after receipt of the termination notice to give written notice to Lessor of Lessee's commitment to pay for the repair of such damage without reimbursement from Lessor. Lessee shall provide Lessor with said funds or satisfactory assurance thereof within thirty (30) days after making such commitment. In such event this Lease shall continue in full force


and effect, and Lessor shall proceed to make such repairs as soon as reasonably possible after the required funds are available. If Lessee does not make the required commitment, this Lease shall terminate as of the date specified in the termination notice.

9.4 TOTAL DESTRUCTION. Notwithstanding any other provision hereof, if a Premises Total Destruction occurs, this Lease shall terminate sixty (60) days following such Destruction. If the damage or destruction was caused by the gross negligence or willful misconduct of Lessee, Lessor shall have the right to recover Lessor's damages from Lessee, except as provided in Paragraph 8.6.

9.5 DAMAGE NEAR END OF TERM. If at any time during the last six
(6) months of this Lease there is damage for which the cost to repair exceeds one (1) month's Base Rent, whether or not an Insured Loss, Lessor may terminate this Lease effective sixty (60) days following the date of occurrence of such damage by giving a written termination notice to Lessee within thirty (30) days after the date of occurrence of such damage. Notwithstanding the foregoing, if Lessee at that time has an exercisable option to extend this Lease or to purchase the Premises, then Lessee may preserve this Lease by, (a) exercising such option and (b) providing Lessor with any shortage in insurance proceeds (or adequate assurance thereof) needed to make the repairs on or before the earlier of (i) the date which is ten days after Lessee's receipt of Lessor's written notice purporting to terminate this Lease, or (ii) the day prior to the date upon which such option expires. If Lessee duly exercises such option during such period and provides Lessor with funds (or adequate assurance thereof) to cover any shortage in insurance proceeds, Lessor shall, at Lessor's commercially reasonable expense, repair such damage as soon as reasonably possible and this Lease shall continue in full force and effect. If Lessee fails to exercise such option and provide such funds or assurance during such period, then this Lease shall terminate on the date specified in the termination notice and Lessee's option shall be extinguished.

9.6 ABATEMENT OF RENT; LESSEE'S REMEDIES.

(a) ABATEMENT. In the event of Premises Partial Damage or Premises Total Destruction or a Hazardous Substance Condition for which Lessee is not responsible under this Lease, the Rent payable by Lessee for the period required for the repair, remediation or restoration of such damage shall be abated in proportion to the degree to which Lessee's use of the Premises is impaired, but not to exceed the proceeds received from the Rental Value insurance. All other obligations of Lessee hereunder shall be performed by Lessee, and Lessor shall have no liability for any such damage, destruction, remediation, repair or restoration except as provided herein.

(b) REMEDIES. If Lessor shall be obligated to repair or restore the Premises and does not commence, in a substantial and meaningful way, such repair or restoration within ninety (90) days after such obligation shall accrue, Lessee may, at any time prior to the commencement of such repair or restoration, give written notice to Lessor and to any Lenders of which Lessee has actual notice, of Lessee's election to terminate this Lease on a date not less than sixty (60) days following the giving of such notice. If Lessee gives such notice and such repair or restoration is not commenced within thirty (30) days thereafter, this Lease shall terminate as of the date specified in said notice. If the repair or restoration is commenced within said thirty (30) days, this Lease shall continue in full force and effect. "Commence" shall mean either the unconditional authorization of the preparation of the required plans, or the beginning of the actual work on the Premises, whichever first occurs.

9.7 TERMINATION - ADVANCE PAYMENTS. Upon termination of this Lease pursuant to Paragraph 6.2(g) or Paragraph 9, an equitable adjustment shall be made concerning advance Base Rent and any other advance payments made by Lessee to Lessor. Lessor shall, in addition, return to Lessee so much of Lessee's Security Deposit as has not been, or is not then required to be, used by Lessor.

9.8 WAIVE STATUTES. Lessor and Lessee agree that the terms of this Lease shall govern the effect of any damage to or destruction of the Premises with respect to the termination of this Lease and hereby waive the provisions of any present or future statute to the extent inconsistent herewith.

10. REAL PROPERTY TAXES.

10.1 DEFINITION OF "REAL PROPERTY TAXES." As used herein, the term "Real Property Taxes" shall include any form of assessment; real estate, general, special, ordinary or extraordinary, or rental levy or tax (other than inheritance, personal income or estate taxes); improvement bond; and/or license fee imposed upon or levied against any legal or equitable interest of Lessor in the Premises, Lessor's right to other income therefrom, and/or Lessor's business of leasing, by any authority having the direct or indirect power to tax and where the funds are generated with reference to the Building address and where the proceeds so generated are to be applied by the city, county or other local taxing authority of a jurisdiction within which the Premises are located. The term "REAL PROPERTY TAXES" shall also include any tax, fee, levy, assessment or charge, or any increase therein, imposed by reason of events occurring during the term of this Lease, including, but not limited to, a change in the ownership of the Premises.

10.2 (a) PAYMENT OF TAXES. Lessee shall pay the Real Property Taxes applicable to the Premises provided during the term of this Lease. Subject to paragraph 10.2(b), all such payments shall be made at least ten (10) days prior to any delinquency date. Upon Lessor's request Lessee shall promptly furnish Lessor with satisfactory evidence that such taxes have been paid. if any such taxes shall cover any period of time prior to or after the expiration or termination of this Lease, Lessee's share of such taxes shall be prorated bto cover only that portion of the tax bill applicable to the period that this lease is in effect, and Lessor shall reimburse lessee for any


overpayment. If Lessee shall fail to pay any required Real Property taxes, Lessor shall have the right to pay the same, and Lessee shall reimburse Lessor therefor upon demand.

(b)

10.3 JOINT ASSESSMENT. If the Premises are not separately assessed, Lessee's liability shall be an equitable proportion of the Tax Increase for all of the land and improvements included within the tax parcel assessed, such proportion to be conclusively determined by Lessor from the respective valuations assigned in the assessor's work sheets or such other information as may be reasonably available.

10.4 PERSONAL PROPERTY TAXES. Lessee shall pay, prior to delinquency, all taxes assessed against and levied upon Lessee Owned Alterations, Utility Installations, Trade Fixtures, furnishings, equipment and all personal property of Lessee. When possible, Lessee shall cause such property to be assessed and billed separately from the real property of Lessor. If any of Lessee's said personal property shall be assessed with Lessor's real property, Lessee shall pay Lessor the taxes attributable to Lessee's property within ten
(10) days after receipt of a written statement.

11. UTILITIES. Lessee shall pay for all water, gas, heat, light, power, telephone, trash disposal and other utilities and services supplied to the Premises, together with any taxes thereon. If any such services are not separately metered to Lessee, Lessee shall pay a reasonable proportion, to be determined by Lessor, of all charges jointly metered.

12. ASSIGNMENT END SUBLETTING.

12.1 LESSOR'S CONSENT REQUIRED. See Addendum paragraphs 51 and 57.

(a) Lessee shall not voluntarily or by operation of law assign, transfer, mortgage or encumber (collectively, "ASSIGN OR ASSIGNMENT") or sublet ail or any part of Lessee's interest in this Lease or in the Premises without Lessor's prior written consent.

(b) A change in the control of Lessee shall constitute an assignment requiring consent. The transfer, on a cumulative basis, of fifty-one percent (51%) or more of the voting control of Lessee without Lessor's prior written consent shall constitute a change in control for this purpose.

(c) The involvement of Lessee or its assets in any transaction, or series of transactions (by way of merger, sale, acquisition, financing, transfer, leverage buy-out or otherwise), whether or not a formal assignment or hypothecation of this Lease or Lessee's assets occurs, which results or will result in a reduction of the Net Worth of Lessee by an amount greater than twenty-five percent (25%) of such Net Worth as it was represented at the time o! the execution of this Lease or at the time of the most recent assignment to which Lessor has consented, or as it exists immediately prior to said transaction or transactions constituting such reduction, whichever was or is greater, shall be considered an assignment of this Lease to which Lessor may withhold its consent. "NET WORTH OF LESSEE" shall mean the net worth of Lessee (excluding any guarantors) established under generally accepted accounting principles.

(d) An assignment or subletting without consent shall, at Lessor's option, be a Default curable after notice per Paragraph 13.1(c), or a noncurable Breach without the necessity of any notice and grace period. If Lessor elects to treat such unapproved assignment or subletting as a noncurable Breach, Lessor may either: (i) terminate this Lease, or (ii) upon thirty (30) days written notice, increase the monthly Base Rent to one hundred ten percent (110%) of the Base Rent then in effect. Further, in the event of such Breach and rental adjustment, (i) the purchase price of any option to purchase the Premises held by Lessee shall be subject to similar adjustment to one hundred ten percent (110%) of the price previously in effect, and (ii) all fixed and non-fixed rental adjustments scheduled during the remainder of the Lease term shall be increased to one hundred ten percent (110%) of the scheduled adjusted rent.

(e) Lessee's remedy for any breach of Paragraph 12.1 by .Lessor shall be limited to compensatory damages and/or injunctive relief.


12.2 TERMS AND CONDITIONS APPLICABLE TO ASSIGNMENT AND SUBLETTING.

(a) Regardless of Lessor's consent, any assignment or subletting shall not: (i) be effective without the express written assumption by such assignee or sublessee of the obligations of Lessee under this Lease; (ii) release Lessee of any obligations hereunder; or (iii) alter the primary liability of Lessee for the payment of Rent or for the performance of any other obligations to be performed by Lessee.

(b) Lessor may accept Rent or performance of Lessee's obligations from any person other than Lessee pending approval or disapproval of an assignment. Neither a delay in the approval or disapproval of such assignment nor the acceptance of Rent or performance shall constitute a waiver or estoppel of Lessor's right to exercise its remedies for Lessee's Default or Breach.

(c) Lessor's consent to any assignment or subletting shall not constitute a consent to any subsequent assignment or subletting.

(d) In the event of any Default or Breach by Lessee, Lessor may proceed directly against Lessee, any Guarantors or anyone else responsible for the performance of Lessee's obligations under this Lease, including any assignee or sublessee, without first exhausting Lessor's remedies against any other person or entity responsible therefore to Lessor, or any security held by Lessor.

(e) Each request for consent to an assignment or subletting shall be in writing, accompanied by information relevant to Lessor's determination as to the financial and operational responsibility and appropriateness of the proposed assignee or sublessee, including but not limited to the intended use and/or required modification of the Premises, if any, together with a fee of not to exceed $1,000 as consideration for Lessor's considering and processing said request. Lessee agrees to provide Lessor with such other or additional information and/or documentation as may be reasonably requested.

(f) Any assignee of, or sublessee under, this Lease shall, by reason of accepting such assignment or entering into such sublease, be deemed to have assumed and agreed to conform and comply with each and every term, covenant, condition and obligation herein to be observed or performed by Lessee during the term of said assignment or sublease, other than such obligations as are contrary to or inconsistent with provisions of an assignment or sublease to which Lessor has specifically consented to in writing.

12.3 ADDITIONAL TERMS AND CONDITIONS APPLICABLE TO SUBLETTING. The following terms and conditions shall apply to any subletting by Lessee of all or any part of the Premises and shall be deemed included in all subleases under this Lease whether or not expressly incorporated therein:

(a) Lessee hereby assigns and transfers to Lessor all of Lessee's interest in all Rent payable on any sublease, and Lessor may collect such Rent and apply same toward Lessee's obligations under this Lease; provided, however, that until a Breach shall occur in the performance of Lessee's obligations, Lessee may collect said Rent subject to Lessor's right to receive bonus rent, if any, pursuant to Addendum Paragraphs.. Lessor shall not, by reason of the foregoing or any assignment of such sublease, nor by reason of the collection of Rent, be deemed liable to the sublessee for any failure of Lessee to perform and comply with any of Lessee's obligations to such sublessee. Lessee hereby irrevocably authorizes and directs any such sublessee, upon receipt of a written notice from Lessor stating that a Breach exists in the performance of Lessee's obligations under this Lease, to pay to Lessor all Rent due and to become due under the sublease. Sublessee shall rely upon any such notice from Lessor and shall pay all Rents to Lessor without any obligation or right to inquire as to whether such Breach exists, notwithstanding any claim from Lessee to the contrary.

(b) In the event of a Breach by Lessee, Lessor may, at its option, require sublessee to attorn to Lessor, in which event Lessor shall undertake the obligations of the sublessor under such sublease from the time of the exercise of said option to the expiration of such sublease; provided, however, Lessor shall not be liable for any prepaid rents or security deposit paid by such sublessee to such sublessor or for any prior Defaults or Breaches of such sublessor.

(c) Any matter requiring the consent of the sublessor under ,, sublease shall also require the consent of Lessor.

(d) See Addendum paragraph 57(a).

(e) Lessor shall deliver a copy of any notice of Default or Breach by Lessee to the sublessee, who shall have the right to cure the Default of Lessee within the grace period, if any, specified in such notice. The sublessee shall have a right of reimbursement and offset from and against Lessee for any such Defaults cured by the sublessee.

13. DEFAULT; BREACH; REMEDIES.


13.1 DEFAULT; BREACH. A "DEFAULT" is defined as a failure by the Lessee to comply with or perform any of the terms, covenants, conditions or rules under this Lease. A "BREACH" is defined as the occurrence of one or more of the following Defaults, and the failure of Lessee to cure such Default within any applicable grace period:

(a) The abandonment of the Premises; or the vacating of the Premises without providing a commercially reasonable level of security, and/or Security Deposit or where the coverage of the property insurance described in Paragraph 8.3 is jeopardized as a result thereof, or without providing reasonable assurances to minimize potential vandalism.

(b) The failure of Lessee to make any payment of Rent or any Security Deposit required to be made by Lessee hereunder, whether to Lessor or to a third party, when due, to provide reasonable evidence of insurance or surety bond, or to fulfill any obligation under this Lease which endangers or threatens life or property, where such failure continues for a period of three
(3) business days following written notice to Lessee.

(c) The failure by Lessee to provide (i) reasonable written evidence of compliance with Applicable Requirements, (ii) the service contracts, (iii) the rescission of an unauthorized assignment or subletting,
(iv) Estoppel Certificate, (v) a requested subordination, where any such failure continues for a period of ten (10) days following written notice to Lessee.

(d) A Default by Lessee as to the terms, covenants, conditions or provisions of this Lease, or of the rules adopted under Paragraph 40 hereof, other than those described in subparagraphs 13.1(a), (b) or (c), above, where such Default continues for a period of thirty (30) days after written notice; provided, however, that if the nature of Lessee's Default is such that more than thirty (30) days are reasonably required for its cure, then it shall not be deemed to be a Breach if Lessee commences such cure within said thirty (30) day period and thereafter diligently prosecutes such cure to completion.

(e) The occurrence of any of the following events: (i) the making of any general arrangement or assignment for the benefit of creditors; (ii) becoming a "debtor" as defined in 11 U.S.C. ss. 101 or any successor statute thereto (unless, in the case of a petition filed against Lessee, the same is dismissed within sixty (60) days); (iii) the appointment of a trustee or receiver to take possession of substantially all of Lessee's assets located at the Premises or of Lessee's interest in this Lease, where possession is not restored to Lessee within sixty (60) days; or (iv) the attachment, execution or other judicial seizure of substantially all of Lessee's assets located at the Premises or of Lessee's interest in this Lease, where such seizure is not discharged within sixty (60) days; provided, however, in the event that any provision of this subparagraph 13.1 (e) is contrary to any applicable law, such provision shall be of no force or effect, and not affect the validity of the remaining provisions.

(f) The discovery that any financial statement of Lessee or of any Guarantor given to Lessor was materially false intentionally.

(g)

13.2 REMEDIES. In the event of the Breach of this Lease by Lessee, Lessor may, at its option, perform such duty or obligation on Lessee's behalf, including, but not limited to, the obtaining of reasonably required bonds, insurance policies, or governmental licenses, permits or approvals. The costs and expenses of any such performance by Lessor shall be due and payable by Lessee upon receipt of invoice therefor. If any check given to Lessor by Lessee shall not be honored by the bank upon which is drawn, Lessor, at its option, may require all future payments to be made by Lessee to be by cashier's check, in the event of a Breach, Lessor may, with or without further notice or demand, and without limiting Lessor in the exercise of any right or remedy which Lessor may have by reason of such Breach:

(a) Terminate Lessee's right to possession of the Premises by any lawful means, in which case this Lease shall terminate and Lessee shall immediately surrender possession to Lessor. In such event Lessor shall be entitled to recover from Lessee: (i) the unpaid Rent which had been earned at the time of termination; (ii) the worth at the time of award of the amount by which the unpaid rent which would have been earned after termination until the time of award exceeds the amount of such rental loss that the Lessee proves could have been reasonably avoided; (iii) the worth at the time of award of the amount by which the unpaid rent for the balance of the term after the time of award exceeds the amount of such rental loss that the Lessee proves could be reasonably avoided; and (iv) any other amount necessary to compensate Lessor for all the detriment proximately caused by the Lessee's failure to perform its obligations under


this Lease or which in the ordinary course of things would be likely to result therefrom, including, but not limited to, the cost of recovering possession of the Premises, expenses of reletting, including necessary renovation and alteration of the Premises, reasonable attorneys' fees, and that portion of any leasing commission paid by Lessor in connection with this Lease applicable to the unexpired term of this Lease. The worth at the time of award of the amount referred to in provision (iii) of the immediately preceding sentence shall be computed by discounting such amount at the discount rate of the Federal Reserve Bank of the District within which the Premises are located at the time of award plus one percent (1%). Efforts by Lessor to mitigate damages caused by Lessee's Breach of this Lease shall not waive Lessor's right to recover damages under Paragraph 12. If termination of this Lease is obtained through the provisional remedy of unlawful detainer, Lessor shall have the right to recover in such proceeding any unpaid Rent and damages as are recoverable therein, or Lessor may reserve the right to recover all or any part thereof in a separate suit. If a notice and grace period required under Paragraph 13.1 was not previously given, a notice to pay rent or quit, or to perform or quit given to Lessee under the unlawful detainer statute shall also constitute the notice required by Paragraph
13.1. In such case, the applicable grace period required by Paragraph 13.1 and the unlawful detainer statute shall run concurrently, and the failure of Lessee to cure the Default within the greater of the two such grace periods shall constitute both an unlawful detainer and a Breach of this Lease entitling Lessor to the remedies provided for in this Lease and/or by said statute.

(b) Continue the Lease and Lessee's right to possession and recover the Rent as it becomes due, in which event Lessee may sublet or assign, subject only to reasonable limitations. Acts of maintenance, efforts to relet, and/or the appointment of a receiver to protect the Lessor's interests, shall not constitute a termination of the Lessee's right to possession.

(c) Pursue any other remedy now or hereafter available under the laws or judicial decisions of the state wherein the Premises are located. The expiration or termination of this Lease and/or the termination of Lessee's right to possession shall not relieve Lessee from liability under any indemnity provisions of this Lease as to matters occurring or accruing during the term hereof prior to such termination or by reason of Lessee's occupancy of the Premises.

13.3

13.4 LATE CHARGES. Lessee hereby acknowledges that late payment by Lessee of Rent will cause Lessor to incur costs not contemplated by this Lease, the exact amount of which will be extremely difficult to ascertain. Such costs include, but are not limited to, processing and accounting charges, and late charges which may be imposed upon Lessor by any Lender. See Addendum Paragraph
58. The parties hereby agree that such late charge represents a fair and reasonable estimate of the costs Lessor will incur by reason of such late payment. Acceptance of such late charge by Lessor shall in no event constitute a waiver of Lessee's Default or Breach with respect to such overdue amount, nor prevent the exercise of any of the other rights and remedies granted hereunder. In the event that a late charge is payable hereunder, whether or not collected, for three (3) consecutive installments of Base Rent, then notwithstanding any provision of this Lease to the contrary, Base Rent shall, at Lessor's option, become due and payable quarterly in advance.

13.5 INTEREST. Any monetary payment due Lessor hereunder, other than late charges, not received by Lessor, when due as to scheduled payments (such as Base Rent) or within thirty (30) days following the date on which it was due for non-scheduled payment, shall bear interest from the date when due, as to scheduled payments, or the thirty-first (31st) day after it was due as to non-scheduled payments. The interest ("Interest") charged shall be equal to the prime rate reported in the Wall Street Journal as published closest prior to the date when due plus four percent (4%), but shall not exceed the maximum rate allowed by law. Interest is payable in addition to the potential late charge provided for in Paragraph 13.4.

13.6 BREACH BY LESSOR.

(a) NOTICE OF BREACH. Lessor shall not be deemed in breach of this Lease unless Lessor fails within a reasonable time to perform an obligation required to be performed by Lessor. For purposes of this Paragraph, a reasonable time shall in no event be less than thirty (30) days after receipt by Lessor, and any Lender whose name and address shall have been furnished Lessee in writing for such purpose, of written notice specifying wherein such obligation of Lessor has not been performed; provided, however, that if the nature of Lessor's obligation is such that more than thirty (30) days are reasonably required for its performance, then Lessor shall not be in breach if performance is commenced within such thirty (30) day period and thereafter diligently pursued to completion.


(b) PERFORMANCE BY LESSEE ON BEHALF OF LESSOR. in the event that neither Lessor nor Lender cures said breach within thirty (30) days after receipt of said written notice, or if having commenced said cure they do not diligently pursue it to completion, then Lessee may elect to cure said breach at Lessee's expense and offset from Rent an amount equal to the greater of one month's Base Rent or the Security Deposit, and to pay an excess of such expense under protest, reserving Lessee's right to reimbursement from Lessor. Lessee shall document the cost of said cure and supply said documentation to Lessor.

14. CONDEMNATION. See Addendum Paragraph 59.

15. BROKERS' FEE.

15.1

15.2 ASSUMPTION OF OBLIGATIONS. Any buyer or transferee of Lessor's interest in this Lease shall be deemed to have assumed Lessor's obligation hereunder. Each Broker shall be a third party beneficiary of the provisions of Paragraphs 1.10, 15, 22 and 31. If Lessor fails to pay to a Broker any amounts due as and for commissions pertaining to this Lease when due, then such amounts shall accrue Interest. In addition, if Lessor fails to pay any amounts to Lessee's Broker when due, Lessee's Broker may send written notice to Lessor and Lessee of such failure and if Lessor fails to pay such amounts within ten (10) days after said notice, Lessee shall pay said monies to its Broker and offset such amounts against Rent. In addition, Lessee's Broker shall be deemed to be a third party beneficiary of any commission agreement entered into by and/or between Lessor and Lessor's Broker.

15.3 REPRESENTATIONS AND INDEMNITIES OF BROKER RELATIONSHIPS. Lessee and Lessor each represent and warrant to the other that it has had no dealings with any person, firm, broker or finder (other than the Brokers, if any) in connection with this Lease, and that no one other than said named Brokers is entitled to any commission or finder's fee in connection herewith. Lessee and Lessor do each hereby agree to indemnify, protect, defend and hold the other harmless from and against liability for compensation or charges which may be claimed by any such unnamed broker, finder or other similar party by reason of any dealings or actions of the indemnifying Party, including any costs, expenses, and/or attorneys' fees reasonably incurred with respect thereto.

16. ESTOPPEL CERTIFICATES.

(a) See Addendum Paragraph 60.

(b) If the Responding Party shall fail to execute or deliver the Estoppel Certificate within such ten day period, the Requesting Party may execute an Estoppel Certificate stating that: (i) the Lease is in full force and effect without modification except as may be represented by the Requesting Party; (ii) there are no uncured defaults in the Requesting Party's performance; and (iii) if Lessor is the Requesting Party, not more than one month's rent has been paid in advance. Prospective purchasers and encumbrancers may rely upon the Requesting Party's Estoppel Certificate, and the Responding Party shall be estopped from denying the truth of the facts contained in said Certificate.


(c) If Lessor desires to finance, refinance, or sell the Premises, or any part thereof, Lessee and all Guarantors shall deliver to any potential lender or purchaser designated by Lessor such financial statements as may be reasonably required by such lender or purchaser, including, but not limited to, Lessee's financial statements for the past three (3) years. All such financial statements shall be received by Lessor and such lender or purchaser in confidence and shall be used only for the purposes herein set forth.

17. DEFINITION OF LESSOR. The term "Lessor" as used herein shall mean the owner or owners at the time in question of the fee title to the Premises, or, if this is a sublease, of the Lessee's interest in the prior lease. In the event of a transfer of Lessor's title or interest in the Premises or this Lease, Lessor shall deliver to the transferee or assignee (in cash or by credit) any unused Security Deposit held by Lessor. Except as provided in Paragraph 15, upon such transfer or assignment and delivery of the Security Deposit, as aforesaid, the prior Lessor shall be relieved of all liability with respect to the obligations and/or covenants under this Lease thereafter to be performed by the Lessor. Subject to the foregoing, the obligations and/or covenants in this Lease to be performed by the Lessor shall be binding only upon the Lessor as hereinabove defined. Notwithstanding the above, and subject to the provisions of Paragraph 20 below, the original Lessor under this Lease, and all subsequent holders of the Lessor's interest in this Lease shall remain liable and responsible with regard to the potential duties and liabilities of Lessor pertaining to Hazardous Substances as outlined in Paragraph 6 above.

18. SEVERABILITY. The invalidity of any provision of this Lease, as determined by a court of competent jurisdiction, shall in no way affect the validity of any other provision hereof.

19. DAYS. Unless otherwise specifically indicated to the contrary, the word "days" as used in this Lease shall mean and refer to calendar days.

20. LIMITATION ON LIABILITY. Subject to the provisions of Paragraph 17 above, the obligations of Lessor under this Lease shall not constitute personal obligations of Lessor, the individual partners of Lessor or its or their individual partners, directors, officers or shareholders, and Lessee shall look to the Premises, and to no other assets of Lessor, for the satisfaction of any liability of Lessor with respect to this Lease, and shall not seek recourse against the individual partners of Lessor, or its or their individual partners, directors, officers or shareholders, or any of their personal assets for such satisfaction.

21. TIME OF ESSENCE. Time is of the essence with respect to the performance of all obligations to be performed or observed by the Parties under this Lease.

22. NO PRIOR OR OTHER AGREEMENTS; BROKER DISCLAIMER. This Lease contains all agreements between the Parties with respect to any matter mentioned herein, and no other prior or contemporaneous agreement or understanding shall be effective.

23. NOTICES.

23.1 NOTICE REQUIREMENTS. All notices required or permitted by this Lease shall be in writing and may be delivered in person (by hand or by courier) or may be sent by regular, certified or registered mail or U.S. Postal Service Express Mail, with postage prepaid, or by facsimile transmission, and shall be deemed sufficiently given if served in a manner specified in this Paragraph 23. The addresses noted adjacent to a Party's signature on this Lease shall be that Party's address for delivery or mailing of notices. Either Party may by written notice to the other specify a different address for notice, except that upon Lessee's taking possession of the Premises, the Premises shall constitute Lessee's address for notice. A copy of all notices to Lessor shall be concurrently transmitted to such party or parties at such addresses as Lessor may from time to time hereafter designate in writing.

23.2 DATE OF NOTICE. Any notice sent by registered or certified mail, return receipt requested, shall be deemed given on the date of delivery shown on the receipt card, or if no delivery date is shown, the postmark thereon. If sent by regular mail the notice shall be deemed given forty-eight
(48) hours after the same is addressed as required herein and mailed with postage prepaid. Notices delivered by United States Express Mail or overnight courier that guarantee next day delivery shall be deemed given twenty-four (24) hours after delivery of the same to the Postal Service or courier. Notices transmitted by facsimile transmission or similar means shall be deemed delivered upon telephone confirmation of receipt, provided a copy is also delivered via delivery or mail. If notice is received on a Saturday, Sunday or legal holiday, it shall be deemed received on the next business day.

24. WAIVERS. No waiver by Lessor of the Default or Breach of any term, covenant or condition hereof by Lessee, shall be deemed a waiver of any other term, covenant or condition hereof, or of any subsequent Default or Breach by Lessee of the same or of any


other term, covenant or condition hereof. Lessor's consent to, or approval of, any act shall not be deemed to render unnecessary the obtaining of Lessor's consent to, or approval of, any subsequent or similar act by Lessee, or be construed as the basis of an estoppel to enforce the provision or provisions of this Lease requiring such consent. The acceptance of Rent by Lessor shall not be a waiver of any Default or Breach by Lessee. Any payment by Lessee may be accepted by Lessor on account of monies or damages due Lessor, notwithstanding any qualifying statements or conditions made by Lessee in connection therewith, which such statements and/or conditions shall be of no force or effect whatsoever unless specifically agreed to in writing by Lessor at or before the time of deposit of such payment.

25. RECORDING. Either Lessor or Lessee shall, upon request of the other, execute, acknowledge and deliver to the other a short form memorandum of this Lease for recording purposes. The Party requesting recordation shall be responsible for payment of any fees applicable thereto.

26. NO RIGHT TO HOLDOVER. Lessee has no right to retain possession of the Premises or any part thereof beyond the expiration or termination of this Lease. In the event that Lessee holds over, then the Base Rent shall be increased to one hundred fifty percent (150%) of the Base Rent applicable during the month immediately preceding the expiration or termination. Nothing contained herein shall be construed as consent by Lessor to any holding over by Lessee.

27. CUMULATIVE REMEDIES. No remedy or election hereunder shall be deemed exclusive but shall, wherever possible, be cumulative with all other remedies at law or in equity.

28. COVENANTS AND CONDITIONS; CONSTRUCTION OF AGREEMENT. All provisions of this Lease to be observed or performed by Lessee are both covenants and conditions. In construing this Lease, all headings and titles are for the convenience of the Parties only and shall not be considered a part of this Lease. Whenever required by the context, the singular shall include the plural and vice versa. This Lease shall not be construed as if prepared by one of the Parties, but rather according to its fair meaning as a whole, as if both Parties had prepared it.

29. BINDING EFFECT; CHOICE OF LAW. This Lease shall be binding upon the Parties, their personal representatives, successors and assigns and be governed by the laws of the State in which the Premises are located. Any litigation between the Parties hereto concerning this Lease shall be initiated in the county in which the Premises are located.

30. SUBORDINATION; ATTORNMENT; NON-DISTURBANCE.

30.1 SUBORDINATION. Subject to Paragraph 30.3 this Lease and any Option granted hereby shall be subject and subordinate to any ground lease, mortgage, deed of trust or other hypothecation or security device (collectively, "Security Device"), now or hereafter placed upon the Premises, to any and all advances made on the security thereof, and to all renewals, modifications, and extensions thereof. Lessee agrees that the holders of any such Security Devices (in this Lease together referred to as "Lessor's Lender") shall have no liability or obligation to perform any of the obligations of Lessor under this Lease. Any Lender may elect to have this Lease and/or any Option granted hereby superior to the lien of its Security Device by giving written notice thereof to Lessee, whereupon this Lease and such Options shall be deemed prior to such Security Device, notwithstanding the relative dates of the documentation or recordation thereof.

30.2 ATTORNMENT. Subject to the non-disturbance provisions of Paragraph 30.3, Lessee agrees to attorn to a Lender or any other party who acquires ownership of the Premises by reason of a foreclosure of a Security Device, and that in the event of such foreclosure, such new owner shall not: (i) be liable for any act or omission of any prior lessor or with respect to events occurring prior to acquisition of ownership; (ii) be subject to any offsets or defenses which Lessee might have against any prior lessor; or (iii) be bound by prepayment of more than one (1) month's rent.

30.3 NON-DISTURBANCE. With respect to Security Devices entered into by Lessor after the execution of this Lease, Lessee's subordination of this Lease shall be subject to receiving a commercially reasonable non-disturbance agreement (a "Non-Disturbance Agreement") from the Lender which Non-Disturbance Agreement provides that Lessee's possession of the Premises, and this Lease, including any options to extend the term hereof, will not be disturbed so long as Lessee is not in Breach hereof and attorns to the record owner of the Premises. Further, within sixty (60) days after the execution of this Lease, Lessor shall use its commercially reasonable efforts to obtain a Non-Disturbance Agreement from the holder of any pre-existing Security Device which is secured by the Premises. In the event that Lessor is unable to provide the Non-Disturbance Agreement within said sixty (60) days, then Lessee may, at Lessee's option, directly contact Lessor's lender and attempt to negotiate for the execution and delivery of a Non-Disturbance Agreement.

30.4 SELF-EXECUTING. The agreements contained in this Paragraph 30 shall be effective without the execution of any further documents; provided, however, that, upon written request from Lessor or a Lender in connection with a sale, financing or refinancing of the Premises, Lessee and Lessor shall execute such further writings as may be reasonably required to separately document any subordination, attornment and/or Non-Disturbance Agreement provided for herein.


31. ATTORNEYS' FEES. If any Party or Broker brings an action or proceeding involving the Premises to enforce the terms hereof or to declare rights hereunder, the Prevailing Party (as hereafter defined) in any such proceeding, action, or appeal thereon, shall be entitled to reasonable attorneys' fees. Such fees may be awarded in the same suit or recovered in a separate suit, whether or not such action or proceeding is pursued to decision or judgment. The term, "PREVAILING PARTY" shall include, without limitation, a Party or Broker who substantially obtains or defeats the relief sought, as the case may be, whether by compromise, settlement, judgment, or the abandonment by the other Party or Broker of its claim or defense. The attorneys' fees award shall not be computed in accordance with any court fee schedule, but shall be such as to fully reimburse all attorneys' fees reasonably incurred. In addition, Lessor shall be entitled to attorneys' fees, costs and expenses incurred in the preparation and service of notices of Default and consultations in connection therewith, whether or not a legal action is subsequently commenced in connection with such Default or resulting Breach.

32. LESSOR'S ACCESS; SHOWING PREMISES; REPAIRS. [See Addendum Paragraph 61]

33. AUCTIONS. Lessee shall not conduct, nor permit to be conducted, any auction upon the Premises without Lessor's prior written consent. Lessor shall not be obligated to exercise any standard of reasonableness in determining whether to permit an auction.

34. SIGNS. See Addendum Paragraph 62.

35. TERMINATION; MERGER. Unless specifically stated otherwise in writing by Lessor, the voluntary or other surrender of this Lease by Lessee, the mutual termination or cancellation hereof, or a termination hereof by Lessor for Breach by Lessee, shall automatically terminate any sublease or lesser estate in the Premises; provided, however, that Lessor may elect to continue any one or all existing subtenancies. Lessor's failure within ten (10) days following any such event to elect to the contrary by written notice to the holder of any such lesser interest, shall constitute Lessor's election to have such event constitute the termination of such interest.

36. CONSENTS. Except as otherwise provided herein, wherever in this Lease the consent of a Party is required to an act by or for the other Party, such consent shall not be unreasonably withheld or delayed. Lessor's actual reasonable costs and expenses (including but not limited to architects', attorneys', engineers' and other consultants' fees) incurred in the consideration of, or response to, a request by Lessee for any Lessor consent, including but not limited to consents to an assignment, a subletting or the presence or use of a Hazardous Substance, shall be paid by Lessee upon receipt of an invoice and supporting documentation therefor. Lessor's consent to any act, assignment or subletting shall not constitute an acknowledgment that no Default or Breach by Lessee of this Lease exists, nor shall such consent be deemed a waiver of any then existing Default or Breach, except as may be otherwise specifically stated in writing by Lessor at the time of such consent. The failure to specify herein any particular condition to Lessor's consent shall not preclude the imposition by Lessor at the time of consent of such further or other conditions as are then reasonable with reference to the particular matter for which consent is being given. In the event that either Party disagrees with any determination made by the other hereunder and reasonably requests the reasons for such determination, the determining party shall furnish its reasons in writing and in reasonable detail within ten (10) business days following such request.

37.

37.1

37.2

38. QUIET POSSESSION. Subject to payment by Lessee of the Rent and performance of all of the covenants, conditions and provisions on Lessee's part to be observed and performed under this Lease, Lessee shall have quiet possession and quiet enjoyment of the Premises during the term hereof. Any remedy for breach of this provision shall be limited to damages or injunction and not Lease termination.

39. OPTIONS.


39.1 DEFINITION. "Option" shall mean: (a) the right to extend the term of or renew this Lease or to extend or renew any lease that Lessee has on other property of Lessor; (b) the right of first refusal or first offer to lease either the Premises or other property of Lessor; (c) the right to purchase or the right of first refusal to purchase the Premises or other property of Lessor.

39.2 OPTIONS PERSONAL TO ORIGINAL LESSEE. Each Option granted to Lessee in this Lease is personal to the original Lessee, and cannot be assigned or exercised by anyone other than said original Lessee and only while the original Lessee is in full possession of the Premises and, if requested by Lessor, with Lessee certifying that Lessee has no intention of thereafter assigning or subletting.

39.3 MULTIPLE OPTIONS. In the event that Lessee has any multiple Options to extend or renew this Lease, a later Option cannot be exercised unless the prior Options have been validly exercised.

39.4 EFFECT OF DEFAULT ON OPTIONS.

(a) Lessee shall have no right to exercise an Option: (i) during the period commencing with the giving of any notice of Default and continuing until said Default is cured; (ii) during the period of time any Rent is unpaid (without regard to whether notice thereof is given Lessee); (iii) during the time Lessee is in Breach of this Lease.

(b) The period of time within which an Option may be exercised shall not be extended or enlarged by reason of Lessee's inability to exercise an Option because of the provisions of Paragraph 39.4(a).

(c) An Option shall terminate and be of no further force or effect, notwithstanding Lessee's due and timely exercise of the Option, if, after such exercise and prior to the commencement of the extended term, if Lessee commits a Breach of this Lease and Lessor terminates this Lease,

40. MULTIPLE BUILDINGS. If the Premises are a part of a group of buildings controlled by Lessor Lessee agrees that it will observe all reasonable rules and regulations which Lessor may make from time to time for the management, safety, and care of said properties, including the care and cleanliness of the grounds and including the parking, loading and unloading of vehicles, and that Lessee will pay its fair share of common expenses incurred in connection therewith.

41. SECURITY MEASURES. Lessee hereby acknowledges that the rental payable to Lessor hereunder does not include the cost of guard service or other security measures, and that Lessor shall have no obligation whatsoever to provide same. Lessee assumes all responsibility for the protection of the Premises, Lessee, its agents and invitees and their property from the acts of third parties.

42. RESERVATIONS. Lessor reserves to itself the right, from time to time, to grant, without the consent or joinder of Lessee, such easements, rights and dedications that Lessor deems necessary, and to cause the recordation of parcel maps and restrictions, so long as such easements, rights, dedications maps and restrictions do not unreasonably interfere with the use of the Premises by Lessee or increase Lessee's costs or obligations hereunder. Lessee agrees to sign any documents reasonably requested by Lessor to effectuate any such easement rights, dedication, map or restrictions.

43. PERFORMANCE UNDER PROTEST. If at any time a dispute shall arise as to any amount or sum of money to be paid by one Party to the other under the provisions hereof, the Party against whom the obligation to pay the money is asserted shall have the right to make payment "under protest" and such payment shall not be regarded as a voluntary payment and there shall survive the right on the part of said Party to institute suit for recovery of such sum. If it shall be adjudged that there was no legal obligation on the part of said Party to pay such sum or any part thereof, said Party shall be entitled to recover such sum or so much thereof as it was not legally required to pay.

44. AUTHORITY. If either Party hereto is a corporation, trust, limited liability company, partnership, or similar entity, each individual executing this Lease on behalf of such entity represents and warrants that he or she is duly authorized to execute and deliver this Lease on its behalf. Each Party shall, within thirty (30) days after request, deliver to the other party satisfactory evidence of such authority.

45. CONFLICT. Any conflict between the printed provisions of this Lease and the typewritten or handwritten provisions shall be controlled by the typewritten or handwritten provisions.

46. OFFER. Preparation of this Lease by either Party or their agent and submission of same to the other Party shall not be deemed an offer to lease to the other Party. This Lease is not intended to be binding until executed and delivered by all Parties hereto.


47. AMENDMENTS. This Lease may be modified only in writing, signed by the Parties in interest at the time of the modification. As long as they do not materially change Lessee's obligations hereunder, Lessee agrees to make such reasonable non-monetary modifications to this Lease as may be reasonably required by a Lender in connection with the obtaining of normal financing or refinancing of the Premises.

48. MULTIPLE PARTIES. If more than one person or entity is named herein as either Lessor or Lessee, such multiple Parties shall have joint and several responsibility to comply with the terms of this Lease.

49. MEDIATION AND ARBITRATION OF DISPUTES. An Addendum requiring the Mediation and/or the Arbitration of all disputes between the Parties and/or Brokers arising out of this Lease / / is /X/ is not attached to this Lease.

LESSOR AND LESSEE HAVE CAREFULLY READ AND REVIEWED THIS LEASE AND EACH TERM AND PROVISION CONTAINED HEREIN, AND BY THE EXECUTION OF THIS LEASE SHOW THEIR INFORMED AND VOLUNTARY CONSENT THERETO. THE PARTIES HEREBY AGREE THAT, AT THE TIME THIS LEASE IS EXECUTED, THE TERMS OF THIS LEASE ARE COMMERCIALLY REASONABLE AND EFFECTUATE THE INTENT AND PURPOSE OF LESSOR AND LESSEE WITH RESPECT TO THE PREMISES.



ATTENTION: NO REPRESENTATION OR RECOMMENDATION IS MADE BY THE AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION OR BY ANY BROKER AS TO THE LEGAL SUFFICIENCY, LEGAL EFFECT, OR TAX CONSEQUENCES OF THIS LEASE OR THE TRANSACTION TO WHICH IT RELATES. THE PARTIES ARE URGED TO:

1. SEEK ADVICE OF COUNSEL AS TO THE LEGAL AND TAX CONSEQUENCES OF THIS LEASE.

2. RETAIN APPROPRIATE CONSULTANTS TO REVIEW AND INVESTIGATE THE CONDITION OF THE PREMISES. SAID INVESTIGATION SHOULD INCLUDE BUT NOT BE LIMITED TO: THE POSSIBLE PRESENCE OF HAZARDOUS SUBSTANCES, THE ZONING OF THE PREMISES, THE STRUCTURAL INTEGRITY, THE CONDITION OF THE ROOF AND OPERATING SYSTEMS, AND THE SUITABILITY OF THE PREMISES FOR LESSEE'S INTENDED USE.

WARNING: IF THE PREMISES IS LOCATED IN A STATE OTHER THAN CALIFORNIA, CERTAIN PROVISIONS OF THE LEASE MAY NEED TO BE REVISED TO COMPLY WITH THE LAWS OF THE STATE IN WHICH THE PREMISES IS LOCATED.

The Parties hereto have executed this Lease at the place and on the dates specified above their respective signatures.

Executed at: Palo Alto , CA                  Executed at:  Palo Alto, CA

on:  October 14, 1999                        on:
                                                 ----------------
by   LESSOR:                                 by   LESSEE:

MARIE A. BATTON, TRUSTEE OF THE              OMNICELL TECHNOLOGIES, INC., a California

W.F. BATTON AND MARIE A. BATTON              corporation

TRUST UTA DATED January 12, 1988,

As Amended

By:  /s/ Marie Barton                        By:  /s/ Earl E. Fry

Name Printed: Marie A. Batton                Name Printed: Earl E. Frey

Title:  Trustee                              Title:
                                                   -----------------------------------------
By:                                          By:
   --------------------------------------       --------------------------------------------
Name Printed:                                Name Printed:
             ----------------------------                 ----------------------------------
TITLE:                                       Title:
-----------------------------------------          -----------------------------------------
Address: 1190 East Meadow Drive              Address: Palo Alto, California 94303-4269


Telephone: (650) 494-7471                    Telephone: (   )
                                                        ------------------------------------
Facsimile: (650) 494-6904                    Facsimile: (   )
                                                        ------------------------------------
Federal ID No.                               Federal ID No.
              ---------------------------                  ---------------------------------

NOTE: These forms are often modified to meet changing requirements of law and industry needs. Always write or call to make sure you are utilizing the most current form: AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION, 700 So.
Flower Street, Suite 600, Los Angeles, California 90017. (213) 687-8777. Fax No. (213) 687-8616


ADDENDUM TO LEASE

1085 East Meadow Circle
Palo Alto, California

This Addendum to Lease is entered into as of September 24, 1999, by and between MARIE A. BATTON, TRUSTEE OF THE W.F. BATTON AND MARIE A. BATTON TRUST UTA DATED JANUARY 12, 1988, AS AMENDED, Lessor, and OMNICELL TECHNOLOGIES, INC., a California corporation, Lessee, for the Premises at 1085 East Meadow Circle, Palo Alto, California.

Lessor and Lessee further agree as follows:

50. BASE RENT.

(a) Lessee shall pay to Lessor Base Rent per month based upon the Premises consisting of 18,360 rentable square feet, as follows:

                                                                               Base Rent
         Period                                       Rental Rate              Per Month
         ------                                       -----------              ---------
December 15, 1999 -December 14, 2000         $2.25/Sq.  Ft./Mo.  NNN           $41,310.00
December 15, 2000 -December 14, 2001         $2.33/Sq.  Ft./Mo.  NNN           $42,778.80
December 15, 2001 -December 14, 2002         $2.41/Sq.  Ft./Mo.  NNN           $44,247.60
December 15, 2002 -December 14, 2003         $2.49/Sq.  Ft./Mo.  NNN           $45,716.40
December 15, 2003 -December 14, 2004         $2.58/Sq.  Ft./Mo.  NNN           $47,368.80

(b) Lessee shall pay to Lessor upon the execution and delivery of this Lease the sum of $41,310 as Base Rent for the period December 15, 1999 to January 14, 2000.

(c) Prior to Lessee occupying the Premises on the Early Possession Date, Lessee shall deliver to Lessor a certificate of insurance and waiver of subrogation.

51. OPTION TO EXTEND. Lessee shall have one (1) five (5) year option to extend the Lease at one hundred percent (100%) of the then fair market rent. In no event shall rent in the option period be less than the rent paid in the last year of the initial term. Said option to extend shall not be exercised by Lessee for the purpose of making a profit on a sublease. Assignment of the Lease or subletting of the Premises or any portion thereof by Lessee during the option extension period shall be subject to the prior written consent of Lessor and shall be subject to the provisions of Paragraph 12 as supplemented by this Paragraph 51. Assignment of the Lease or subletting of the Premises during the option extension period shall also be subject to the prior written approval of the Ground Lessor in accordance with the Ground Lease. Lessor may condition Lessor's consent to an assignment or subletting to Lessor receiving fifty percent (50%) of the bogus rent, if any, after deducting only a standard leasing commission payable by Lessee which shall be subject to Lessor's prior written approval, which approval shall not be unreasonably withheld. Any assignment or sublease to which Lessor and the Ground Lessor consent in the first instance shall expressly prohibit any further assignment or subletting of all or any portion of the Premises by such initial assignee or sublessee. At Lessor's option, Lessor may terminate the Lease and recapture the Premises upon


receipt by Lessor of a request from Lessee for Lessor's consent to an assignment or subletting of all or any portion of the Premises. If Lessor elects to terminate this Lease, (a) as of the effective date of termination, Lessor and Lessee shall be released and discharged from any liability or obligation to the other under this Lease which accrues thereafter, and (b) Lessee agrees that Lessor may enter into a direct lease with such proposed assignee or sublessee without any obligation or liability to Lessee.

Lessee may exercise the option to extend by giving written notice of exercise to Lessor at least six (6) months but not more than twelve (12) months prior to the expiration of the initial Lease term, provided that if Lessee is currently in default under the Lease at the time of exercise of the option or at the commencement date of the option extension period, such notice shall be void and of no force or effect and the option shall lapse. If exercised, the option extension period shall be upon the same terms and conditions as the initial Lease term, except that (i) the initial monthly Base Rent and rental adjustments during the option period shall be one hundred percent (100%) of the then fair market rent as agreed upon by the parties within thirty (30) days after the exercise of the option or if the parties are unable to agree, then by appraisal, but the initial monthly Base Rent shall not be less than the monthly Base Rent payable during the last twelve (12) months of the initial Lease term and the periodic adjustments of Base Rent shall not be less than the annual percentage adjustments of Base Rent for the initial term as provided in Paragraph 50(a); and (ii) there shall be no additional option to extend. If Lessee does not exercise the option to extend at least six (6) months prior to the expiration of the initial term, the option shall lapse, time being of the essence.

52. CONDITION OF THE PREMISES; TENANT IMPROVEMENTS.

(a) Prior to the occupancy of the Premises by Lessee, Lessor shall cause to be constructed and completed the Tenant Improvements to the Premises listed on the schematic plan prepared by LRS Architects dated August 27, 1999, a copy of which has been delivered by Lessor to Lessee and is incorporated by reference herein. Lessor shall cause the Tenant Improvements to be constructed by Dymond Construction Group (the "Contractor") pursuant to an Agreement between Lessor and the Contractor (the "Construction Contract"). The Construction Contract shall be subject to Lessee's approval, which approval shall not be unreasonably withheld. A copy of the approved Construction Contract shall be attached hereto as EXHIBIT "A." Any additional working drawings for the Tenant Improvements shall be prepared by LRS Architects at Lessor's expense. The Construction Contract and the working drawings for the Tenant Improvements shall be subject to approval by Lessee, which approval shall not be unreasonably withheld. The Construction Contract shall include a guarantee by the Contractor against defects in workmanship or materials for one (1) year. The electrical system, HVAC ..system, and plumbing in the Premises shall be in good working order upon completion of the Tenant Improvements.

(b) The total cost of the Tenant Improvements is estimated to be approximately Eight Hundred Fifty Thousand Dollars ($850,000). Lessor shall pay (1) the cost of certain basic upgrades and improvements to the Premises at a cost of approximately Three Hundred Thirty-Five Thousand Dollars ($335,000), and (2)the additional sum of Two Hundred Thirty-Five Thousand Dollars ($235,000) as Lessor's Tenant Improvement Allowance. The sum of said two (2) amounts is referred to as "Lessor's Contribution" to the cost of the Tenant Improvements. Lessee shall pay to Lessor in a lump sum in cash promptly upon completion of the Tenant Improvements and receipt by Lessee of an invoice therefore from Lessor, that portion of the cost of the Tenant Improvements which exceeds Lessor's Contribution plus the added cost of any change orders requested by Lessee pursuant to Paragraph 52(c).


(c) After the working drawings have been approved by Lessor and Lessee in final form in writing as provided above, Lessee shall have the right to request change orders to the Tenant Improvements. Any change order requested by Lessee shall be subject to the prior written approval of Lessor, which consent shall not be unreasonably withheld or delayed provided that Lessee agrees to pay in a lump sum in cash promptly upon completion of the Tenant Improvements any increase in the cost of the Tenant Improvements resulting from such change order, and provided further that if any change order results in a delay in the completion of the Tenant Improvements beyond December 15, 1999, the rent commencement shall be December 15, 1999.

(d) All of the Tenant Improvements shall become a part of the realty and shall remain with the property upon the expiration or sooner termination of this Lease, except for items which Lessor and Lessee agree in writing prior to commencement of construction may be or shall be removed by Lessee.

(e) If the Tenant Improvements are not completed by December 15, 1999 due solely to delays caused by Lessee which are documented by Lessor and/or the Contractor, the Commencement Date and rent commencement shall be December 15, 1999.

53. ALTERATIONS OR IMPROVEMENTS. If Lessee shall desire to make any Alterations or improvements to the Premises, or any part or parts thereof at any time or times during the term of this Lease or the option period, the same shall be subject to Lessor's prior written approval, and if approved, such Alterations shall be constructed without cost or expense to Lessor, in accordance with the requirements of all laws, ordinances, codes, orders, rules and regulations of all governmental authorities having jurisdiction over the Premises. Should any modifications require a building permit, such work shall be done by a licensed contractor. Subsequent structural or design modifications to the Premises involving a cost of more than Twenty-Five Thousand Dollars ($25,000) shall not be made until the Ground Lessor has given its written approval of detailed plans and specifications for the work. Lessor shall have the right to require Lessee to restore the Premises to their original condition on occupancy when the Lease expires or terminates. Upon request from Lessee, Lessor shall advise Lessee in writing whether Lessor reserves the right to require Lessee to remove any specific Alterations or Utility Installations from the Premises upon the termination of the Lease. Otherwise, the Premises shall be returned to Lessor in "clean" condition including carpet cleaning and repair of any damages,

54. HAZARDOUS SUBSTANCES.

(a) DEFINITION; COVENANT BY LESSEE. The term "Hazardous Substance" as used in this Lease shall mean any product, substance, chemical, material, or waste whose presence, nature, quantity and/or intensity of existence, use, manufacture, disposal, transportation, spill release or effect, either by itself or in combination with other materials expected to be on the Premises, is either (i) regulated or monitored by any governmental authority, or (ii) a basis for liability of Lessor to any governmental agency or third party under any applicable statute or common law theory. Hazardous Substance shall include, but not be limited to, hydrocarbons, petroleum, gasoline, crude oil or any products, by-products or fractions thereof. Lessee shall not cause any contamination or damage to the Premises or the neighboring properties or cause Lessor to incur any liability, loss, or damage as a result of the generation, possession, storage, use, transportation, or disposal by Lessee of any Hazardous Substances in the conduct of Lessee's business on the Premises. Notwithstanding the foregoing, Lessee may, without Lessor's prior consent, but in compliance with all Applicable Law, use any ordinary and customary materials reasonably required to be used by Lessee in the normal course of Lessee's business permitted on the Premises, so long as such use does not expose the


Premises or neighboring properties to any meaningful risk of contamination or damage or expose Lessor to any liability therefor. Prior to the occupancy of the Premises by Lessee, Lessee shall deliver to Lessor a list of the Hazardous Substances which Lessee considers to be ordinary and customary materials reasonably required to be used by Lessee in the normal course of Lessee's permitted use of the Premises. If Lessor concurs therewith, Lessor shall so confirm in writing to Lessee, and such confirmation shall constitute Lessor's consent to the existence, use, manufacture, storage, and transportation of-such Hazardous Substances in, on, and about the Premises during the term of this Lease.

(b) DUTY TO INFORM LESSOR. Upon the commencement of the Lease term and on each anniversary date thereafter, Lessee shall provide to Lessor a list of the primary Hazardous Substances which Lessee uses or stores on the Premises, along with, as to each such Hazardous Substance, its purpose and the approximate volume brought onto the Premises since the last report to Lessor under this Paragraph 54(b). Lessee shall deliver to Lessor (1) a copy of Lessee's current Hazardous Substances Management Plan, and any amendments or supplements thereto, or replacements thereof, from time to time during the term of this Lease, and (2) a copy of all Hazardous Substances reports or plans filed by Lessee with the City of Palo Alto, even though Lessee's Hazardous Substances Management Plan and any such reports on plans filed with the City show that Lessee is not currently using any reportable Hazardous Substances on the Premises.

(c) INDEMNIFICATION.

(i) Lessee shall indemnify, protect, defend and hold Lessor, and Lessor's agents, employees, successors and assigns, harmless from and against any and all loss of rents and/or damages, liabilities, judgments, costs, claims, liens, expenses, penalties, permits and attorneys' and consultants' fees if incurred as a result of the release, discharge or emission of any Hazardous Substance or storage tank brought on the Premises during the Lease term by or for Lessee or under Lessee's control. Lessee's obligations under this Paragraph 54 shall include, but not be limited to, the effects of any contamination or injury to person, property, or the environment created by Lessee, and the cost of investigation (including consultants' and attorneys' fee), testing, removal, remediation, restoration and/or abatement thereof, or of any contamination therein involved, and shall survive the expiration or earlier termination of this Lease. No termination, cancellation, or release agreement entered into by Lessor and Lessee shall release Lessee from Lessee's obligations under this Lease with respect to Hazardous Substances or storage tanks, unless specifically so agreed by Lessor in writing at the time of such agreement.

(ii) Lessor represents and warrants to Lessee that to the best of Lessor's knowledge there are no Hazardous Substances located in, on, under, or about the Premises as of the Commencement Date of the term of this Lease. Lessee shall have no responsibility to Lessor or to any other person with respect to the existence of any Hazardous Substances or storage tank on the Premises that is not brought onto the Premises or caused by any of Lessee's employees, agents, contractors, or other persons under Lessee's control or acting for or on behalf of Lessee.

(iii) Lessor shall indemnify, defend, protect and hold Lessee, its employees, agents, shareholders, licensees, invitees, officers and directors, harmless from and against any claims, actions,


losses, costs, damages, liabilities or expenses (including, without limitation, reasonable attorneys', experts' and consultants' fees, investigation and laboratory fees), arising out of or in connection with any Hazardous Substance (including, without limitation, asbestos) which Lessee establishes was present on the Commencement Date of the term of this Lease on, under, in or about the Premises, soil, air, groundwater or surface water thereof and was not caused by the acts or omissions of Lessee or its agents, contractors, or employees.

(d) LESSEE'S COMPLIANCE WITH LAW. Except as otherwise provided in this Lease, Lessee shall, at Lessee's sole cost and expense, fully diligently and in a timely manner, comply with all "Applicable Law," which term is used in this Lease shall include all laws, rules, regulations, ordinances, directives, covenants, easements and restrictions of record, permits, the requirements of any applicable fire insurance underwriter or rating bureau, relating to Lessee's particular use of the Premises, including, but not limited to, matters pertaining to
(i) industrial hygiene, (ii) environmental conditions on, in, under or about the Premises, including soil and groundwater conditions, and (iii) the use, generation, manufacture, production, installation, maintenance, removal, transportation, storage, spill or release of any Hazardous Substance or storage tank), now in effect or which may hereafter come into effect, and whether or not reflecting a change in policy from any previously existing policy. Lessee shall, within ten (10) business days after receipt of Lessor's written request, provide Lessor with copies of all documents and information, including, but not limited to, permits, registrations, manifests, applications, reports and certifications, evidencing compliance with any Applicable Law specified by Lessor in writing (with copies or any documents involved) or any threatened or actual claim known to Lessee, notice, citation, warning, complaint or report within Lessee's possession and control pertaining to or involving failure by Lessee or the Premises to comply with any Applicable Law.

(e) INSPECTION COMPLIANCE. Lessor shall have the right to enter the Premises at any time in the case of an emergency, and otherwise at reasonable times upon at least 24 hours notice to the Lessee and subject to Lessee's reasonable security precautions, for the purpose of inspecting the condition of the Premises and for verifying the compliance by Lessee with this Lease and all Applicable Laws (as defined in subparagraph
(d) above), and to employ experts and/or consultants in connection therewith and/or to advise Lessor with respect to Lessee's activities, including, but not limited to, the installation, operation, use, monitoring, maintenance, or removal of any Hazardous Substance or storage tank on or from the Premises. The costs and expenses of any such inspections shall be paid by the party requesting same, unless a Breach of this Lease is found to exist, or unless the inspection is requested or ordered by a governmental authority as the result of any such existing violation or contamination. In any such case, Lessee shall upon request reimburse Lessor for the reasonable costs and expenses of such inspections.

55. MAINTENANCE AND REPAIRS.

(a) Excluded from Lessee's obligations for maintenance and repairs in Paragraph 7.1(a) are the structural elements of the Premises, the roof, exterior walls and foundation of the Premises.

(b) Notwithstanding anything to the contrary in the Lease, Lessor shall perform and construct, at Lessor's sole cost and expense, any repair, maintenance or improvement (i) necessitated by the acts or omissions of Lessor or its agents, employees, invitees, or licensees, (ii) required as a consequence of any violation of Applicable Laws or a construction defect in the Premises as of the


Commencement Date, (iii) which would be treated as a "capital expenditure" under generally accepted accounting principles,
(iv) occasioned by fire, acts of God or other casualty or by the exercise of the power of eminent domain, (v) for which Lessor has a right of reimbursement from others, (vi)to the structural elements of the Premises, the structural elements of the roof (but excluding the roof membrane), exterior walls and foundation of the Premises, and (vii) relating to the abatement, removal, encapsulation, or other handling of asbestos in, on or about the Premises existing on the Commencement Date. Notwithstanding the foregoing, Lessee shall reimburse Lessor for costs incurred with respect to (iii) above (excluding costs of asbestos abatement) but only to the extent that (a) the same reduces the expenses otherwise payable by Lessee under the Lease and (b) Lessee's share of such costs during any twelve-month period of the Lease is amortized over the useful life of the capital item in question.

(c) Pursuant to Paragraphs 7.1 and 7.2, Lessor's Obligations, of the printed portion of this Lease, Lessor and Lessee agree that this Lease is a "NNN Lease" and that it shall be solely Lessee's obligation to repair and maintain the Premises, and the equipment therein. Lessee shall reimburse Lessor within thirty (30) days after written demand for all operating expenses of the Premises, including, but not limited to, real property taxes and assessments, and Lessor's property insurance and liability insurance. Lessee shall directly contract for and shall be responsible for the performance and payment for all repairs and maintenance, including but not limited to, repair and maintenance (and replacement, as necessary) of the parking area; landscaping; common areas; building repairs; repair and maintenance of the HVAC system, including an HVAC service contract providing for inspection, service and maintenance on a quarterly basis; repair and maintenance of all other mechanical systems in the building, and utilities; maintenance, repair, and replacement of the roof membrane; and other structural and non-structural repairs and replacement of building elements required as a result of the installation, repair, maintenance, operation and removal of Lessee's improvements, fixtures, and equipment.

(d) Upon request, Lessor shall advise Lessee in writing whether it reserves the right to require Lessee to remove any Alterations or Utility Installations from the Premises upon termination of the Lease.

(e) The first sentence of Paragraph 7.4(c), Surrender/Restoration, is amended to read as follows:

Lessee shall surrender the Premises by the Expiration Date or any earlier termination date, with all of the improvements, parts and surfaces thereof broom clean and free of debris, and in good operating order, condition and state of repair, ordinary wear and tear, acts of God, casualties, condemnation, Hazardous Substances (other than those stored, used or disposed of by Lessee in or about the Premises), and Alterations or Utility Installations which Lessor states in writing may be surrendered at the termination of the Lease, excepted.

56. INSURANCE.

(a) The parties acknowledge and agree that Lessor is the "Insuring Party" for purposes of Paragraph 1.9 and Paragraph 8.

(b) Paragraphs 8.3(a) and 8.3(b) of the printed portion of this Lease (which Paragraphs shall remain in full force and effect) are supplemented as follows:


The property insurance carried by Lessor pursuant to Paragraph 8.3 shall include (i) property insurance insuring the building and all improvements which now are or hereafter become a part of the Premises for perils covered by a causes of loss-special form insurance policy containing both replacement cost and agreed amount endorsements or options; (ii) boiler and machinery-insurance, if applicable; (iii) flood insurance; (iv)earthquake insurance (if required by Lessor's mortgage lender in the future and Lessor's mortgage lender determines that the cost and availability of earthquake insurance is reasonable); (v) builders risk insurance during all periods of construction; (vi) insurance against all other hazards as may be reasonably required by Lessor's lender or the Ground Lessor; and (vii) rental value insurance for the perils insured against by Lessor for one hundred percent (1.00%) of the Rent (including operating expenses, real estate taxes, assessments and insurance costs which are Lessee's liability) for a period of twelve (12) months.

57. ASSIGNMENT AND SUBLETTING. Paragraph 12, Assignment and Subletting, of the printed Lease form is amended as follows:

(a) Any assignment of this Lease or any sublease of all or any portion of the Premises shall be subject to Lessor's prior written approval, the prior written approval of the Ground Lessor, and the conditions specified in Paragraph 12 of this Lease, amended and supplemented as follows: (1) any sublease base rent in excess of the amount Lessee is paying to Lessor shall be shared 50-50 by Lessor and Lessee, alter deducting from such excess only Lessee's customary brokerage fees in obtaining the assignment or sublease in an amount approved by Lessor; (2)any such sublease shall provide that further assignment or sub-subletting by the sublessee is expressly prohibited; (3) in lieu of approving or disapproving an assignment or sublease, Lessor may terminate this Lease and recapture the Premises without any liability to Lessee; and
(4)Lessor shall have not less than fifteen (15) business days after receipt by Lessor of Lessee's written request for consent to an assignment or sublease, and all relevant information requested by Lessor including the transaction documentation, within which to give Lessor's approval or disapproval of the sublease, or to terminate this Lease and recapture the Premises.

(b) Lessee shall reimburse Lessor for Lessor's attorney's fees incurred in connection with any assignment or sublease transaction. Said attorney's fees shall be billed at the attorney's normal hourly rate, but such fees shall not exceed the total of One Thousand Dollars ($1,000).

(c) Notwithstanding anything to the contrary in this Lease, Lessee may, without Lessor's prior written consent, without any participation by Lessor in assignment and subletting proceeds, and without Lessor's right of recapture the Premises, sublet the Premises or assign this Lease to a subsidiary, affiliate, division, or corporation controlling, controlled by or under common control with Lessee; a successor corporation related to Lessee by merger, consolidation, nonbankruptcy reorganization, or government action; or a purchaser of substantially all of Lessee's assets; provided that in any such case each of the following conditions is satisfied: no default by Lessee under this Lease then remains uncured; Lessee shall provide Lessor with documentary evidence reasonably satisfactory to Lessor that as of the effective date of such transaction the assignee, sublessee or transferee has a positive net worth at least equal to that of Lessee as of the date of this Lease; and the assignee, sublessee, or transferee shall expressly assume and agree to perform all of the obligations of Lessee under this Lease by a written assignment, acceptance of assignment and assumption, a copy of which shall be delivered to Lessor concurrently with the assignment, sublease, or transfer.

58. LATE CHARGES. The second sentence of Paragraph 13.4, Late Charges, shall read:


Accordingly, if any Rent shall not be received by Lessor within ten
(10) days after receipt by Lessee of written notice from Lessor that the same is due, Lessee shall pay to Lessor a one time late charge equal to ten percent (10%) of such overdue amount.

59. CONDEMNATION. If the Premises or any portion thereof are taken under the power of eminent domain or sold under the threat of the exercise of said power (all of which are herein called "condemnation"), this Lease shall terminate as to the part so taken as of the date the condemning authority takes title or possession, whichever occurs first. If the portion of the Premises taken by condemnation materially impairs Lessee's use and occupancy of the Premises, Lessee may, at Lessee's option, to be exercised in writing within ten
(10) days after Lessor shall have given Lessee written notice of such taking (or in the absence of such notice, within ten (10) days after the condemning authority shall have taken possession) terminate this Lease as of the date the condemning authority takes such possession. If Lessee does not terminate this Lease in accordance with the foregoing, this Lease shall remain in full force and effect as to the portion of the Premises remaining, except that the Base Rent shall be reduced in the same proportion as the rentable floor area of the Premises taken bears to the total rentable floor area of the building located on the Premises and Rent shall be further equitably abated during any restoration of the Premises. No reduction of Base Rent shall occur if the only portion of the Premises taken is land on which there is no building. Any award for the taking of all or any part of the Premises under the power of eminent domain or any payment made under threat of the exercise of such power shall be the property of Lessor, whether such award shall be made as compensation for diminution in value of the leasehold or for the taking of the fee, or as severance damages; provided, however, that Lessee shall be entitled to any compensation separately awarded to Lessee for Lessee's relocation expenses and/or loss of Lessee's Trade Fixtures, any tenant improvements constructed by Lessee solely at Lessee's expense and Lessee's personal property. In the event that this Lease is not terminated by reason of such condemnation, Lessor shall to the extent of its net severance damages received, over and above the legal and other expenses incurred by Lessor in the condemnation matter, repair any damage to the Premises caused by such condemnation, except to the extent that Lessee has been reimbursed therefor by the condemning authority. Lessee shall be responsible for the payment of any amount in excess of such net severance damages required to complete such repair to the extent that Lessee has been reimbursed therefor by the condemning authority.

60. ESTOPPEL CERTIFICATES.

(a) Each Party (as "Responding Party") shall within ten (10) business days after written notice from the other Party (the "Requesting Party") execute, acknowledge and deliver to the Requesting Party a statement in writing certifying: (1) that none of the terms or provisions of this Lease have been changed (or if they have been changed, stating how they have been changed); (2) that this Lease has not been cancelled or terminated; (3) the last date of payment of Base Rent and other charges and the time period covered by such payment; and
(4) that, to the party's actual current knowledge, the other party is not in default under this Lease (or if the other party is claimed to be in default, stating why).

61. LESSOR'S ACCESS. Lessor and Lessor's agents shall have the right to enter the Premises at any time, in the case of an emergency, and otherwise at reasonable times upon one (1) business day's prior notice subject to Lessee's reasonable security measures for the purpose of showing the same to prospective purchasers, lenders, or lessees, and making such alterations, repairs, improvements or additions to the Premises as Lessor may deem necessary. All such activities shall be without abatement of rent or liability to Lessee. Lessor may at any time place on the Premises any ordinary "For Sale" signs and Lessor may during the last six (6) months of the term hereof place on the Premises any ordinary "For Lease" signs. Lessee may at any time place on or about the


Premises any ordinary "For Sublease" sign. Lessor shall, however, at all times minimize any interference with Lessee's operations at the Premises.

62. SIGNS. Lessor grants to Lessee the right to construct a monument sign and a building sign with Lessee's name thereon at Lessee's expense, subject to the prior written approval by Lessor of the. size, design, and location of such signage and subject to approval of such signage by the City of Palo Alto. Lessee shall remove all such signage at Lessee's expense promptly upon the expiration or sooner termination of this Lease.

62A. QUIET POSSESSION. Paragraph 38, Quiet Possession, is amended to read as follows:

At all times that no Breach of this Lease by Lessee exists, subject to payment by Lessee of the Rent and performance of all of the covenants, conditions and provisions on Lessee's part to be observed and performed under this Lease, Lessee shall have quiet possession and quiet enjoyment of the Premises during the term hereof. Any remedy for breach of this provision shall be limited to damages or injunction and not Lease termination.

63. GROUND LEASE. Lessor's interest in the Premises is a leasehold estate under a Ground Lease dated November 27, 1974, as amended (the "Ground Lease"), between California Pacific Commercial Corporation ("Ground Lessor"), and W.F. Batton and Marie A. Batton ("Ground Lessee"). This Lease is therefore a Sublease. This Lease is subject and subordinate to the terms and provisions of the Ground Lease. There is an action pending in Santa Clara County Superior Court, Action No. CV767605 between Ground Lessor and Ground Lessee. This Lease is subject to the consent of the Ground Lessor in a form and upon terms and conditions satisfactory to Ground Lessee.

64. ADDENDUM TO GOVERN. In the event of any inconsistency between the printed provisions of this Lease and this typed Addendum to Lease, the provisions of this typed Addendum to Lease shall govern.

65. SUBLEASE OF 1180 E. MEADOW CIRCLE. Lessor agrees that Lessor will not unreasonably withhold Lessor's consent to Lessee's anticipated subleasing of the premises at 1180 E. Meadow Circle, Palo Alto, California, subject to obtaining the prior written approval of the Ground Lessor in accordance with the Ground Lease.


IN WITNESS WHEREOF, the parties have executed this Lease as of the date set forth above.

LESSOR

/s/  Marie A. Batton
Marie  A.  Batton,  Trustee  of The W.F.  Batton  and
Marie A. Batton  Trust UTA dated  January  12,  1988,
as amended

LESSEE

OMNICELL TECHNOLOGIES, INC.,
a California corporation

By  /s/ Earl E. Fry
     Its Vice President and Chief Financial Officer

By
   ---------------------------------------
     Its


Memo

W.F. Batton C., Inc.

1190-East Meadow Dr.

Palo Alto, CA 94303-4269

650-494-7491

CONFIDENTIAL 1/13/00

To: Pete McGoff

From: Harold Balzer
Re: Amendment to 1085 Lease

Dear Pete,

Enclosed is your signed copy of the Amendment to the 1085 lease agreement. It has been a pleasure working with you. Please do not hesitate to call me with any future requests.

Sincerely,

/s/ H. Balzer

H. Balzer


FIRST AMENDMENT TO LEASE AGREEMENT
1085 EAST MEADOW CIRCLE
PALO ALTO, CALIFORNIA

This First Amendment to Lease Agreement (this "Amendment") is entered into by and between MARIE A. BATTON, TRUSTEE OF THE W.F. BATTON AND MARIE A. BATTON UTA JANUARY 12, 1988, AS AMENDED ("Lessor"), and OMNICELL TECHNOLOGIES, INC., a California corporation ("Lessee"), effective January 3, 2000 (the "Effective Date"). This First Amendment amends the Lease Agreement and Addendum to Lease entered into between Landlord and Tenant as of September 24, 1999 (collectively, the "Lease").

RECITALS

A. Lessor and Lessee entered into that certain Lease for the Premises located 1085 East Meadow Circle, Palo Alto, California.

B. The Lease term commences on December 15, 1999 and expires on December 15, 2004.

C. The Lessee, subsequent to executing the Lease, has formally changed its corporate name form OmniCell Technologies, Inc. to Omnicell.com.

D. Certain delays in the construction and completion of the Tenant Improvements to the Premises have occurred which will delay Lessee's possession to the Premises under the Lease.

E. The parties have agreed to delete the last sentence of Section 63, namely, the recitation that the subject Lease (sublease) shall be subject to the consent of the Ground Lessor.

F. The Lessee has recently been made aware of Ground Lessor's desire and intent to terminate the subject Lease prior to the expiration of the Term should Ground Lessor be successful in its action to terminate the Ground Lease for the Property.

G. The parties desire to amend the terms and conditions of the Lease as set forth below.

AGREEMENT

NOW, THEREFORE, in consideration of the foregoing Recitals, the mutual covenants contained in this Amendment and of good, lawful and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, Lessor and Lessee agree as follows:

1. LESSEE CORPORATE NAME CHANGE. Effective October 20, 1999, and as evidenced by the copy of the Certificate of Amendment to the Lessee's Articles of Incorporation filed with the California Secretary of State's Office, attached hereto as Exhibit A, Lessee has formally changed its corporate name from OmniCell Technologies, Inc. to Omnicell.com. Section 1.1 of the Lease, and any other references to OmniCell Technologies, shall hereby be revised to reflect such change.

2. TERM. The Original Term of the Lease, as defined in Section 1.3, shall be revised to reflect a Commencement Date of February 1, 2000 and an Expiration Date of January 31, 2005. Any Other provisions in the Lease, dependant on such dates, shall hereby be revised accordingly.


3. GROUND LEASE. The original text of Section 63 is hereby deleted and replaced by the following:

"Lessor's interest in the Premises is a leasehold estate under a Ground Lease dated November 27, 1974, as amended (the "Ground Lease"), between California Pacific Commercial Corporation ("Ground Lessor"), and W.F. Batton and Marie A. Batton ("Ground Lessee"). This Lease is therefor a Sublease. This Lease is subject and subordinate to the terms and provisions of the Ground Lease. There is an action pending in Santa Clara County Superior Court, Action No. CV767605 between Ground Lessor and Ground Lessee, which if decided in favor of Ground Lessor, could result in the early termination of Ground Lessee's (Lessor under the instant Lease) interest in the Premises. Ground Lessor, by the letter of Dan McGanney, III, President of Ground Lessor, has notified Lessor of Ground Lessor's intention to terminate early the instant Lease should Ground Lessor be successful in the civil action described above.

The parties acknowledge that the Lease is not subject to the approval of the Ground Lessor; however, the Lease agreement must be submitted to Ground Lessor for Ground Lessor's review.

Only in the event that Ground Lessor is successful in terminating the Ground Lease and Ground Lessor thereby terminates this Lease prior to the expiration of the original term or any extended term, Lessor hereby agrees to indemnify and reimburse Lessee for reasonable costs and expenses incurred by Lessee in relocating to suitable replacement premises in the greater San Francisco Bay Area ("Relocation Expenses"). Such Relocation Expenses shall include, but are not limited to, tenant improvements at the substitute premises, moving costs for approximately 100 employees, de-installation and re-installation of furniture, costs related to the installation of alarm and phone systems and the design, development and installation of hardware, software and systems for computer network and data/voice wiring costs. Any leasing commission expenses incurred, if any, shall be paid by Lessee.

Lessee's cost of tenant improvements at the substitute premises to be reimbursed by Lessor shall not exceed the cost of the tenant improvements paid for Lessee for the Premises which is currently estimated to be $310,000. The exact amount of Lessee's cost of the tenant improvements performed by Lessee at the Premises shall be confirmed by letter agreement between Lessor and Lessee upon completion of the tenant improvement work at the Premises. The total of the tenant improvement costs to be reimbursed to Lessee at the time of the Lessee's move shall be the Lessee's original tenant improvement costs, as specified in the letter agreement, increased at the simple rate of five percent (5%) per year.

Lessor shall liable for the aggregate Relocation Expenses NOT TO EXCEED $600,000 ("Relocation Expense Cap"), which Relocation Expense Cap shall be reduced by a factor of ten percent (10%) per year from the Commencement Date.

In the event that the Ground Lessor is not successful in the legal action referred to above in terminating the Ground Lease, or the Ground Lease is terminated under the circumstances where this Lease remains in full force and effect as confirmed in writing by Lessor and/or California Pacific Commercial Corporation, and Lessee in form and under terms reasonably acceptable to Lessee, Lessee agrees upon request of either Lessor or California Pacific Commercial Corporation to enter into a further amendment of this Lease specifying such disposition of the legal action referred to above and releasing the indemnity obligation referred to in this Section."

4. GENERAL PROVISIONS. In the event of a conflict between the terms or provisions of this Amendment and the terms or provisions of the Lease, the terms of this Amendment shall prevail in all respects. All terms and


conditions of the Lease not specifically modified herein shall remain unchanged and in full force and effect. All terms not specifically defined herein are as defined in the Lease. Except as modified herein, the Lease shall remain unchanged and in full force and effect.

AUTHORIZED SIGNATURES

IN WITNESS WHEREOF, the parties hereto have executed this Amendment on the dates indicated.

"LESSOR                                      LESSEE"

MARIE A. BATTON, TRUSTEE OF                  OMNICELL TECHNOLOGIES, INC
THE W.F. BATTON AND MARIE A.                 a California corporation
BATTON UTA January 12, 1988, AS
AMENDED

By: /s/ Marie A. Barton
    Marie A. Batton, Trustee of The          By: /s/ Earl E. Fry
    W.F. Batton and Marie A. Batton              Earl Fry, Vice President and
    Trust UTA dated January 12, 1988,            Chief Financial Officer
    As amended

Date: 01/05/00                               Date: 01/03/00


EXHIBIT A

OMNICELL TECHNOLOGIES, INC. CERTIFICATE OF AMENDMENT
TO ITS ARTICLES OF INCORPORATION


February 3, 2000

Mr. Peter McGoff
Omnicell.Com
1101 East Meadow Drive
Palo Alto, CA 94303

Dear Peter,

I spoke to David Balzer today and he indicated that both he and Pat DiResta were in agreement that Omnicell.com would be moving into 1085 East Meadow Drive, February 21, 2000.

The initial term of the lease between Omnicell and Marie A. Batton should be changed from February 1, 2000 to February 21, 2000. All other provisions in the "Initial Term" of the lease agreement shall remain the same.

If the above information is true and correct, please sign and return to me at your earliest convenience.

Sincerely,

/s/ Harold Balzer                                 /s/ Peter McGoff
Harold Balzer
W.F. Batton Management Company                    Omnicell.Com

Date: 02/03/00                                    Date:  02/04/00


EXHIBIT 10.2

AMHURST INDUSTRIAL CENTER I
WAUKEGAN, ILLINOIS

LEASE

BETWEEN

AMLI COMMERCIAL PROPERTIES LIMITED PARTNERSHIP
a Delaware limited partnership

Landlord

AND

OMNICELL TECHNOLOGIES, INC.,
a California corporation,

Tenant


Table Of Contents

                                                                                                 Page
 1.  FUNDAMENTAL LEASE TERMS...............................................................         1

 2.  DEFINED TERMS.........................................................................         2

 3.  AGREEMENT TO LEASE....................................................................         5

 4.  RENT..................................................................................         5

 5.  LANDLORD'S SERVICES...................................................................         6

 6.  SECURITY DEPOSIT......................................................................         8

 7.  USE...................................................................................         8

 8.  CONDITION OF PREMISES.................................................................         9

 9.  EARLY POSSESSION......................................................................         9

10.  ASSIGNMENT AND SUBLETTING.............................................................         9

11.  REPAIRS AND ALTERATIONS...............................................................        10

12.  CERTAIN RIGHTS RESERVED BY LANDLORD...................................................        12

13.  COVENANT AGAINST LIENS................................................................        13

14.  WAIVERS AND INDEMNITIES...............................................................        13

15.  DEFAULTS AND LANDLORD'S REMEDIES......................................................        14

16.  SURRENDER OF POSSESSION...............................................................        15

17.  INSURANCE.............................................................................        16

18.  FIRE OR CASUALTY......................................................................        17

19.  CONDEMNATION..........................................................................        18

20.  NOTICES...............................................................................        18

21.  ADDITIONAL COVENANTS OF TENANT........................................................        19

22.  ESTOPPEL CERTIFICATES: MORTGAGE ISSUES................................................        21

23.  MISCELLANEOUS.........................................................................        22

24.  SIGNAGE...............................................................................        25

25.  OPTION TO RENEW TERM..................................................................        25

26.  TRUCK DOCKS...........................................................................        26

27.  TENANT IMPROVEMENTS...................................................................        26

     Exhibit A   -   Plan of the Premises
     Exhibit B   -   Work Letter
     Exhibit C   -   Legal Description of the Land
     Exhibit D   -   Landlord's Insurance
     Exhibit E   -   Trailer Area
     Exhibit F   -   Form of Tenant Estoppel Letter
     Exhibit G   -   Form of Landlord's Estoppel Letter
     Exhibit H   -   Form of Subordination, Non-Disturbance and Attornment Agreement
     Exhibit I   -   Truck Docks


AMHURST INDUSTRIAL I

LEASE

THIS LEASE ("Lease") is entered into as of the day of April, 1999, by and between AMLI COMMERCIAL PROPERTIES LIMITED PARTNERSHIP, a Delaware limited partnership (together with its successors and assigns, "Landlord") and OMNICELL TECHNOLOGIES, INC., a California corporation (together with its permitted successors and assigns, "Tenant").

1. FUNDAMENTAL LEASE TERMS. Certain fundamental lease terms (the "Fundamental

Lease Terms") are set forth below in this Section 1:

1.1  Building and Address:          Amhurst Industrial Center 1
     --------------------
                                    3651 Burwood Drive
                                    Waukegan, Illinois 60085

1.2  Tenant:                        Omnicell Technologies, Inc.
     -------

1.3  Tenant's Current Address
     ------------------------
     and Facsimile Telephone No.:   1101 E. Meadow Drive
     ---------------------------
                                    Palo Alto, CA 94303
                                    650-843-6266

1.4  Landlord:                      Amli Commercial Properties Limited
     --------
                                    Partnership

1.5  Landlord's Address:            222 Spring Lake Drive
     ------------------
                                    Itasca, IL 60143

1.6  Premises:                      approximately 38,459 square feet of
     --------
                                    space located in the Building
                                    containing approximately 166,466 square
                                    feet, as shown on the plan attached
                                    hereto and made a part hereof as
                                    Exhibit A.
                                    ---------

1.7  Term:                          eighty-four (84) calendar months
     ----
                                    commencing on the Commencement Date,
                                    provided that if the Commencement Date
                                    is not the first (1st) day of a
                                    calendar month, the Term shall end
                                    eighty-four (84) calendar months after
                                    the last day of the calendar month in
                                    which the Commencement Date occurs.

1.8  Commencement Date:             July 1, 1999, subject to a delay in
     -----------------
                                    the substantial completion of the
                                    Tenant Improvements to be made in the
                                    Premises, as described in the Work
                                    Letter attached hereto and made a part
                                    hereof as Exhibit B.
                                              ---------

1.9  Base Rent:                     1/st/ Lease Year     $253,829.40
     ---------
                                    2/nd/ Lease Year     $261,444.28
                                    3/rd/ Lease Year     $269,287.61
                                    4/th/ Lease Year     $277,366.24
                                    5/th/ Lease Year     $285,687.23

                                  1.

                                    6/th/ Lease Year     $294,257.84
                                    7/th/ Lease Year     $303,085.58

1.10  Security Deposit:             $21,152.45
      ----------------

1.11 Tenant's Proportionate Share: 23.10%

1.12  Permitted Use:                general office, warehouse and
      -------------
                                    stockroom purposes, refurbishment of
                                    used equipment and uses generally
                                    related thereto, including, without
                                    limitation, light manufacturing and
                                    painting

1.13  Broker:                       Paine Wetzel Associates, Inc.
      ------

1.14  Parking:                      one hundred (100) spaces
      -------

2. DEFINED TERMS. As used in this Lease, the following terms shall have the respective meanings set forth below in this Section 2.
2.1 Affiliate: means any person or entity controlling, controlled by or under common control with Tenant. For purposes hereof, "control" shall mean the ownership of not less than sixty-six and two-thirds percent (66-2/3%) of the economic ownership interests in an entity, along with the power to control the management and policy-making decisions of such entity.

2.2 Alteration: means any alteration, decoration, improvement or addition to the Premises, or installation of any utility, mechanical, communication or alarm system in the Premises, provided that any such alteration, decoration, improvement, addition or installation shall not constitute an "Alteration" if such item(s): (i) individually, and in the aggregate (assuming there are several items for a particular project), does not cost in excess of $5,000-00, (ii) does not affect the roof or structural components of the Building, (iii) does not affect the HVAC, utility or mechanical systems, or equipment of the Building,
(iv) does not require a building permit to perform, and (v) is not visible from outside the Premises.

2.3 Association: means the Amhurst Lake Business Park Association, the association of owners of property in the business park in which the Property is located.

2.4 Calendar Year: means the twelve (12) month period January through December of any year (or portion thereof) falling within the Term.

2.5 City: means Waukegan.

2.6 Events of Bankruptcy: means the occurrence of any one or more of the following events or circumstances:

(a) If Tenant shall file in any court a petition in bankruptcy or insolvency or for reorganization within the meaning of the Federal Bankruptcy Code, or for arrangement within the meaning of such Code (or for reorganization or arrangement under any future bankruptcy or reform act for the same or similar relief), or for the appointment of a receiver or trustee for all or a portion of the property of Tenant, or

(b) If an involuntary petition shall be filed against Tenant and such petition shall not be vacated or withdrawn within thirty (30) days after the date of filing thereof, or

(c) If Tenant shall make an assignment for the benefit of creditors, or

2.


(d) If Tenant shall be adjudicated a bankrupt or shall admit in writing an inability to pay its debts as they become due, or

(e) If a receiver shall be appointed for the property of Tenant by order of a court of competent jurisdiction (except where such receiver shall be appointed in an involuntary proceeding, and be withdrawn within thirty (30) days from the date of his appointment).

2.7 Events of Force Majeure: means any accident, governmental restriction, inability to obtain fuel or materials, strike or lockout (whether legal or illegal), act of God or other event, occurrence or circumstance beyond Landlord's reasonable control.

2.8 Hazardous Materials: means (i) substances defined as "hazardous substances", "toxic substances" or "hazardous wastes" in the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended (42 U.S.C., Sec. 9061, et. seq.), the Hazardous Materials Transportation Act (49 U.S.C., Sec. 1802), the Resource Conservation and Recovery Act (42 U.S.C., Sec. 6901 et. seq.), the Toxic Substances Control Act of 1976, as amended (15 U.S.C., Sec. 2601, et. seq.) or in any other federal, state or local laws and ordinances now or hereafter in effect governing similar matters, or in any regulations adopted or publications promulgated pursuant thereto (collectively, "Environmental Laws"); (ii) asbestos and asbestos containing materials; and
(iii) petroleum and petroleum based products.

2.9 Land: means the land on which the Building is located, which Land

is legally described on Exhibit C attached hereto and made a part hereof.

2.10 Landlord's Representative: means Michael Murphy.

2.11 Laws: means all laws (including, without limitation, Environmental

Laws); statutes (including, without limitation, the Americans with Disabilities Act); codes; ordinances; governmental rules, regulations or requirements; judicial decrees or orders; administrative rulings or orders; covenants, conditions or restrictions of record; and governmental permits, licenses, approvals or certificates (including, without limitation, any certificate of occupancy for the Premises or the Building) now or hereafter in effect and applicable to the Premises, the Property or the use, occupancy or operation of the Premises or the Property.

2.12 Lease Year: means each consecutive twelve (12) month period beginning with the Commencement Date, except that if the Commencement Date is other than the first day of a calendar month, then the first Lease Year shall be the period from the Commencement Date through the date twelve (12) months after the last day of the calendar month in which the Commencement Date occurs, and each subsequent Lease Year shall be the period of twelve (12) months following the last day of the prior Lease Year.

2.13 Material Alteration: means any Alteration which: (i) affects the roof or structural components of the Building, (ii) affects any HVAC, utility or mechanical systems or equipment in the Building, (iii) is visible from outside of the Premises, (iv) costs more than $10,000 to complete (including all labor and material costs), or (v) requires a building permit to perform.

2.14 Mortgagee: means the mortgagee, from time to time, under any mortgage granted by Landlord and now or hereafter encumbering the Property or any portion thereof (including the Premises).

2.15 Operating Expenses: means for any Calendar Year those costs or expenses paid or incurred by or on behalf of Landlord for owning, managing, operating, maintaining and repairing the Property and Landlord's personal property used in connection with the Property, including, without limitation:
Taxes; dues and other amounts payable to any owner's association; the cost of fire monitoring, security and security device systems for the Building, if any; snow and ice removal; exterior cleaning, sweeping, planting and landscaping; the cost of maintaining and repairing: (i) sewer, water, mechanical,

3.


electrical, sprinkler and other utility systems and equipment, (ii) parking lots, (iii) heating, ventilating and air conditioning systems and equipment,
(iv) exterior lighting systems and equipment, and (v) the roof and structural components of the Building; utilities, fuel and water if not separately metered; exterior window cleaning; insurance (including, but not limited to, fire, extended coverage, all risk, rent loss, liability, worker's compensation, and any other insurance carried by Landlord and applicable to the Property and not carried by tenants under any provision of their lease); deductibles paid by Landlord under the insurance policies described above; uninsured losses; exterior painting; management fees (not to exceed 3% of gross rentals from the Property for the Calendar Year); supplies; the cost of wages, salaries and benefits of all persons at the level of property manager and below, engaged in the operation, management, maintenance and repair of the Property; legal and accounting expenses; and any other expense or charge which would be considered as an expense of owning, managing, operating, maintaining or repairing the Property. Notwithstanding anything herein to the contrary, Operating Expenses shall not include: costs of tenant alterations to tenant space; marketing costs; costs of capital improvements to the Property, except for the cost of resurfacing the parking areas, driveways and sidewalks on the Property and except as provided below; depreciation charges; real estate brokerage and leasing commissions; the cost of any service sold directly to any tenant (including Tenant) or other occupant for which Landlord is entitled to be reimbursed as an additional charge or rental over and above the basic rent and escalations payable under the lease with that tenant; expenses in connection with services or other benefits of a type that are not provided to Tenant but which are provided another tenant or occupant of the Property; overhead and profit paid to Landlord or to subsidiaries or affiliates of Landlord for services on or to the Building to the extent that fees paid for said services materially exceed competitive costs of said services offered by other third parties; all interest, loan fees, and other carrying costs related to any mortgage or deed of trust or related to any capital item, and all rental and other payments due under any ground or underlying lease, or any lease for any equipment ordinarily considered to be of a capital nature (except janitorial equipment and the like which is not affixed to the building); expenses for which Landlord has been reimbursed (other than pursuant to rent escalation or tax and operating expense reimbursement provisions in leases), but only to the extent of any said reimbursement; wages, salaries, or other compensation paid to any executive employees above the grade of building manager; any costs, interest or penalty charges incurred by Landlord due to the violation by Landlord of any Law or failure to timely pay obligations of Landlord under this Lease or any other lease in the building resulting from Landlord's gross negligence or willful misconduct, except to the extent any said violation or failure results from Tenant's failure to perform its obligations under this Lease; and the cost of correcting any building code or other violations which were violations prior to the Commencement Date. Notwithstanding the foregoing, the cost of any capital improvements to the Property made after the date of this Lease which are reasonably intended to reduce Operating Expenses or which are required under any Laws which were not applicable to the Property prior to the Commencement Date amortized over the life expectancy of such capital improvements as Landlord shall reasonably determine, together with interest on the unamortized cost of any such improvements (at the prevailing construction loan rate available to Landlord on the date the cost of such improvements was incurred) shall be included in Operating Expenses. The cost of any capital improvements made in connection with resurfacing the parking areas,. driveways and sidewalks on the Property shall also be amortized, with interest, as provided in the immediately preceding sentence, and included in Operating Expenses. In the event the Property is not fully occupied during any Calendar Year, the variable Operating Expenses (e.g. water, Taxes and snow removal) for that year may be adjusted

by Landlord to reflect the Operating Expenses as though the Property were fully occupied; provided, however, that in no event shall the payments made by all tenants of the Property to Landlord for Operating Expenses exceed the actual Operating Expenses paid or incurred by Landlord in any Calendar Year. Notwithstanding anything to the contrary contained in this Section 2.15, Operating Expenses may include, at Landlord's reasonable discretion an equitable proportion, to be reasonably determined by Landlord, of both (i) snow removal costs, and/or (ii) maintenance, repair and/or replacement costs of the parking areas for both the Property and the building directly north of and immediately adjacent to the Property (the "Adjacent Property"); provided, however, in no event shall Tenant's Proportionate Share of the aggregate cost for (i) snow removal for the Property and the Adjacent Property; or (ii) maintenance, repair and/or replacement costs of the parking areas for both the Property and the Adjacent Property exceed Tenant's Proportionate Share of snow removal costs for the Property or Tenants Share of maintenance, repair and/or replacement costs of the parking area for the Property. Notwithstanding anything to the contrary in this

4.


Section 2.15, to the extent personal property costs, management fees and any other items are attributable to other properties owned or managed by Landlord, they will be allocated to such properties.

2.16 Property: means collectively, the Land, the Building and all other improvements located on the Land.

2.17 Rent: means collectively, Base Rent, Additional Rent and all other

amounts to be paid by Tenant to Landlord under this Lease or under the Work Letter.

2.18 Taxes: means all real estate taxes and assessments and similar governmental charges, special or otherwise, direct or indirect, ordinary or extraordinary (including, without limitation, those levied or assessed by special taxing districts now or hereafter created) levied or assessed upon or with respect to the Property and/or Landlord's leasehold interest in the Property, and ad valorem taxes for Landlord's personal property used in connection therewith. Should any political subdivision or governmental authority having jurisdiction over the Property, impose a tax, assessment, charge or fee which Landlord shall be required to pay, either by way of substitution for such real estate taxes and ad valorem personal property taxes, or in addition to such real estate taxes and ad valorem personal property taxes, or impose an income or franchise tax or a tax on rents which may be in addition to or in substitution for a tax levied against the Property and/or Landlord's personal property used in connection with the Property, such taxes, assessments, fees or charges shall be deemed to constitute Taxes hereunder. "Taxes" shall also include all reasonable fees and costs incurred by Landlord in connection with reducing or limiting the increase in any Taxes, but only to the extent a reduction or limitation is obtained. "Taxes" shall not include inheritance, income, transfer or franchise taxes paid by Landlord, other than as described above. In determining the amount of Taxes for any Calendar Year, the amount of special assessments to be included shall be limited to the amount of the installment (plus any interest payable thereon) of such special assessment which would have been required to have been paid during such year if Landlord had elected to have such special assessment paid over the maximum period of time permitted by law. Except as provided in the preceding sentence, all references to Taxes "for" a particular year shall be deemed to refer to Taxes levied, assessed or otherwise imposed for such year without regard to when such Taxes are payable.

2.19 Tenant's Representative: means Patrick DiResta.

3. AGREEMENT TO LEASE. Landlord hereby leases to Tenant, and Tenant hereby accepts and leases from Landlord, the Premises, together with the non-exclusive right to use all common areas outside the Building and on the Property (provided that Tenant shall not interfere with or disturb the conduct of other tenants' business in the Building or their enjoyment of the common areas outside the Building and on the Property), for the Term, subject to the terms and conditions set forth in this Lease.

4. RENT.

4.1 Place and Manner of Payment. Tenant shall pay Rent to Landlord at the address set forth in Section 1.5 hereof or to such other person or at such other address as Landlord may designate from time to time, without offsets or deductions of any kind whatsoever, at the times and in the manner set forth in this Lease. Tenant's covenant to pay Rent shall be independent of every other covenant in this Lease.

4.2 Base Rent. During the Term, Tenant shall pay annual Base Rent in the respective amounts set forth in Section 1.9 hereof. The Base Rent payable for each Lease Year shall be paid in twelve (12) equal monthly installments, paid in advance not later than the first (1st) day of each month. If the Commencement' Date is other than the first (1st) day of a month, then the installment of Base Rent for such initial month shall be prorated on a per diem basis for such fractional period and shall be paid on the Commencement Date. If the last day of the Term or Renewal Term is other than the last day of a month, then the installment of Base Rent for such last month of the Term or Renewal Term, as the case may be, shall be prorated on a per diem basis for such fractional period.

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4.3 Additional Rent. In addition to paying the Base Rent, Tenant shall pay as "Additional Rent" the amounts determined as set forth below.

A. Tenant shall pay to Landlord as Rent, in addition to the Base Rent, an amount (the "Operating Expense Amount") equal to Tenant's Proportionate Share of the Operating Expenses for each Calendar Year. Tenant shall pay to Landlord the Operating Expense Amount for each Calendar Year in monthly installments, at the same time and place as Base Rent is to be paid, in an amount reasonably estimated from time to time by Landlord in a written notice to Tenant (the "Estimated Payments"). Landlord will maintain books and records showing Operating Expenses in accordance with a system of accounts and accounting practices consistently maintained on a year-to-year basis. If the Commencement Date is other than the first (1st) day of a month, then the installment of Operating Expense Amount for such initial month shall be prorated on a per diem basis. Landlord shall deliver to Tenant within ninety (90) days after the close of each Calendar Year (including the Calendar Year in which this Lease terminates) a statement showing the amount of the Operating Expenses for such Calendar Year and the Operating Expense Amount. If the Estimated Payments paid by Tenant during any Calendar Year are less than the Operating Expense Amount for such Calendar Year, Tenant shall pay any deficiency to Landlord as shown by such statement within thirty (30) days after receipt of such statement. If the Estimated Payments paid by Tenant during any Calendar Year exceed the Operating Expense Amount due from Tenant for such Calendar Year, such excess shall be credited against payments next due hereunder. If no such payments are next due, such excess shall be refunded by Landlord within thirty (30) days of such reduction. Landlord's failure to deliver an annual statement of the Operating Expenses for any Calendar Year shall not constitute a waiver or release of, or relieve Tenant from, its obligations under this Section. If the last day of the Term or Renewal Term is other than the last day of a month, then the installment of Operating Expense Amount for such last month of the Term or Renewal Term, as the case maybe, shall be prorated on a per them basis for such fractional period.

B. Since Landlord will not be able to determine the Taxes for a Calendar Year until Landlord receives the real estate tax bills for such Calendar Year (which bills are currently received 6 to 9 months after the end of each Calendar Year), Landlord may deliver an annual statement to Tenant for all Operating Expenses other than Taxes, and deliver a subsequent statement to Tenant for Taxes, within ninety (90) days after Landlord receives the real estate tax bills for such Calendar Year. In such case, Landlord and Tenant shall make the payments or provide the credits, at the times and in the manner described in Section 4.3A above, with respect to the items covered by any such statements delivered by Landlord.

C. During the 90-day period immediately following Landlord's delivery of any annual statement relating to Operating Expenses, Tenant shall have the right to inspect Landlord's accounting records relating to Operating Expenses at Landlord's or its agent's office, upon reasonable prior notice. Unless Tenant shall take written exception to any item in any such statement within said 90-day period, such statement shall be considered as final and accepted by Tenant. Any payment due to Landlord or credit or payment due to Tenant as shown on any such statement shall be paid or applied in the manner and within the time periods described in
Section 4.3(A), whether or not written exception is taken thereto, provided that such payment or application shall be without prejudice to any such written exception. If Tenant makes such timely written exception, a certification as to the proper amount of the Operating Expense Amount shall be made by an independent certified public accountant reasonably acceptable to both parties, which shall be final and conclusive. Tenant shall pay the accountant's fees in connection with such audit and certification, unless it is determined that Landlord's original determination of the Operating Expense Amount was overstated by more than six percent (6%), in which case, Landlord shall pay such reasonable accountant's fees.

D. Without limiting any other obligations of the parties which survive the expiration of the Term, Landlord and Tenant's obligation to reimburse or pay the Additional Rent, as the case may be shall survive the expiration of the Term.

6.


5. LANDLORD'S SERVICES. As long as Tenant is not in default under this Lease, Landlord shall furnish the following services:

(a) Repairs and maintenance (and if necessary, replacements) of: (i) the air conditioning and heating units providing service to the Premises;
(ii) the roof and structural components of the Building; (iii) the parking areas, driveways and sidewalks located on the Property; (iv) any landscaping located on the Property; and (v) utility lines, pipes, conduit and other equipment located on the Property and furnishing services to the Premises, other than any such lines, pipes, conduit and equipment located within the Premises (which shall be repaired, maintained and if necessary, replaced by Tenant pursuant to Section 11.1 hereof). Notwithstanding the foregoing, all mechanical systems and sanitary sewer lines servicing the Premises will be repaired and maintained by Landlord and in furtherance thereof, Tenant shall provide Landlord access to the Premises to make such repairs. Notwithstanding anything contained herein to the contrary, if any repairs, maintenance or replacements are necessitated by the willful misconduct or gross negligence of Tenant, its agents, servants or employees, then the cost thereof shall be billed directly to Tenant, and Tenant shall pay Landlord therefor within thirty (30) days after receiving such bill together with reasonable supporting documentation.

(b) Reasonably adequate domestic water service in common with other tenants. In the event that water is not separately metered for the Premises and Tenant uses a materially greater amount of water than the usual amount used in similar buildings, then Landlord may bill Tenant for the additional cost of such increased use and for the cost of determining such increased use, and Tenant shall pay Landlord therefor within thirty
(30) days after receiving such bill together with reasonable supporting documentation. If as of the Commencement Date, water service is not separately metered for the Premises, Landlord reserves the right to install separate meters for the Premises at Tenant's sole cost and expense during the Term of this Lease.

(c) Exterior window washing of all windows in the Premises, weather permitting three (3) times per Calendar Year;

(d) Replacement of dock levelers, provided that if the replacement is necessitated by the willful misconduct or gross negligence of Tenant, its agents, servants or employees, then the cost thereof shall be billed directly to Tenant, and Tenant shall pay Landlord therefor within thirty
(30) days after receiving such bill together with reasonable supporting documentation;

(e) Reasonably adequate sanitary sewer service in common with other tenants. If Landlord reasonably determines that additional sanitary sewer capacity is required or that a separate sanitary sewer line servicing the Premises is or may be prudent based on the nature of the Permitted Use (e.g., excessive amounts or unique nature of discharge from the Premises),

Landlord may increase such capacity and/or install a separate sanitary sewer line servicing the Premises, all at Tenant's sole cost (which cost shall include a reasonable administrative fee payable to Landlord in connection therewith). Any such costs shall be paid by Tenant to Landlord within thirty (30) days after being billed therefor together with reasonable supporting documentation. If a separate sanitary sewer line is installed serving the Premises as a result of Tenant's excessive use of the sanitary sewer service, as reasonably determined by Landlord, and such service is not separately metered to the Premises, then Landlord may bill Tenant for the cost of sanitary sewer service furnished to the Premises through such separate line, and Tenant shall pay Landlord therefor within thirty (30) days after receiving such bill.

Landlord shall arrange with the utility companies providing the Building with electricity, telephone and natural gas service for the supply of such services to the Premises. Such services shall be separately metered to the Premises, and Tenant shall pay for the cost of any meter required in connection therewith. Tenant shall pay the public utility companies and/or municipality directly for any services provided and separately metered to the Premises. Tenant shall bear the cost of maintaining light fixtures and replacing bulbs, tubes, ballasts, etc.

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Landlord shall not be obligated to provide any services other than those expressly set forth above in this Section. Landlord does not warrant that any of the services mentioned above will be free from interruptions caused by repairs, improvements or alterations of their equipment by utility providers, or by war, insurrection, civil commotion, acts of God or governmental action, strikes, lockouts, picketing, whether legal or illegal, accidents, inability of Landlord to obtain fuel or supplies, or any other cause or causes beyond Landlord's reasonable control. Any such interruption of service shall never be deemed an eviction (actual or constructive) or a disturbance of Tenant's use and possession of the Premises or any part thereof and shall never render Landlord liable to Tenant for damages or relieve Tenant from performance of Tenant's obligations under this Lease. In any such event, however, Landlord shall use its best efforts to cause all such interrupted services to be restored to the Premises as soon as possible.

Except as expressly provided below in this paragraph, Tenant agrees that Landlord shall not be liable for damages (by abatement of Rent or otherwise) for any interruption in or failure to furnish or any delay in furnishing any of the services described above in this Section, or for any diminution in the quality or quantity thereof, when such interruption, failure, delay or diminution is occasioned, in whole or in part, by any repairs, maintenance, replacements or improvements, or by any strike, lockout or other labor trouble (whether legal or illegal), by any failure to obtain fuel or supplies, by any accident, by any act, omission or default of Tenant or other parties, or by any other cause beyond Landlord's reasonable control; and any such interruption, failure, delay or diminution shall never be deemed to constitute an eviction or disturbance of Tenant's use and possession of the Premises or relieve Tenant from paying Rent (except as expressly provided below in this paragraph) or performing any of its obligations under this Lease. Notwithstanding the foregoing, if (i) Landlord ceases to furnish any of the services referred to in this Section as a result of a condition which is within Landlord's reasonable control and is reasonably susceptible of being remedied by Landlord, (ii) Tenant notifies Landlord of such cessation within two (2) business days after obtaining knowledge thereof, and
(iii) as a result of such cessation, a portion of the Premises is rendered untenantable (meaning that Tenant is unable to use such space in the normal course of business) and Tenant in fact so ceases to use such space, for more than five (5) consecutive days, then Base Rent and Additional Rent payable hereunder shall be equitably abated based on the percentage of space in the Premises so rendered untenantable and not being so used by Tenant, effective as of the day the affected space becomes untenantable and Tenant ceases to so use such space and continuing until the affected space once again becomes tenantable.

6. SECURITY DEPOSIT. As additional security for the full and prompt performance by Tenant of all its obligations hereunder, Tenant has upon execution of this Lease paid to Landlord the amount set forth in Section 1.10 hereof (the "Security Deposit"), which amount may be applied by Landlord for the purpose of curing any default by Tenant which default continues beyond the expiration of any applicable cure period set forth in Section 15.1 of this Lease. Landlord shall be permitted to commingle the Security Deposit with Landlord's general funds. Landlord shall not be required to pay any interest on the Security Deposit. If any portion of the Security Deposit is applied to cure a default by Tenant which default continues beyond the expiration of any applicable cure period set forth in Section 15.1 of this Lease, Tenant shall, within ten (10) business days after written demand therefor, deposit cash with Landlord in an amount sufficient to restore the Security Deposit to its original amount, and Tenant's failure to do so shall be a breach of this Lease. If Tenant has not defaulted hereunder or if Landlord has not applied the full amount of the Security Deposit to said default beyond the expiration of any applicable cure period set forth in Section 15.1 of this Lease, then the Security Deposit, or any portion thereof not so applied by Landlord, shall be paid in cash to Tenant within sixty (60) days after Tenant shall have vacated the Premises in accordance with the provisions of this Lease. The Security Deposit is not an advance payment of Rent or an account of Rent, or any part or settlement thereof, or a measure of Landlord's damages. If on the fifth anniversary of the Commencement Date Tenant is not in default under this Lease and no event has occurred and is continuing which with the giving of notice or the passage of time, or both, would constitute a default under this Lease, the Security Deposit still be reduced to Ten Thousand and 00/100 Dollars ($10,000.00). In the event Landlord transfers all or any part of its interest in the Building or this Lease, upon such transferee's written assumption of all of Landlord's obligations under this Lease, Landlord shall have the right to transfer the Security Deposit to the transferee. Upon such transfer and assumption, Landlord shall thereby be released by Tenant from all liability or obligation for the return of the Security Deposit.

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7. USE. Tenant shall use and occupy the Premises for the Permitted Use only

and for no other purpose, unless otherwise expressly agreed in writing by Landlord. Tenant shall not use or occupy the Premises, or permit the Premises to be used or occupied contrary to or in violation of any Laws, or in any manner which would: (i) cause structural injury to the Premises or the Building; (if) invalidate any insurance policy affecting the Premises or the Building; (iii) increase the amount of premiums for any insurance policy affecting the Premises or the Building; (iv) or may be dangerous to persons or property; (v) create a nuisance, or disturb any other occupant of the Building.

8. CONDITION OF PREMISES. On the Commencement Date, Landlord shall deliver the Premises to Tenant in broom-clean condition. Subject to the correction and completion of any items set forth on the punch list to be prepared under Section 4 of the Work Letter, Tenant's taking possession of the Premises shall be

conclusive evidence as against Tenant that the Premises were in good, clean and sanitary order and repair and satisfactory condition and at such time were free from defects, other than latent defects in the Tenant Improvements of which Landlord is notified of within one (1) year after the Commencement Date. No promise of Landlord to after, remodel or improve the Premises or the Building and no representation respecting the condition of the Premises or the Building has been made by Landlord to Tenant other than as may be contained herein or in the Work Letter.

Landlord warrants to Tenant that as of the date of this Lease, to the actual knowledge of Landlord, the Premises and any improvements to be constructed by Landlord (a) are free from material structural defects, (b) comply with all applicable Laws and (c) are free from contamination by any Hazardous Materials. In the event of a breach of the foregoing warranties, Landlord shall promptly rectify such breach at its sole cost and expense.

9. EARLY POSSESSION. If Tenant takes possession of all or any part of the Premises prior to the Commencement Date, all of the covenants and conditions of this Lease (except for the payment of Rent which shall be paid to Landlord in accordance with the terms of this Lease commencing on the Commencement Date) shall be binding upon the parties hereto the same as if the Commencement Date had been fixed as of the date when Tenant took such possession.

10. ASSIGNMENT AND SUBLETTING.

10.1 Prohibitions. Tenant shall not, without the prior written consent of Landlord: (a) assign, convey or mortgage this Lease or any interest hereunder, other than to an Affiliate or Successor (as hereinafter defined); (b) permit any assignment of, or lien upon this Lease or Tenant's interest herein by operation of law or otherwise; (c) sublet the Premises or any part thereof, other than to an Affiliate or Successor; or (d) permit the use of the Premises by any parties other than Tenant, its agents and employees. Landlord shall not unreasonably withhold or delay its consent to any such assignment or subletting. Tenant acknowledges and agrees that Landlord has a vital interest in the nature, variety and location of tenants in the Building as a whole and that Landlord's right to withhold its consent to any proposed assignment or subletting for reasonable business concerns and purposes is a material consideration for the rental rate and terms contained in this Lease. Neither an assignment or subletting to an Affiliate or to a Successor, nor Landlord's consent to any other assignment, subletting or transfer, nor Landlord's election to accept any assignee, sublessee or transferee as Tenant hereunder, shall release the original Tenant from any covenant or obligation under this Lease. Landlord's consent to any assignment or subletting shall not constitute a waiver of Landlord's right to consent to any future assignment or subletting.

10.2 Notice to Landlord. Tenant shall give Landlord written notice of any proposed sublease or assignment (including, without limitation, a proposed sublease or assignment to an Affiliate or to a Successor) at least forty-five
(45) days prior to the effective date of such proposed sublease or assignment. Such notice shall contain the name of the proposed sublessee or assignee, a copy of the proposed sublease or assignment document, a description of the intended use of the Premises by the proposed sublessee or assignee, and such other information as Landlord may reasonably request to evaluate the character, reputation and creditworthiness of the proposed assignee or sublessee and the proposed use of the Premises by such proposed assignee or sublessee. In connection with a sublease

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or assignment to an Affiliate or to a Successor, such notice shall be accompanied by reasonable evidence that the proposed sublessee or assignee is an Affiliate or a Successor.

10.3 Sharing of Profits. Without limitation of any other provision hereof, should Tenant propose to assign this Lease or sublet the Premises to any person or entity other than an Affiliate or to a Successor, Landlord may grant its consent to the assignment or sublease on the condition that fifty percent (50%) of the profits derived by Tenant from the assignment or sublease be paid by Tenant to Landlord as Additional Rent. For purposes of this Section, "profits" shall mean the amount of any and all consideration received by Tenant in connection with such sublease or assignment, minus the amount of Rent to be paid by Tenant under this Lease for the portion of the Term and the portion of the Premises covered by such sublease or assignment, minus all reasonable, out- of-pocket costs incurred by Tenant in connection with such assignment or sublease (including leasing commissions, advertising expenses, costs of alterations or improvements to the Premises and attorney's fees).

10.4 Transfers of Ownership Interests in Tenant. If Tenant is a partnership or a corporation whose partnership interests or stock are not publicly traded, any event or transaction or series of events or transactions resulting in a transfer of control of Tenant shall be deemed to be a voluntary assignment of this Lease by Tenant and shall be subject to the provisions of this Section 10. For purposes of this Section 10.4, the term "control" shall have the meaning set forth in Section 2.1 hereof. Tenant shall pay to Landlord as Additional Rent hereunder, all reasonable costs and expenses (including, without limitation, reasonable attorneys' fees) paid or incurred by Landlord in connection with any proposed assignment or subletting hereunder, regardless of whether Landlord withholds or grants its consent to such assignment or subletting.

Notwithstanding anything to the contrary contained herein, any assignment of this Lease to a successor by reason of merger with Tenant, or assignment between parent and subsidiary, or assignment to an entity acquiring substantially all of the assets or capital stock of Tenant (the "Successor") shall be permitted upon prior written notice to Landlord but without Landlord's consent if on the date Tenant notifies Landlord of such assignment and on the effective date of the assignment the Successor has "Tangible Net Worth" (as hereinafter defined) equal to or greater than the greater of (i) the Tangible Net Worth of Tenant on the date of this Lease, or (ii) the Tangible Net Worth of Tenant on the date Tenant notifies Landlord of such Successor; provided, however, neither an assignment or subletting to an Affiliate or Successor, nor Landlord's consent to any other assignment, subletting or transfer, nor Landlord's election to accept any assignee, sublessee or transferee as Tenant hereunder, shall release the original Tenant from any covenant or obligation under this Lease. "Tangible Net Worth" means the excess of total assets over total liabilities, in each case as determined in accordance with generally accepted accounting principles consistently applied.

In addition, and notwithstanding anything to the contrary herein, a sale or transfer of the capital stock of Tenant shall be permitted without the consent of Landlord provided that (a) Tenant becomes a publicly traded corporation as a result of such sale or transfer, and (b) on the date Tenant notifies Landlord of such sale or transfer to become a publicly traded corporation, and on the effective date of Tenant becoming a publicly traded corporation, Tenant has Tangible Net Worth equal to or greater than the greater of (i) the Tangible Net Worth of Tenant on the date of this Lease, or (ii) the Tangible Net Worth of Tenant on the date Tenant notifies Landlord of such sale or transfer to become a publicly traded corporation. Tenant shall give Landlord written notice of any public offering at least thirty (30) days prior to the effective date of such proposed initial public offering.

11. REPAIRS AND ALTERATIONS.

11.1 Tenant's Repair Obligations. Tenant will, at its own expense, keep the Premises in good condition and repair during the Term, and Tenant shall promptly and adequately repair all damage to the Premises (including, without limitation, docks, dock doors and seals and dock levelers) and replace or repair all damaged or broken glass, fixtures, improvements and appurtenances, and within any reasonable period of time specified by Landlord. Notwithstanding anything to the contrary herein, any repairs by Tenant to mechanical, electrical or plumbing systems in the Premises shall be performed under

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the supervision and with the approval of Landlord. If Tenant fails to commence any such repairs or replacements within five (5) business days after written notice from Landlord of such required action, Landlord may, but need not, make such repairs and replacements, and Tenant shall pay Landlord the cost thereof, plus an additional ten percent (10%) to cover Landlord's overhead and related expenses, forthwith upon being billed for same. Landlord may enter the Premises at all reasonable times and with at least one business day prior verbal notice to make such repairs and replacements and any other repairs, alterations, improvements and additions to the Premises required hereunder or to the Building or to any equipment located in the Building. Tenant shall not be obligated to repair or replace the roof or any structural defects in the Premises. Notwithstanding anything contained herein to the contrary, if any damage to the Property or to the Premises or to any equipment thereon or appurtenance thereto results from the willful misconduct or gross negligence of Tenant or of Tenant's contractors, agents or employees, Landlord may, at Landlord's option, repair such damage and Tenant shall, within thirty (30) days of receipt of a written invoice and reasonable supporting documentation by Landlord, reimburse Landlord forthwith for the total cost of such repairs, plus an additional ten percent (10%) to cover Landlord's overhead and related expenses. In connection with any entry made pursuant to this Paragraph 11, Landlord shall use reasonable efforts to minimize any disruption to Tenant's business caused by any such entry and any such repairs, alterations, additions or improvements to the Premises. Notwithstanding anything to the contrary contained herein, Tenant's repair obligations with respect to a casualty or condemnation shall be governed by the terms of Sections 18 and 19 respectively. In addition, nothing in this Section 11.1 shall relieve Landlord of its obligations under Section 5.

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     11.2    Prohibition on Alterations.  Tenant shall not, without the prior
             --------------------------

written consent of Landlord, make any Alterations. Landlord may withhold its consent to any Material Alterations in its sole but reasonable discretion. With respect to all other Alterations, Landlord shall not unreasonably withhold or delay its consent. Tenant may, without obtaining Landlord's consent, paint and make minor decorative changes within the Premises (e.g., wallpaper and picture

hanging).

11.3 Performance of Alterations. The work necessary to make any Alterations shall be done by contractors approved by Landlord, which approval shall not be unreasonably withheld or delayed. If Alterations are, with Landlord's consent, performed by contractors employed by Tenant, Tenant shall deliver to Landlord, for its review and approval, which shall not be unreasonably withheld or delayed, prior to commencing any such Alterations, copies of all contracts and subcontracts related to such Alterations, and plans, working drawings and specifications necessary to perform such work. Landlord's review of Tenant's plans, specifications or working drawings shall impose no responsibility or liability on Landlord, and shall not constitute a representation, warranty or guarantee by Landlord, with respect to the completeness, design, sufficiency or compliance thereof with any Laws. Alterations shall be performed subject to any reasonable conditions Landlord may impose, including, without limitation, furnishing Landlord with reasonable security for the payment of all costs to be incurred in connection with such Alterations and insurance against liabilities which may arise out of such Alterations, as reasonably determined by Landlord. All Alterations performed by Tenant or its contractors shall be done in a first-class, workmanlike manner using only good grades of materials and shall comply with all insurance requirements and all Laws. Other than out-of-pocket costs incurred by Landlord which shall be reimbursed by Tenant upon demand (i.e., consultant fees), Tenant shall permit Landlord to supervise all Alterations at no cost to Tenant if Tenant's employees or contractors perform the Alterations. Landlord will charge Tenant a supervising fee not to exceed ten percent (10%) of the total cost of the Alterations, including, without limitation, all labor and material costs, if Landlord's employees or contractors perform the Alterations. Tenant shall promptly pay to Landlord and/or to Tenant's contractors, as the case may be, when due, the cost of all work and of all decorating required in connection with any Alterations, and all supervising fees, and if payment is made directly to Tenant's contractors, upon completion of the Alterations, Tenant shall deliver to Landlord evidence of payment and full and final waivers of all liens for labor, services or materials. Tenant covenants and agrees not to suffer or permit any liens to be placed against the Property or the Premises relating to any Alterations, and in case of any such lien attaching or claim thereof being asserted, Tenant covenants and agrees no later than thirty (30) days from the filing thereof or such claim being asserted (i) to cause it to be released and removed of record or (ii) to provide Landlord, with endorsements (reasonably satisfactory to Landlord and Mortgagee) to Landlord and Mortgagee's title insurance policies insuring against that existence of or attempted enforcement of such

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lien or a bond in form and substance reasonably acceptable to Landlord. In the event that such lien is not released, removed, insured or bonded over within said thirty (30) day period Landlord, at its sole option, may take all action necessary to release and remove such lien (without any duty to investigate the validity thereof) and Tenant shall, within ten (10) business days following notice, either before or after such release and removal, pay or reimburse Landlord, as Additional Rent hereunder, for all sums, costs and expenses
(including, without limitation, reasonable attorneys' fees and court costs)
incurred by Landlord in connection therewith. Except to the extent caused by gross negligence or willful misconduct of Landlord or any of its agents, employees, contractors or representatives, Tenant shall indemnify, defend and hold Landlord and its partners and their respective officers, shareholders, directors, agents and employees harmless from all claims, causes of action, liabilities, losses, costs, damages, liens and expenses related to any Alterations, whether performed by or under the direction of Landlord, and whether performed in compliance with this Section 11 or any other conditions imposed by Landlord.

12. CERTAIN RIGHTS RESERVED BY LANDLORD. Landlord shall have the following rights, exercisable without notice (except as expressly provided below) and, except to the extent that any loss, injury or damage is suffered as a result of the gross negligence or willful misconduct of Landlord or any of its agents, employees or contractors, without liability to Tenant for damage or injury to property, person or business, and without effecting an eviction, constructive or actual, or disturbance of Tenant's use or possession of the Premises or giving rise to any claim for set-off or abatement of Rent:

(a) To change the name or street address of the Building with at least ninety (90) days' written notice to Tenant;

(b) To install, affix and maintain any and all signs within and on the exterior of the Building (excluding the exterior portion of the Building where the Premises is located) and on the Land;

(c) To designate and/or approve, prior to installation, all types of window shades, blinds, drapes, awnings, window ventilators and other similar equipment, and to control all internal lighting that may be visible from the exterior of the Premises;

(d) To show the Premises to prospective tenants at reasonable hours upon at least one business day's prior verbal notice to Tenant's Representative or Tenant's site manager at the Premises during the last nine (9) months of the Term and, if abandoned during such year, to prepare the Premises for re-occupancy, and to show the Premises to prospective purchasers and lenders of the Building at reasonable hours upon at least one (1) business days prior verbal notice to Tenant's Representative or Tenant's site manager at the Premises at any time during the Term;

(e) To retain at all times, and to use in appropriate instances upon at least one (1) business day's prior verbal notice (except in cases of emergency in which case no notice shall be necessary) to Tenant's Representative or Tenant's site manager at the Premises, keys to all doors (except secure areas) within and into the Premises. No locks shall be changed without the prior written consent of Landlord;

(f) To decorate or to make repairs, alterations, additions, or improvements, whether structural or otherwise, in and about the Building or the Property, or any part thereof, and for such purposes to enter upon the Premises upon at least one (1) business days prior verbal notice to Tenant's representative or Tenant's site manager at the Premises (except in an emergency, in which case no notice shall be necessary), and during the continuance of any such work, to temporarily close roads, drives, doors, entryways, public space and corridors in the Building or on the Property, and to interrupt or suspend temporarily Building services and facilities, all without abatement of Rent or affecting any of Tenant's obligations hereunder, so long as the Premises are reasonably accessible and, Landlord shall use reasonable efforts to minimize any disruption to Tenant's business;

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(g) To have and retain a paramount title to the Premises free and clear of any act of Tenant purporting to burden or encumber it;

(h) In its reasonable discretion, to grant to anyone the exclusive right to conduct any business or render any service in or to the Property, provided such exclusive right shall not operate to affect any of Tenant's rights under this Lease;

(i) To approve the location of equipment and articles in and about the Premises and the Building so as not to exceed the legal live load; and

(j) To prohibit the placing of vending or dispensing machines of any kind in or about the Premises, except for vending or dispensing machines for the sole use of Tenant and its employees.

In connection with any action by or on behalf of Landlord performed pursuant to this Paragraph 12, Landlord shall use reasonable efforts to minimize any disruption to Tenant's business caused by any such action.

13. COVENANT AGAINST LIENS. Tenant covenants and agrees not to permit any lien of mechanics or materialmen to be placed against the Property or the Premises, and in the case of any such lien attaching, to pay off and remove or bond over any such lien to Landlord's reasonable satisfaction within thirty (30) days after the filing thereof. If any such lien attaches, and Tenant fails to remove or bond over such lien to Landlord's reasonable satisfaction within said 30-day period, Landlord may, but shall not be obligated to, pay the amount necessary to remove such lien without being responsible for making an investigation as to the validity or accuracy thereof, and the amount so paid, together with all costs and expenses (including, without limitation, reasonable attorneys' fees) incurred by Landlord in connection therewith, shall be deemed Additional Rent hereunder, payable within ten (10) business days of Landlord's written demand, which shall be delivered together with reasonable supporting documentation of such amounts owed Landlord.

14. WAIVERS AND INDEMNITIES.

14.1 Waiver. To the extent not expressly prohibited by law and except for the gross negligence or willful misconduct of Landlord or any of its agents, employees, contractors or representatives, Tenant waives all claims it may have against Landlord and its partners, and their respective officers, shareholders, directors, agents and employees for any damage to person or property or loss of business due to the Property, the Premises or any part of either thereof or any appurtenances thereto or improvements thereon not being in good condition or becoming out of repair, or due to the happening of any accident in or about the Property or the Premises or due to any act or neglect of any tenant or occupant of the Property or of any other person, including Landlord and its partners, and their respective officers, shareholders, directors, agents and employees. This provision shall apply particularly (but not exclusively) to damage caused by water, snow, frost, steam, sewage, gas, faucets and plumbing fixtures, and shall apply without distinction as to the person whose act or neglect was responsible for the damage and whether the damage was due to any of the causes specifically enumerated above or to some other cause of an entirely different kind. Tenant further agrees that all Tenant's property upon the Premises shall be there at the risk of Tenant only, and that Landlord shall not be liable for any damage thereto or theft thereof.

14.2 Indemnification. Subject to Section 17.1 and except for the gross negligence or willful misconduct of Landlord, Tenant hereby agrees to indemnify, defend and hold harmless Landlord and its partners and their respective officers, shareholders, directors, agents and employees against any claims or liability for damage to person or property (or for loss or misappropriation of property) occurring during the Term in or on the Property or in the Premises, arising from any breach or default on the part of Tenant under this Lease, or from any act or omission of Tenant or any employee, agent, servant, invitee or contractor of Tenant in or on the Property or in the Premises, or from Tenant's operations or activities on

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or use of the Premises or the Property, and from any cost relating thereto (including, without limitation, reasonable attorneys' fees).

Subject to Section 17.1 hereof and except for the gross negligence or willful misconduct of Tenant, Landlord hereby agrees to indemnify, defend and hold harmless Tenant and its respective officers, shareholders, directors, agents and employees against any claims or liability for damage to person or property (or for loss or misappropriation of property) occurring during the Term in or on the Property or the Premises, arising from any negligent act or omission of Landlord or any employee, agent, servant, invitee or contractor of Landlord in or on the Property or the Premises, or from any breach or default on the part of Landlord under this Lease, or from Landlord's operations or activities on or use of the Property or the Premises, and from any cost relating thereto (including, without limitation, reasonable attorney's fees).

14.3 No Implicit Waivers. No waiver of any condition expressed in this Lease shall be implied by any neglect of Landlord or Tenant to enforce any remedy on account of the violation of such condition if such violation be continued or repeated subsequently, and no express waiver shall affect any condition other than the one specified in such waiver and that one only for the time and in the manner specifically stated. After the expiration of any applicable cure period set forth in Section 15.1 of this Lease, no receipt of moneys by Landlord from Tenant after the termination in any way of the Term or of Tenant's right of possession hereunder or after the giving of any notice shall reinstate, continue or extend the Term or affect any notice given to Tenant prior to the receipt of such moneys, it being agreed that after the service of notice of the commencement of a suit or after final judgment for possession of the Premises, Landlord may receive and collect any Rent due, and the payment of said Rent shall not waive or affect said notice, suit or judgment.

15. DEFAULTS AND LANDLORD'S REMEDIES.

15.1 Defaults. It shall be a default under this Lease if: (i) default shall be made in the payment of Rent or any installment thereof or in the payment of any other sum required to be paid by Tenant under this Lease, and such default shall continue for five (5) days after receipt of written notice of such default; or (ii) default shall be made in the performance of any of the other covenants or conditions which Tenant or any Guarantor is required to observe and perform under this Lease or under any Guaranty, and such default shall continue for thirty (30) days after notice to Tenant (unless such default shall give rise to a hazardous condition requiring an immediate cure, in which case, no notice is necessary (although Landlord shall use reasonable efforts to provide such notice) and Tenant must cure such default immediately); provided, however, that Landlord shall not be entitled to exercise its remedies on account of any default described in this clause (ii) if (a) such default cannot reasonably be cured within thirty (30) days, (b) Tenant commences to cure such default within said 30-day period and thereafter diligently and continuously proceeds with such cure, and (c) Tenant cures such default within a reasonable period of time after Landlord's notice of such default; or (iii) the interest of Tenant in this Lease is levied on under execution or other legal process, or
(iv) an Event of Bankruptcy occurs, or (v) Tenant dissolves or ceases to exist unless Tenant's interest in this Lease shall be transferred to an Affiliate or to a Successor pursuant to the terms of Section 10 of this Lease, or (vi) Tenant shall abandon the Premises during the Term.

15.2 Landlord's Remedies. Upon a default under this Lease, Landlord at its option may, without notice or demand of any kind to Tenant or any other person, exercise any one or more of the following described remedies in addition to all other rights and remedies provided at law or in equity:

(a) Landlord may terminate this Lease and the Term created hereby, in which event Landlord may forthwith repossess the Premises and be entitled to recover forthwith as damages a sum of money equal to all Rent accrued and unpaid for the period up to and including the date of termination, plus as final and liquidated damages (and not as a penalty), Landlord's reasonable estimate of the amount of Rent that would be payable from the date of such termination through the balance of the scheduled Term, less the fair rental value of the Premises for said period (taking into consideration the time to relet the Premises, and taking into consideration and

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reducing said fair rental value by, the cost of reletting and retrofitting the Premises), plus any other sum of money and damages owed by Tenant to Landlord.

(b) Landlord may terminate Tenant's right of possession and may repossess the Premises by forcible entry or detainer suit or otherwise, without terminating this Lease, in which event Landlord may, but shall be under no obligation to, relet the Premises for the account of Tenant, for such rent and upon such terms as shall be satisfactory to Landlord. For the purpose of such reletting, Landlord is authorized to decorate and make any repairs, changes, alterations, or additions in or to the Premises that may be necessary or appropriate, and Tenant shall, upon written demand, pay the cost thereof. If Landlord shall fail or refuse to relet the Premises, or if the Premises are relet and a sufficient sum shall not be realized from such reletting to pay all of the costs and expenses (i) of such decoration, repairs, changes, alterations and additions, (ii) of such reletting (including, without limitation, all brokerage, advertising, and legal expenses), and (iii) of the collection of the rent accruing therefrom, and to satisfy the Rent provided for in this Lease, then Tenant shall pay to Landlord as damages a sum equal to the amount of the Rent reserved in this Lease for such period or periods, or, if the Premises have been relet, Tenant shall satisfy and pay any such deficiency upon demand therefor from time to time. Tenant agrees that Landlord may file suit to recover any sums falling due under the terms of this paragraph (b) from time to time and that no suit or recovery of any portion due Landlord hereunder shall be any defense to any subsequent action brought for any amount not theretofore reduced to judgement in favor of Landlord. To the extent required by law, Landlord shall use reasonable efforts to mitigate its damages.

(c) Landlord may perform the obligation which is the subject of such default for the account and at the expense of Tenant. All costs incurred by Landlord in performing such obligation, plus an administrative fee equal to ten percent (10%) of such costs, plus all attorneys' fees and expenses of Landlord incurred in enforcing any of the obligations of Tenant under this Lease shall become Additional Rent hereunder and shall be due and payable by Tenant on demand.

16. SURRENDER OF POSSESSION.

16.1 Condition of Premises. At the termination of this Lease by lapse of time or otherwise, or upon a termination of Tenant's right of possession without terminating this Lease, Tenant shall surrender possession of the Premises and all Tenant Improvements to Landlord and deliver all keys to the Premises to Landlord, and shall return the Premises and all equipment and fixtures of Landlord to Landlord In as good condition as when Tenant originally took possession, ordinary wear and tear, loss or damage by fire or other insured casualty, and damage resulting from the acts of Landlord or any of its employees and agents excepted, failing which Landlord may restore the Premises and such equipment and fixtures to such condition and Tenant shall pay the reasonable cost thereof to Landlord within ten (10) business days of receipt of Landlord's invoice thereof, which shall be delivered to Tenant with reasonable supporting documentation. All Alterations, whether temporary or permanent in character, made by Landlord or Tenant in or upon the Premises shall become Landlord's property, and unless Landlord requests their removal, shall remain upon the Premises at the termination of this Lease by lapse of time or otherwise or upon a termination of Tenant's right to possess the Premises, without compensation to Tenant, excepting, however, Tenant's movable furniture, equipment and trade fixtures, provided that they may be removed without permanent structural damage to the Building. If Tenant does not remove such furniture, equipment and trade fixtures upon the expiration or earlier termination of this Lease, or upon the termination of Tenant's right to possess the Premises, at Landlord's election:
(i) Tenant shall be conclusively presumed to have conveyed the same to Landlord under this Lease as a bill of sale without payment or credit by Landlord, or
(ii) Tenant shall be conclusively presumed to have forever abandoned such property, and without accepting title thereto, Landlord may, at Tenant's expense, remove, store, destroy, discard or otherwise dispose of all or any part thereof without incurring liability to Tenant or to any other person, and Tenant shall pay Landlord upon demand the reasonable expenses incurred in taking such actions. Tenant's obligations under this Section 16.1 shall survive the expiration or earlier termination of the Term of this Lease. Notwithstanding any of the foregoing, Tenant shall not be required

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by Landlord to remove any Alterations from the Premises unless, at the time that Tenant requests Landlord for its consent for the construction of the same, Landlord informs Tenant of such removal obligation.

16.2 Holding Over. If Tenant retains possession of the Premises or any part thereof after the termination of this Lease, whether by lapse of time or otherwise, or after a termination of Tenant's right to possess the Premises, then Landlord may, at Landlord's sole election at any time after the termination of this Lease or Tenant's right of possession, serve written notice on Tenant that such holding over constitutes either: (a) the creation of a month-to-month tenancy upon each of the terms herein provided as may be applicable to such month-to-month tenancy, except that Tenant shall pay to Landlord Base Rent for each month or portion thereof in the amount set forth below, plus all Additional Rent (including, without limitation, the Operating Expense Amount and Estimated Payments) coming due during such period, or (b) the creation of a tenancy at sufferance upon each of the terms herein provided as may be applicable to such tenancy at sufferance, except that Tenant shall pay to Landlord a per them rent equal to the per them Base Rent set forth below, plus the per them amount of all Additional Rent (including, without limitation, the Operating Expense Amount and Estimated Payments). If no written notice is served by Landlord, then a tenancy at sufferance with Rent as stated in (b) above shall have been created. The provisions of this Section shall not operate as a waiver by Landlord of any right of re-entry herein provided. In addition to and not in limitation of all other remedies set out in this Section, Tenant shall be liable for all damages (consequential as well as direct) sustained by Landlord on account of Tenant's holding over. Base Rent payable during any holding over shall be as follows:

(i) during the first sixty (60) days following the termination of this Lease or the termination of Tenant's right of possession, one hundred twenty-five percent (125%) of the Base Rent for the calendar month immediately preceding the termination date of this Lease or the termination of Tenant's right of possession; and

(ii) from and after the sixty-first (61st) day following the termination of this Lease or the termination of Tenant's right of possession, one hundred fifty percent (150%) of the Base Rent for the calendar month immediately preceding the termination date of this Lease or the termination of Tenant's right of possession.

17. INSURANCE.

17.1 Waiver of Subrogation. Landlord and Tenant each hereby waive all claims against the other for loss of or damage to the Property or Premises or to the contents thereof, which loss or damage is covered by valid and collectible fire and extended coverage insurance policies, to the extent that such loss or damage is recoverable under said insurance policies. Inasmuch as this mutual waiver will preclude the assignment of any such claim by subrogation (or otherwise) to an insurance company (or any other person), Landlord and Tenant each agree to give each insurance company which has issued, or in the future may issue, to it policies of fire and extended coverage insurance, written notice of the terms of this mutual waiver, and to have said insurance policies properly endorsed, if necessary, to prevent the invalidation of said insurance coverage by reason of said waiver.

17.2 Tenant's Insurance. Tenant shall carry insurance during the entire Term insuring Tenant and Landlord and their respective agents and employees, and any other reasonable parties designated by Landlord from time to time (including, without limitation, any Mortgagee) as their interests may appear, with terms, coverages and in companies reasonably satisfactory to Landlord, and with such increases in limits as Landlord may from time to time reasonably request, but initially Tenant shall maintain the following coverages in the following amounts:

(a) Comprehensive or Commercial General Liability insurance, including Contractual Liability coverage of the indemnification provisions contained in this Lease and host liquor liability insurance, with limits for bodily injury or personal injury to or death of any person, or more than one (1) person, or for damage to property in an amount of not less than $1,000,000.00 per occurrence/$3,000,000.00 aggregate. The coverage amounts may be provided through an

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umbrella or excess liability policy. The Comprehensive or Commercial General Liability policy shall include Landlord, Landlord's management agent and any Mortgagee designated by Landlord from time to time as additional insureds on a primary and non-contributory basis to any insurance carried by Landlord, Landlord's management agent and any Mortgagee.

(b) Insurance against "all risks" of physical loss for the full insurable replacement value of the initial build-out of the Premises (including, without limitation, the Tenant Improvements) and all Alterations, and of all furniture, trade fixtures, equipment, merchandise and all other items of Tenant's property on the Premises.

(c) Worker's Compensation insurance in amounts required by the State of Illinois, including Voluntary Compensation, Broad Form All States Endorsement.

(d) Automobile Liability insurance with limits for bodily injury or personal injury to or death of any person, or more than one (1) person, or for damage to property in an amount of not less than $1,000,000.00 combined single limit, including Employer's Owned, Non-Owned and Hired Car coverage.

17.3 Evidence of Insurance. Tenant shall, prior to the commencement of the Term, furnish to Landlord certificates of insurance evidencing the insurance coverage required under this Section 17, and Tenant shall deliver renewals thereof to Landlord not less than thirty (30) days prior to the end of the term of such coverage, which certificates shall state that such insurance coverage shall not be changed or canceled without at least thirty (30) days' prior written notice to Landlord and any Mortgagee identified by Landlord from time to time.

17.4 Landlord's Insurance. Attached hereto and made a part hereof as Exhibit D is a certificate of insurance. evidencing the insurance carried by Landlord for the Property as of the date of this Lease. Landlord covenants that during the Term of this Lease it will continue to maintain insurance for the Property customarily carried by similar owners of similar types of property.

18. FIRE OR CASUALTY.

(a) If the Premises or the Building (including machinery or equipment used in the operation of the Building) shall be destroyed or damaged by fire or other cause and if the Premises or Building may be repaired and restored within two hundred seventy (270) days after such damage, then Landlord shall, to the extent insurance proceeds are actually made available to Landlord for purposes of repair and restoration, diligently repair and restore same with reasonable promptness; provided, however, that Landlord shall only be obligated to repair or restore any improvements made to the Premises (including, without limitation, the Tenant Improvements or any Alterations) to the extent that (i) Landlord paid for the initial construction of such improvements (either directly or through an allowance granted to Tenant), and (ii) Landlord receives the insurance proceeds related to such improvements under the insurance described in clause (b) of Section 17.2 hereof. Tenant agrees to execute all reasonable documents and take all actions reasonably necessary to make the insurance proceeds described in clause (ii) of the immediately preceding sentence available to Landlord for the repair and restoration of the Premises. Notwithstanding anything contained herein to the contrary, if the Premises or the Building are substantially damaged or destroyed during the last twelve (12) months of the Term, either Landlord or Tenant shall have the right to terminate this Lease as of the date of the fire or other casualty by giving notice to the other within thirty (30) days after the date of the fire or casualty, i n which event, Rent shall be apportioned on a per them basis and paid to the date of such fire or casualty. Notwithstanding anything contained herein to the contrary, if such damage renders the Premises untenantable in whole or in part and cannot reasonably be repaired and restored within two hundred seventy (270) days, or if sufficient insurance proceeds are not made available to Landlord for repair or restoration and Landlord elects to not obtain or provide alternative financing, or if Landlord elects to demolish the Building or cease its operation, then either party shall have the right to cancel and terminate this Lease (which termination shall be

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effective as of the date of such damage), in the manner as hereinafter provided. Within seventy-five (75) days after the occurrence of the casualty, Landlord agrees to provide Tenant with written notice (the "Landlord's Casualty Notice") stating which, if any, of the conditions set forth in the immediately preceding sentence (individually a "Termination Event", and collectively, the "Termination Events") exist and its reasonable estimate of the repair period. In the event that a Termination Event does exist, Landlord shall exercise its termination right hereunder, if at all, by electing to exercise the same in the Landlord's Casualty Notice. Provided that a Termination Event exists and Landlord shall not have previously chosen to terminate this Lease pursuant to the foregoing sentence, Tenant shall terminate this Lease, if at all, by delivering written notice to Landlord within twenty (20) days after receiving the Landlord's Casualty Notice. Tenant's failure to deliver written notice of termination within said 20-day period shall be deemed that Tenant has waived its right to terminate this Lease under this Section 18(b). In the event any fire or casualty renders the Premises untenantable, in whole or in part, and if this Lease shall not be terminated by reason of such damage, then Rent shall abate during the period beginning with the date of such fire or other casualty and ending with the date when the Premises are again rendered tenantable, by an amount bearing the same ratio to the total amount of Rent for such period as the untenantable portion of the Premises bears to the entire Premises. Notwithstanding anything contained herein to the contrary, if any fire or other casualty is caused by the gross negligence or willful misconduct of Tenant or its agents or employees, Tenant shall not be entitled to terminate this Lease on account of such fire or other casualty, and Rent shall only abate to the extent Landlord actually recovers rent loss insurance proceeds specifically allocated to the Rent due under this Lease.

(b) In the event neither Landlord nor Tenant terminate this Lease, pursuant to the terms of Section 18(a), following a casualty to the Premises, and Landlord elects to repair the Premises, Landlord shall commence construction within thirty (30) days after receipt of a building permit from the City, subject to Events of Force Majeure, and shall substantially complete such repair or restoration of the Premises within two hundred seventy (270) days from the date of the casualty, subject to Events of Force Majeure. If Landlord fails to commence construction or complete construction within the time periods hereinabove set forth, subject to Events of Force Majeure, Tenant shall have the right to terminate this Lease by delivering written notice within ten (10) days after the expiration of the thirty (30) day period or within ten (10) days after the expiration of the two hundred seventy (270) day period, as the case may be. Tenant's failure to deliver written notice of its election to terminate within the required time period shall be deemed that Tenant has waived its right to terminate this Lease under this Section 18(b).

19. CONDEMNATION. If the whole or any material part of the Premises or the Building or any substantial portion of the parking area on the Land shall be taken or condemned by any competent authority for any public use or purpose or if any adjacent property or street shall be condemned or improved in such a manner as to require the use of any part of the Premises or of the Building or such parking area, the Term, at the option of Landlord, shall end upon the date when the possession of the part so taken shall be required for such use or purpose, and current Rent shall be apportioned as of the date of such termination. In addition, if part of the Premises shall be taken or condemned by any competent authority for any public use or purpose so that Tenant cannot, in the reasonable judgment of Tenant, operate its business in the remaining portion of the Premises, Tenant shall have the option to cancel this Lease as of the date on which the condemning authority shall take possession of the part of the Premises so taken, which option shall be exercised by written notice to Landlord within thirty (30) days following Tenant's receipt of notice of the intended taking. Tenant shall have no right to any apportionment of or share in any condemnation award or judgement for damages made for the taking of any part of the Premises or the Property but may seek its own award for loss of or damage to Tenant's business or its property and relocation expenses resulting from such taking, provided that such an award to Tenant does not in any way diminish the award payable to Landlord on account of such taking. In the event of a taking of the Premises and neither Landlord nor Tenant elects to terminate this Lease, Base Rent shall be reduced in proportion to the floor area of the Premises taken, which shall be evidenced by an amendment to this Lease executed by both parties, and shall become effective on the date possession is delivered pursuant to said taking.

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20. NOTICES. All notices to be given by one party to the other under this Lease shall be in writing (except as expressly provided herein to the contrary), mailed by certified or registered mail, postage prepaid, sent by overnight courier, hand delivered, or sent by facsimile transmission with a copy to follow within one (1) business day by one of the alternative methods of delivery permitted hereunder as follows:

(a) To Landlord:

Amli Commercial Properties Limited Partnership 222 Spring Lake Drive
Itasca, IL 60143
Attention: President
Facsimile Telephone No.:630-227-9860

or to such other person or at such other address or to such other facsimile telephone number designated by notice sent to Tenant in one of the manners permitted under this Section 20, and during the Term with a copy to the address to which Rent is then being paid under this Lease.

(b) To Tenant: at the address or to the facsimile telephone number set forth in Section 1.3 above, and during the Term with a copy to the Premises or to such other address or facsimile telephone number designated by notice to Landlord in one of the manners permitted under this Section 20.

Any notice given in accordance with this Section 20 shall be deemed to have been given and received: (a) on the date of hand delivery if sent by hand delivery,
(b) on the date and at the time transmitted if sent by facsimile transmission, as evidenced by the confirmation slip generated by the sender's facsimile machine, or (c) on the date of actual delivery (or refusal thereof), as shown on the return receipt, air bill or other delivery record if sent by any other means permitted hereunder.

21. ADDITIONAL COVENANTS OF TENANT. Tenant hereby covenants and agrees to comply with, and use reasonable efforts to cause its employees, agents, clients, customers, invitees and guests to comply with, the following provisions:

(a) Any sign, lettering, picture, notice, or advertisement installed within the Premises shall be installed at Tenant's cost and in compliance with all Laws. Without obtaining Landlord's prior, written consent (which consent may be withheld in Landlord's reasonable discretion) no sign, lettering, picture, notice or advertisement may be placed on any portion of the Premises which is visible from outside the Premises.

(b) Tenant shall not advertise the business, profession or activities of Tenant in any manner which violates the letter or spirit of any code of ethics adopted by any recognized association or organization pertaining thereto, or use the name of the Building for any purpose other than for identifying Tenant's business address, or use the name of the business park, as it may from time to time be known, in which the Building is located, or use any picture or likeness of the Building in any letterheads, envelopes, circulars, notices, advertisements, containers or wrapping material, without Landlord's prior consent in writing.

(c) Tenant shall not place any radio or television antenna on the roof of the Building or on any other part of the Property other than inside the Premises, or operate or permit to be operated any musical or sound producing instrument or device inside or outside the Premises which may be heard outside the Premises. Tenant shall not make noises, cause disturbances or vibrations or use or operate any electrical or electronic devices or other devices that emit sound or other waves or disturbances, or create odors, any of which may be offensive to other tenants and occupants of the Building or that would interfere with the operation of any device or equipment or radio or television broadcasting or reception from or within the Building or elsewhere.

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(d) Tenant shall not obstruct sidewalks or entrances in and about the Property. Tenant shall not place objects against doors or windows which would be unsightly from the exterior of the Building, and will promptly remove same upon notice from Landlord. Tenant shall store and dispose of refuse as directed by Landlord, including, without limitation, storing and disposing of all refuse in a neat and clean condition so as not to be visible to members of the public outside the Premises and so as not to create any health or fire hazard. In no event shall Tenant burn any refuse at any time in the Premises or on or about the Property. Tenant shall not:
(i) leave or store any pallets on or around the loading docks, parking areas or anywhere on the Property outside of the Premises or park any truck trailers in the parking areas on the Land for any purposes (including, without limitation, storage purposes, temporary or permanently; or (ii) store any boxes, materials, goods or equipment anywhere on the Property outside of the Premises. Notwithstanding anything to the contrary herein, Tenant shall be permitted, subject to covenants, rules, regulations and guidelines presently existing or imposed from time to time by the Amhurst Lake Business Park Association, or any committee thereof, including, without limitation, the Declaration of Protective Covenants for Amhurst Lake Business Park, to park truck trailers within the area on the Land which is crosshatched and depicted on Exhibit E attached hereto (the "Trailer Area"), for temporary or permanent (including overnight) storage purposes provided all truck trailers are efficiently placed within the Trailer Area along the south wall of the Building and do not interfere with any truck maneuvering of other tenants within the truck area between the Building and Amhurst Industrial Center II. Landlord covenants that at no time during the Term will any rules or regulations be imposed by the Landlord with respect to the Trailer Area materially affect Tenant's ability to conduct its business

(e) Tenant shall not make any room-to-room canvass to solicit business from other tenants in the Building, and shall not exhibit, sell or offer to sell, use, rent or exchange any item or service in or from the Premises unless expressly included within the Permitted Use.

(f) Tenant agrees to cooperate reasonably with Landlord to assure the most effective operation of the Building's heating and air conditioning systems, and shall not adjust any controls other than room thermostats installed for Tenant's use or take any action which could jeopardize the warranties covering the heating, ventilating and air conditioning systems.

(g) Door keys for doors in the Premises will be furnished at the commencement of the Term by Landlord. Tenant shall not affix additional locks on doors without the prior consent of Landlord and shall purchase duplicate keys only from Landlord. At the and of the Term or upon a termination of Tenant's right of possession, Tenant shall return all keys to Landlord and will disclose to Landlord the combination of any safes, cabinets or vaults left in the Premises.

(h) Tenant assumes full responsibility for protecting the Premises from theft, robbery and pilferage, which includes keeping doors locked and other means of entry to the Premises (including, without limitation, truck docks) closed and secured.

(i) Peddlers, solicitors and beggars shall be reported promptly to Landlord.

(j) Tenant shall not install or operate heavy machinery of a nature not related to the Permitted Use without the written permission of Landlord.

(k) Tenant shall comply with all covenants, conditions and restrictions of record encumbering or relating to the Property or any portion thereof (including, without limitation, any declaration of covenants, conditions, restrictions and easements encumbering the business park in which the Property is located), and with all reasonable rules and regulations issued from time to time by the Association or by Landlord, provided that the same shall not unreasonably interfere with the conduct of Tenant's business or its enjoyment of the Premises.

(l) Tenant will not in any manner deface or injure the Property or any part thereof or overload the floors of the Premises.

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(m) Tenant will not use the Premises for lodging or sleeping purposes or for any immoral or illegal purposes.

(n) Tenant shall not at any time manufacture, sell, use or give away, and shall not at any time permit the manufacture, sale, use or gift of any spirituous, fermented, intoxicating or alcoholic liquors on the Premises or Property. Except for Tenant's and its employees exclusive use of vending machines within the Premises, Tenant shall not at any time sell, purchase or give away, or permit the sale, purchase or gift of, food in any form by or to any of Tenant's agents or employees or any other parties on the Premises or Property.

(o) In no event shall Tenant permit on the Property flammables or explosives or any other article of an intrinsically dangerous nature, except for any such materials used in the ordinary course of Tenant's business and in accordance with all Laws. If by reason of Tenant's failure to comply with the provisions of this Section, any insurance coverage is jeopardized or insurance premiums are increased, in addition to all other rights and remedies available to Landlord upon a default by Tenant under this Lease, Landlord shall have the right to require Tenant to make immediate payment of the increased insurance premium, if any.

(p) Tenant shall not introduce, use, handle, generate, treat, transport, store or dispose of, or permit the introduction, use, handling, generation, treatment, transportation, storage or disposal of any Hazardous Materials in, on, under, to, from, around or about the Premises, the Building or the Property, except for Hazardous Materials contained in products which are reasonably and customarily used in the normal course of Tenant's business, such as photocopy machine solutions and cleaning solvents, as long as such Hazardous Materials are only used in compliance with all Laws (without the need for a special permit) and all manufacturer's and supplier's instructions and recommendation, and in quantities and for purposes which are reasonably and customarily used in the normal course of Tenant's business. Tenant shall indemnify, defend and hold harmless Landlord, its partners and their respective officers, directors, shareholders, servants, agents and employees from and against all fines, penalties, liens, suits, procedures, claims, demands, liabilities, damages (including consequential damages), actions, causes of action, costs and expenses of every kind and nature whatsoever (including, without limitation, reasonable attorneys', engineers', experts and consultants' fees and costs of testing, monitoring, remediation, removal and cleanup), contingent or otherwise, known or unknown, incurred or imposed, to the extent arising directly or indirectly out of or in any way connected with Tenant's breach of the covenants set forth in this Section
21(p). Tenant's obligations under the immediately preceding sentence shall survive the expiration or earlier termination of this Lease and a termination of Tenant's right to possess the Premises.

22. ESTOPPEL CERTIFICATES: MORTGAGE ISSUES.

22.1 Estoppel Certificates. Tenant agrees that from time to time upon not less than ten (10) business days prior request by Landlord or any Mortgagee, Tenant will deliver to Landlord or such Mortgagee an estoppel certificate substantially in the form of Exhibit F attached hereto and made a part hereof or in such other form as Landlord or such Mortgagee may reasonably request. In the event Tenant fails or refuses to deliver any such certificate within said 10- business day period, in addition to all other rights and remedies available under this Lease, at law or in equity upon a default by Tenant under this Lease, Tenant shall be deemed to have accepted, agreed with and certified to, each of the statements set forth in any such certificate. Landlord agrees that upon not less than ten (10) business days prior request by Tenant's primary lender or Successor, Landlord will deliver to Tenant and Tenant's primary lender or Successor, as the case may be, an estoppel certificate substantially in the form of Exhibit G attached hereto and made a part hereof or in such other form as Tenant's lender or Successor may reasonably request. In the event Landlord fails or refuses to deliver any such certificate within said 10-business day period, in addition to all other rights and remedies available under this Lease, at law or in equity upon a default by Landlord under this Lease, Landlord shall be deemed to have accepted, agreed with and certified to, each of the statements set forth in any such certificate.

21.


22.2 Subordination and Attornment. Landlord may sell the Land and become the tenant under a ground or underlying lease of the Land and this Lease and all rights of Tenant hereunder will then be subject and subordinate to such underlying lease and any extensions or modifications thereof. This Lease and all of Tenant's rights hereunder shall also be subject and subordinate to any mortgage or mortgages (and the liens thereof) now or at any time hereafter in force against the Building, the Land and/or the underlying leasehold estate, and to all advances made or hereafter to be made upon the security thereof; provided, however, that such subordination shall be conditioned upon the Mortgagee under any such mortgage agreeing, in writing, that a foreclosure of such mortgage or the giving of a deed in lieu of foreclosure shall not terminate this Lease, and Tenant may remain In possession of the Premises pursuant to the terms of this Lease, as long as Tenant is not in default beyond the expiration of any applicable cure period set forth in Section 15.1 of this Lease (a "Non- Disturbance Agreement"). A Non-Disturbance Agreement may be contained in an instrument signed by the Mortgagee only, or in an agreement entered into by Tenant and any such Mortgagee. For purposes of this Lease, "Mortgagee" shall mean the mortgagee, from time to time, under any mortgage granted by Landlord and now or hereafter encumbering the Property or any portion thereof or interest therein. Tenant hereby acknowledges that as of the date hereof, Bank One, Chicago, NA, 111 N. Canal Street, Chicago, Illinois 60606 is a Mortgagee. Tenant shall execute such further reasonable instruments subordinating this Lease to any such mortgage or mortgages (and containing such other terms and agreements as are customarily contained in such instruments) as Landlord from time to time may reasonably request, provided that any such instrument contains a Non-Disturbance Agreement. Tenant covenants and agrees that, if by reason of any default on the part of Landlord herein as tenant under said underlying lease, or as mortgagor under any mortgage to which this Lease is subject and subordinate, said underlying lease is terminated or such mortgage is foreclosed by summary proceedings, voluntary agreement or otherwise, Tenant, at the election of the landlord under said underlying lease or the Mortgagee of such mortgage, as the case may be, will attorn to and recognize such landlord or Mortgagee as the "Landlord" under this Lease. Tenant further agrees to execute and deliver at any time upon request of Landlord, any Mortgagee or any party which shall succeed to the interest of Landlord as tenant under said underlying lease, any instrument to evidence such attornment and containing such other terms and agreements as are customarily contained in such instruments. Tenant waives the provision of any law now or hereafter in effect which may give to Tenant any right of election to terminate this Lease or to surrender possession of the Premises in the event any proceeding is brought by landlord under said underlying lease or the Mortgagee under any such mortgage to terminate said underlying lease or foreclose such mortgage, as long as any such Mortgagee has provided a Non-Disturbance Agreement. At the election of any Mortgagee (expressed in a document signed by such Mortgagee), such Mortgagee may make all or some of Tenant's rights and interests in this Lease superior to any mortgage held by such Mortgagee and the lien thereof. Landlord will use best efforts to obtain a Subordination, Non-Disturbance and Attornment Agreement from its current Mortgagee in the form attached hereto as Exhibit H as soon as possible after this Lease is executed by Tenant.

22.3 Notices to Mortgagees. Tenant agrees to give any Mortgagee, by registered mail, a copy of any notice of default served upon Landlord, provided that Landlord shall have provided Tenant with a current address for Mortgagee. Tenant further agrees that if Landlord shall have failed to cure such default, then such Mortgagee shall have an additional thirty (30) days within which to cure such default, or if such default cannot reasonably be cured by such Mortgagee within thirty (30) days, such Mortgagee shall have such additional time as may be necessary to cure such default (including, without limitation, time necessary to obtain possession of the Property if possession is necessary to cure such default), and Tenant shall not pursue any remedies it may have for such default and this Lease shall not be terminated, while such cure is being diligently pursued.

22.4 Quiet Possession. Upon payment by Tenant of the Rent due hereunder, and upon the observance and performance of all the covenants, terms and conditions on Tenant's part to be observed and performed, Tenant shall peaceably and quietly hold and enjoy the Premises for the Term, without hindrance or interruption by Landlord or any other person or persons lawfully or equitably claiming by, through or under Landlord, always subject, however, to the terms and conditions of this Lease.

23. MISCELLANEOUS.

22.


23.1 Definition of Landlord. For purposes of this Lease, Landlord shall mean Landlord hereinabove named, except that in the event of any sale or other transfer of the Property or the Building, upon the transferee's written assumption of Landlord's obligations under. this Lease, the seller or transferor (and the beneficiaries of any selling or transferring land trust) shall be and hereby is and are entirely freed and relieved of all agreements, covenants and obligations of the Landlord hereunder accruing from and after the effective date of such transfer, and without further agreement between the parties and the purchaser or transferee on any sale or transfer, such purchaser or transferee shall be deemed and held to have assumed and agreed to carry out any and all agreements, covenants and obligations of the Landlord hereunder accruing from and after the effective date of such sale or transfer.

23.2 Real Estate Broker. Tenant represents that Tenant has dealt with no broker in connection with this Lease other than the Broker, and that insofar as Tenant knows, no other broker or finder negotiated this Lease or is entitled to any fee or commission in connection herewith. Tenant agrees to indemnify, defend and hold Landlord and its partners and their respective officers. shareholders, directors, agents and employees free and harmless from and against all claims for broker's commissions or finder's fees by any person claiming to have represented or procured, or to have been engaged by, Tenant in connection with this transaction other than the Broker. Landlord represents that Landlord has dealt with no broker in connection with this Lease other than the Broker and that insofar as Landlord knows, no other broker or finder negotiated this Lease or is entitled to any fee or commission in connection herewith. Landlord agrees to indemnify, defend and hold Tenant and its officers, shareholders, directors, agents and employees free and harmless from and against all claims for broker's commissions or finder's fees by any person claiming to have represented or to have been engaged by Landlord in connection with this transaction. Landlord shall pay Broker all fees and commissions due to Broker in connection with this Lease.

23.3 Cumulative Remedies. All rights and remedies of Landlord under this Lease shall be cumulative, and none shall exclude any other rights and remedies allowed by law.

23.4 Default Interest. All payments becoming due to Landlord from Tenant under this Lease shall be considered as Rent, and if any such payments remain unpaid for more than five (5) business days after written notice of such default, such payments shall bear interest from the date when due until the date paid at a rate of interest per annum equal to five percent (5%) in excess of the rate announced or published from time to time by Harris Trust and Savings Bank at its office in Chicago, Illinois as its prime or equivalent base rate of interest adopted as a general benchmark from which Harris Trust and Savings Bank determines the floating interest rates chargeable on various loans to borrowers from time to time. Landlord's right to receive such interest shall not, in any way, limit any of Landlord's other remedies under this Lease or at law or equity.

23.5 Grammatical Interpretation. The word "Tenant" wherever used herein shall be construed to mean Tenants in all cases where there is more than one Tenant, and the necessary grammatical changes required to make the provisions hereof apply either to corporations or individuals, men or women, shall in all cases be assumed as though in each case fully expressed.

23.6 Successors and Assigns. Each of the provisions of this Lease shall extend to and shall, as the case may require, bind or inure to the benefit, not only of Landlord and of Tenant, but also of their respective heirs, legal representatives, successors and assigns, provided this clause shall not permit any assignment contrary to the provisions of Section 10 hereof.

23.7 No Oral Modifications. All of the representations and obligations of Landlord and Tenant are contained herein, and no modification, waiver or amendment of this Lease or of any of its conditions or provisions shall be binding upon Landlord unless contained in a writing signed by Landlord and Tenant or by a duly authorized agent of Landlord or Tenant empowered by a written authorization signed by Landlord or Tenant, as the case may be.

23.8 Irrevocable Offer; No Option. In consideration of Landlord's administrative expense in considering this Lease, Tenant's submission to Landlord of this Lease, duly executed by Tenant, shall

23.


constitute Tenant's irrevocable offer to continue for ten (10) business days from and after receipt by Landlord or until Landlord shall deliver to Tenant written notice of rejection of Tenant's offer, whichever shall first occur. If within said 10 business day period Landlord shall neither return this Lease duly executed by Landlord nor so advise Tenant of Landlord's rejection of Tenant's offer, then Tenant shall be free to revoke its offer. Although Tenant's execution of this Lease shall be deemed an irrevocable offer by Tenant, the submission of this Lease by Landlord to Tenant for examination shall not constitute a reservation of or option for the Premises. This Lease shall become effective only upon execution thereof by both parties and delivery thereof to Tenant.

23.9 No Air Rights. No rights to light or air over any property, whether belonging to Landlord or any other person, are granted to Tenant by this Lease.

23.10   Intentionally Deleted.
        ---------------------

23.11   Landlord's Title.  Landlord's title to the Property is and always
        ----------------

shall be paramount to the title of Tenant. Nothing herein contained shall empower Tenant to do any act which can, shall or may encumber the title of Landlord to the Property.

23.12 Recording Prohibited. Neither this Lease, nor any memorandum, affidavit or other writing with respect hereto, shall be recorded in any public record by Tenant or by anyone acting through, under or on behalf of Tenant, and the recording thereof in violation of this provision shall make this Lease null and void at Landlord's election.

23.13 Relationship of Parties. Nothing contained in this Lease shall be deemed or construed by the parties hereto or by any third party, to create the relationship of principal and agent, partnership, joint venture or any association between Landlord and Tenant, it being expressly understood and agreed that neither the method of computation of Rent nor any other provisions contained in this Lease nor any acts of the parties hereto shall be deemed to create any relationship between Landlord and Tenant other than the relationship of lessor and lessee.

23.14 Limitation of Liability. Except for actions arising from Landlord's fraud or willful misconduct, any claim against, or liability or obligation of, Landlord under this Lease or relating to the Property or the Premises shall be limited solely to and satisfied solely from the interest of Landlord in the Property, and no partner in Landlord, or partner in a partner, shall be individually or personally liable for any claim arising out of this Lease or relating to the Property or the Premises. A deficit capital account of any such partner shall not be deemed an asset or property of Landlord.

23.15 Excuse for Non-Performance. Except as expressly provided to the contrary in this Lease, this Lease and Tenant's obligation to pay Rent hereunder and to perform all of Tenant's covenants and agreements hereunder shall not be impaired or affected, and Landlord shall not be in default hereunder, if Landlord is unable to fulfill any of its obligations under this Lease because of any Events of Force Majeure.

23.16 Late Charge. If any payment or installment of Rent owed by Tenant under this Lease or under the Work Letter is not paid within five (5) business days of the date when due, in addition to the amounts due under Section 23.4 hereof, Tenant shall pay, as a late charge, an amount equal to five percent (5%) of the amount overdue for each and every thirty (30) day period or portion thereof that said amount remains unpaid.

23.17 Parking. Landlord hereby grants to Tenant, the non-exclusive right to use, during the Term, the number of parking spaces on the Property set forth under Section 1.14. Tenant and its agents, employees, customers, guests and invitees shall not use parking spaces on the Property exceeding, at any time, the number of parking spaces permitted under Section 1.14. Tenant agrees to comply with all reasonable rules and regulations which Landlord may promulgate from time to time with respect to use of the parking areas on the Property.

24.


23.18 Riders and Exhibits. All exhibits and riders attached to this Lease are made a part hereof and are incorporated herein by reference.

23.19 Year 2000 Compliance. Landlord will use reasonable care to ascertain that systems owned and controlled by Landlord in performing its obligations under this Lease will continue to function beyond December 31, 1999 (the "Y2K Problem"). Landlord cannot, however, assure that all such systems will perform as expected. Moreover, many goods and services received by Tenant are neither owned nor controlled by Landlord including, but not limited to, electricity, water, gas, cable television, telephone, transportation, police and fire protection and other governmental services. Notwithstanding anything to the contrary contained in this Lease, including Section 5, Tenant agrees that Landlord shall have no liability to Tenant for any loss, claim, liability, damage, expense or injury to Tenant or any other person or property resulting from a Y2K Problem unless the same results solely from Landlord's gross negligence or willful misconduct. Any failure of or problems with Landlord's and/or Tenant's systems or equipment attributable to the Y2K Problem shall not release Tenant from or otherwise modify or affect Tenant's duties, obligations and liabilities under this Lease.

24. SIGNAGE. Prior to the Commencement Date, Landlord shall, at its sole cost, install one (1) ground mounted sign (the "Monument Sign") with a panel containing Tenant's name and logo, and such other panels containing names of other tenants at the Property, the order of said names to be determined by Landlord. The Monument Sign shall be located on the Land or such other location mutually agreed to by Landlord and Tenant, provided such location shall also be approved, to the extent required, by the City of Waukegan, the County of Lake and the Illinois Department of Transportation; provided, however, that Landlord may, at its cost, change the location of the Monument Sign from time to time upon not less than thirty (30) days written notice to Tenant, subject to Tenant's prior approval of the new location of the Monument Sign (which approval shall not be unreasonably withheld). The size, color, material, content, manner of installation and general appearance of the Monument Sign (and Tenant's panel thereon) shall comply with all applicable Laws and all covenants, conditions and restrictions of record encumbering the Property and all rules, regulations and guidelines imposed from time to time by the Amhurst Lake Business Park Association (or any subdivision or committee thereof), and shall otherwise be reasonably acceptable to Landlord in its sole discretion. Following the installation of the Monument Sign, Landlord shall keep the Monument Sign in good condition and repair, and the cost thereof shall be included in Operating Expenses.

25. OPTION TO RENEW TERM.

25.1 Renewal Option. Subject to the terms and conditions set forth below in this Section 25, this Lease may be extended at Tenant's option (the "Renewal Option") for five (5) years. Such period is called the "Renewal Term". The Renewal Term shall be upon the same terms, covenants and conditions contained in this Lease (excluding the Work Letter and this Section 25), except for the amount of Base Rent payable during the Renewal Term, which shall be determined in accordance with Section 25.2 below. Any reference in this Lease to the "Term" shall be deemed to include the Renewal Term and apply thereto, unless it is expressly provided otherwise. Tenant shall have no extension or renewal option other than the Renewal Option. Any termination of this Lease or of Tenant's right of possession shall terminate all of Tenant's rights under this
Section 25. Tenant shall exercise the Renewal Option by delivering written notice thereof to Landlord not less than nine (9) months prior to the first day of the Renewal Term. If Tenant fails to deliver any such notice within the time period set forth in the immediately preceding sentence, Tenant shall be deemed to have irrevocably waived its right to exercise the Renewal Option. If Tenant delivers written notice exercising the Renewal Option, such notice shall be irrevocable.

25.2 Base Rent During the Renewal Term. The Base Rent during the first
(1st) Lease Year of the Renewal Term shall be based on an annual per square foot rental rate equal to the greater of: (i) one hundred three percent (103%) of the net annual per square foot base rental rate in effect under this Lease during the seventh (7th) Lease Year of the Term, or (ii) ninety-five percent (95%) of the then Prevailing Market Rental Rate (as defined in Subsection 25.4 hereof) for the Premises, as reasonably determined by Landlord. Thereafter, Base Rent shall increase by three percent (3%) each Lease Year during the

25.


Renewal Term on a cumulative basis. Tenant's obligation to pay Additional Rent (including, without limitation, the Operating Expense Amount) and all other amounts to be paid by Tenant to Landlord under this Lease, shall continue during the Renewal Term.

25.3 Conditions to Exercising the Renewal Option. Tenant's right to exercise the Renewal Option is subject to the conditions that on the date that Tenant delivers its written notice exercising its Renewal Option: (I) Tenant is not in default under this Lease; (ii) no event has occurred and is continuing which with the giving of notice or the passage of time, or both, would constitute a default under this Lease; and (iii) Tenant shall not have assigned this Lease or sublet more than fifty percent (50%) of the Premises (other than to an Affiliate or Successor). Promptly after Tenant exercises the Renewal Option and the Base Rent to be paid during the Renewal Term is determined, Landlord shall prepare an amendment to this Lease to reflect the extension of this Lease for the Renewal Term on the terms set forth above in this Section. Tenant shall execute and return such amendment to Landlord within fifteen (15) days after its receipt thereof.

25.4 Prevailing Market Rental Rate. For purposes of this Lease, "Prevailing Market Rental Rate" shall mean the then prevailing per rentable square foot market rental rate per annum for Base Rent for the Premises based on comparable space and size in the Building and in comparable buildings in the north suburban Chicago metropolitan market area, for fully creditworthy tenants for a comparable term commencing on or about the first day of the Renewal Term.

26. TRUCK DOCKS. Landlord hereby grants to Tenant the exclusive right to use during the Term the four (4) exterior docks identified in Exhibit I, each of which shall be equipped with 30,000 pound levelators. Landlord shall pay for the initial installation of the levelators.

27. TENANT IMPROVEMENTS. Subject to the terms of this Section 27, Tenant shall be permitted to amortize the cost of the Tenant Improvements (as defined in the Work Letter) which exceed the allowance of $615,344.00 as more fully set forth in Section 1 of the Work Letter. The cost of the Tenant Improvements which Tenant may amortize shall in no event exceed One Hundred Thousand and 00/100 Dollars ($100,000.00), and shall be amortized over the Term of the Lease (excluding the Renewal Term) at the rate of ten and three-quarters percent (10.75%) per annum. Upon the Landlord's determination of the aggregate costs of the Tenant Improvements, Landlord shall prepare, at Landlord's election, an amendment to this Lease or side letter agreement, evidencing the foregoing and Tenant shall execute and return the amendment or side letter agreement within fifteen (15) days after its receipt thereof. If Tenant does not exercise its option hereunder within a reasonable period of time after the aggregate costs of the Tenant Improvements is determined, the total cost of the Tenant Improvements that exceed $615,344.00 shall be paid to Landlord in accordance with Section 1 of the Work Letter.

[Signature Page to Follow]

26.


IN WITNESS WHEREOF, Landlord and Tenant have caused this instrument to be duly executed as of the date and year first set forth above.

TENANT:

OMNICELL TECHNOLOGIES, INC., a California
corporation

By: /s/ Earl E. Fry
   ------------------------------------------
Its: Vice President & Chief Financial Officer
    -----------------------------------------

LANDLORD:

AMLI COMMERCIAL PROPERTIES LIMITED
PARTNERSHIP, a Delaware limited partnership

By: AMLI COMMERCIAL PROPERTIES TRUST, a
Maryland real estate investment
trust, its general partner

By: /s/ Michael Murphy
   --------------------------------
Its:___________________________

27.


Exhibit A

LEGAL DESCRIPTION

A-1.


Exhibit B

WORK LETTER

All of the terms and conditions of the Lease are incorporated herein by reference and, except as may be expressly set forth to the contrary in this Work Letter or the Lease, shall apply as fully to this Work Letter as to the Lease. The capitalized terms used but not defined in this Work Letter shall have the meanings ascribed to them in the Lease.

1. Construction of Tenant Improvements. Landlord shall, at its sole cost up to a total cost of $615,344.00, provide the construction material, hardware and equipment and the labor to construct the Tenant Improvements (as hereinafter defined). Tenant shall pay that part of the total cost of the Tenant Improvements that exceed $615,344.00 ($16.00 per square foot of the Building). If the total cost of the Tenant Improvements exceed $615,344.00 based on the Plans (as defined in Paragraph 2 below) approved by Tenant and Landlord pursuant to Paragraph 2 below, subject to the terms of Section 27 of the Lease, Tenant shall pay to Landlord such costs in excess of $615,344.00 in one lump sum payment within thirty (30) days after receiving an invoice from Landlord, showing that such excess costs have been paid, together with reasonable supporting documentation of such costs. If the total cost of the Tenant Improvements is less than $615,344.00, Tenant shall receive a credit against monthly Base Rent which credit shall commence on the Commencement Date and shall be utilized towards the first installments of monthly Base Rent due under the Lease; provided, however, that for any one calendar month during the Term, Tenant may not receive a credit against monthly Base Rent of more than one-half (1/2) of the monthly Base Rent due and owing for such month. "Tenant Improvements" means (i) the materials, hardware and equipment to be incorporated into the Premises pursuant to the Plans (as defined below and as the same may be modified pursuant to Section 3 of this Work Letter), and the labor to construct and install such items, and (ii) the other building standard items described in the Plans, as the same may be modified pursuant to Section 3 of this Work Letter. Landlord shall proceed diligently to cause the Tenant Improvements to be substantially completed substantially in accordance with the Plans and the terms and conditions of the Lease. If Tenant elects to engage an interior designer for the Premises (the "Interior Designer"), Tenant shall have the right to do so, subject to Landlord's reasonable approval, and Tenant shall contract directly with the Interior Designer for the provision of services. All other architects, engineers, contractors, subcontractors, suppliers, manufacturers or materialmen performing services or supplying materials in connection with the design and/or construction of the Tenant Improvements (the "Contractors") shall be selected by Landlord, and shall enter into contracts directly with Landlord for the provision of services and materials. Landlord will make available to Tenant for its review, at Landlord's office, the books and records relating to the total cost of the Tenant Improvements.

2. The Plans. Landlord and Tenant have approved the preliminary description of the Tenant Improvements attached to this Work Letter as Schedule 1 and made a part hereof. Landlord will cause to be prepared at Landlord's cost, and Landlord and Tenant shall act in good faith and cooperate with each other to finalize and approve as soon as reasonably possible, the plans, drawings and specifications for the Tenant Improvements based on the description in Schedule
1. If Landlord and Tenant have not approved the final plans, drawings and

specifications for the Tenant Improvements within thirty (30) days after the execution and delivery of the Lease by Landlord and Tenant, at the request of either party, any disagreements regarding such final plans, drawings and specifications shall be submitted to and resolved by arbitration in accordance with the rules of the American Arbitration Association. Any such arbitration proceedings shall be conducted in Chicago, Illinois and the cost of such arbitration proceedings shall be split evenly between Landlord and Tenant, provided that each party shall be solely responsible for its own costs and expenses incurred in connection with any arbitration proceedings. The final plans, drawings and specifications for the Tenant Improvements approved by Landlord and Tenant prior to the commencement of construction are collectively referred to as the "Plans".

B-1.


3. Changes to the Plans.

3.1 Tenant Changes to the Plans. Tenant may propose one or more changes to the Plans to Landlord at any time before the Substantial Completion Date (as hereinafter defined), and, as promptly as reasonably practicable after the receipt and approval thereof by Landlord (which approval may be withheld in Landlord's reasonable discretion), Landlord shall provide Tenant with a reasonable written estimate of the delay (if any) in the Substantial Completion Date (which delay shall be a Tenant Delay [as defined below]) and the additional cost (if any) to complete the Tenant Improvements which will result from such change (whether hard costs or soft costs), which costs shall include, without limitation: (i) the actual cost of all materials, supplies, equipment and labor used or supplied in making the proposed change, including general conditions and any contractor's fees; (ii) any architect and engineer fees; (iii) a developer's fee payable to Landlord equal to ten percent (10%) of such additional costs; and
(iv) any other reasonable additional costs and expenses of owning and operating the Premises during the extended construction period (if any) resulting from such change(s). If Tenant falls to approve the estimate within five (5) business days after delivery of same, Tenant shall be deemed to have abandoned its request for such change, and the Tenant Improvements shall be constructed substantially in accordance with the then existing Plans. If Tenant approves the estimate within said 5-day period by signing and returning a copy of Landlord's estimate, Landlord shall diligently cause the Tenant Improvements to be constructed substantially in accordance with the Plans as so revised. If and to the extent there are actual increased costs due to Tenant's changes in the Plans, Tenant shall pay such amount to Landlord within ten (10) business days after Tenant's receipt of an invoice for such amount showing Landlord's payment of such amount, together with reasonable supporting documentation thereof unless the increased costs are covered by the $615,344.00 allowance. Unless requested in writing by Tenant to the contrary, Landlord shall continue with construction of the Tenant Improvements according to the then existing Plans during the pendency of any proposed change in the Plans until such change is approved by Landlord and Tenant as provided above. Any delay resulting from a halt in construction requested in writing by Tenant shall constitute a Tenant Delay.

If Tenant approves Landlord's estimate of the time and cost of a proposed change to the Plans: (a) Tenant shall be liable for the actual cost of such change, whether or not such actual cost exceeds Landlord's estimate, and (b) Landlord shall not be liable for any delay in the Substantial Completion Date resulting from the requested change, whether or not the delay exceeds Landlord's estimate, and any such delay shall be a Tenant Delay. Upon Tenant's request, Landlord shall provide Tenant with reasonable evidence of the actual cost of such change and the basis for any delay in the Substantial Completion Date resulting from such change.

If Tenant requests a change to the Plans pursuant to this Section 3.1, and Tenant does not ultimately approve the resulting revised Plans or estimate, Tenant shall promptly reimburse Landlord, as Additional Rent, for any reasonable costs and expenses resulting from such requested changes incurred by Landlord.

3.2 Landlord Changes to the Plans. Landlord may make changes to the Plans without Tenant's consent, provided that such changes (i) are necessary to address field conditions, (ii) will not create any additional monetary obligation for Tenant under the Lease, (iii) are in material conformity with the Plans (as they may have been previously revised by permissible Tenant and/or Landlord changes thereto), and (iv) will not result in the use of materials or equipment which are of a materially lesser quality or materially different appearance than those specified in the Plans.

4. Punchlist Items. Before Tenant takes occupancy of the Premises, but no later than five (5) business days after the Substantial Completion Date, Landlord, Landlord's architect, Tenant and at Tenant's election, Tenant's consulting architect or other construction consultants shall conduct an inspection of the Premises, and work in good faith to jointly prepare a punchlist for the Tenant Improvements. Subject to Landlord's obligations for latent defects under Section 8 of the Lease, any items not on such punchlist shall be deemed accepted by Tenant. Landlord shall complete all punchlist items as soon as reasonably practicable after such punchlist items are finally determined, but in no event later than thirty (30) days following the Commencement Date, subject to long lead times for materials.

B-2.


5. Representatives of Landlord and Tenant. Wherever this Work Letter requires any notice to be given to or by a party, or any determination or action to be made or taken by a party, Landlord's Representative or Tenant's Representative, as the case may be, shall act for and on behalf of such party, and the other party shall be entitled to rely thereon. Either party may designate one or more additional or substitute representatives for all or a specified portion of the provisions of this Work Letter, subject to notice to the other party of the identity of such additional or substitute representative(s).

6. Delay In the Commencement Date.

6.1 The Substantial Completion Date. If the Tenant Improvements have not been substantially completed on or before the date set forth in Section 1.8 of the Lease, then the Commencement Date shall be the Substantial Completion Date. The "Substantial Completion Date" shall mean the earliest to occur of: (i) the date on which both of the following have been satisfied: Landlord receives the City's approval authorizing occupancy of the Premises by Tenant, which approval may take the form of a conditional certificate of occupancy so long as Tenant may occupy the Premises and Tenant has received a "Delivery of Possession Letter from Landlord, or (ii) the date on which both of the following have been satisfied: Landlord's architect issues a certificate to Landlord and Tenant stating that the Tenant Improvements have been substantially completed substantially in accordance with the Plans and Tenant has received a "Delivery of Possession Letter" from Landlord, or (iii) if the substantial completion of the Tenant Improvements has been delayed as a result of one or more Tenant Delays (as defined below), the date on which Landlord would have substantially completed the Tenant Improvements but for such Tenant Delays, as so certified by the Landlord's architect; provided, however, that in no event shall the Substantial Completion Date be earlier than the date set forth in Section 1.8 of the Lease.

6.2 Tenant Delays. "Tenant Delay" shall mean any interruption or delay at any time in the progress of the Tenant Improvements to the extent caused by: (i) Tenant changes to the Plans, including, in addition to delays resulting from the actual execution of such changes to the Plans, any delay occurring because the change to the Plans requested by Tenant expressly requires the design or construction of the Premises to be halted or delayed pending resolution of any request by Tenant for a change to the Plans, whether or not the requested change is ultimately approved by Landlord and/or Tenant; (ii) the performance or non- performance of any work at the Premises by Tenant or any person, firm or corporation employed by Tenant; or (iii) any other act or omission of Tenant (for example, but not by way of limitation, failure to timely respond to requests for information or approval of construction related matters submitted by Landlord [and failure to act in good faith and to cooperate with Landlord in finalizing and approving the Plans pursuant to Section 2 of this Work Letter]).

6.3 Force Majeure Delays. "Force Majeure Delay" shall mean any interruption or delay at any time in the progress of the Tenant Improvements which is not a Tenant Delay and is the result of any Events of Force Majeure.

6.4 Notice of Tenant Delays and Force Majeure Delays. Landlord agrees that it shall exercise reasonable efforts to provide Tenant with written notice of any Tenant Delay or Force Majeure Delay (and the expected length of the applicable delay) as soon as reasonably practicable following the date Landlord has been notified of any such delay; provided, however, that Landlord's failure to furnish such notice shall in no event be deemed to a waiver by Landlord of the Tenant Delay or Force Majeure Delay or otherwise affect the operation of this Section 6.

7. Governmental Approvals. Landlord shall use reasonable and diligent efforts to obtain all governmental licenses, permits and approvals necessary for the construction of the Tenant Improvements. If Landlord is unable to obtain any permit, license or approval from any governmental authority necessary for the construction of the Tenant Improvements and after notice thereof to Tenant, Tenant, within thirty (30) days after said notice, fails or is unable to take any action to cause such permit, license or approval to be issued, Landlord may elect to terminate the Lease upon written notice to Tenant delivered within thirty (30) days after agreement upon the final Plans, upon which termination Landlord shall return to Tenant any Security Deposit and Base Rent in Landlord's possession, and thereafter Landlord shall have no further liability to Tenant hereunder or under the Lease.

B-3.


8. Access by Tenant Prior to Commencement Date. Landlord will permit Tenant and Tenant's agents, suppliers, contractors and workmen to enter the Premises prior to the completion of the Tenant Improvements to enable Tenant to do such other things as maybe required by Tenant to make the Premises ready for Tenant's occupancy, provided that Tenant shall fully perform and comply with each of the following covenants, conditions and requirements:

(a) Tenant and Tenant's agents, contractors, workmen, mechanics, suppliers and invitees, shall work in harmony and not interfere with Landlord and Landlord's agents in performing the Tenant Improvements or work for other tenants and occupants of the Building, and if at any time such entry shall in the reasonable judgment of Landlord cause or threaten to cause disharmony or interference, Landlord shall have the right to withdraw such permission upon twelve (12) hours written notice.

(b) Tenant agrees that any such entry into the Premises shall be deemed to be under all of the terms, covenants, conditions, and provisions of the Lease except the covenant to pay Rent, and further agrees that in connection therewith Landlord shall not be liable in anyway for any injury, loss or damage which may occur to any of Tenant's work or installations made in the Premises or to property placed therein prior to the Commencement Date, the same being at Tenant's sole risk, except to the extent that any such injury, loss or damage is caused by the gross negligence or willful misconduct of Landlord or any of its agents, employees, contractors or representatives. In addition, Tenant shall require all entities performing work on behalf of Tenant to provide protection for existing improvements to an extent that is reasonably satisfactory to Landlord and shall allow Landlord access to the Premises, for inspection purposes, at all times during the period when Tenant is undertaking construction activities therein. In the event any entity performing work on behalf of Tenant causes any damage to the Tenant Improvements or the property of Landlord or others, Tenant shall cause such damage to be repaired at Tenant's or such entity's expense, and if Tenant fails to cause the commencement of the repair of such damage promptly upon Landlord's demand therefor, Landlord may in addition to any other rights or remedies available to Landlord under the Lease or at law or equity cause such damage to be repaired, in which event Tenant shall, within ten (10) business days of receiving Landlord's invoice, together with reasonable supporting documentation of such costs, pay to Landlord the cost of such repairs as Additional Rent.

(c) All contractors and subcontractors shall use only those entrances designated by Landlord for ingress and egress of personnel, and the delivery and removal of equipment and material through or across any common areas of the Building or parking areas on the Property shall only be permitted with the written approval of Landlord and during hours reasonably determined by Landlord. Landlord shall have the right to order Tenant or any contractor or subcontractor who violates the above requirements to cease work and remove it, its equipment, and its employees from the Building and the Property.

(d) During the performance of Tenant's work and Tenant's fixturing, Landlord may provide trash removal service from a location reasonably designated by Landlord. Tenant shall be responsible for breaking down boxes and placing trash in Landlord's containers at such designated location. Tenant shall accumulate its trash In containers supplied by Tenant and Tenant shall not permit trash to accumulate within the Premises or in the corridors or public areas adjacent to the Premises. Tenant shall cause each entity employed by it to perform work on the Premises to abide by the provisions of this Work Letter as to the storage of trash and shall require each such entity to make reasonable efforts to perform its work in a way that dust and dirt is contained entirely within the Premises and not within any other portion of the Building, and shall cause Tenant's contractors to leave the Premises broom clean at the end of each day. Should Landlord reasonably deem it necessary to remove Tenant's trash because of accumulation, an additional charge to Tenant will be on a time and material basis.

(e) Tenant agrees that all services and work performed on the Premises by, on behalf of, or for the account of Tenant, including installation of materials and personal property

B-4.


delivered to the Premises shall be done in a first-class workmanlike manner using only good grades of material, shall be performed in accordance with Laws, and, to the extent the services and work are performed on the Premises prior to the Commencement Date, such services and work shall be performed only by persons covered by a collective bargaining agreement with the appropriate trade union.

(f) Tenant agrees to protect, indemnify, defend and hold harmless Landlord and its partners, and their respective officers, directors, shareholder, agents and employees from and against any and all losses, damages, liabilities, claims, liens, costs and expenses, including reasonable attorneys' fees, of whatever nature, including those to the person and property of Tenant, its employees, agents, invitees, licensees and others arising out of or in connection with the activities of Tenant or Tenant's contractors in or about the Premises or the Property undertaken pursuant to any entry under this Section 8. and the cost of any repairs to the Premises or the Property necessitated by such activities of Tenant or Tenant's contractors.

(g) Tenant shall secure, pay for, and maintain during the continuance of its work within the Premises, policies of insurance with such coverages and such amounts as Landlord may reasonably require, which policies shall be endorsed to include Landlord and its contractors and their respective employees and agents and any Mortgagee as additional insured parties, and which shall provide thirty (30) days prior written notice of any alteration or termination of coverage. Tenant shall not permit Tenant's contractors to commence any work until all required insurance has been obtained by Tenant and certificates evidencing such coverage have been delivered to and approved by Landlord in writing.

9. Termination of Work Letter; Survival of Terms. Landlord and Tenant acknowledge and agree that the provisions of this Work Letter are intended and designed to govern certain rights and obligations of the parties relating to the construction of the Tenant Improvements and other matters prior to the Commencement Date. Accordingly, except as hereinafter set forth in this Section 9, from and after the Commencement Date, the terms and provisions of this Work

Letter shall become null and void and of no further force or effect. Notwithstanding anything to the contrary in this Section 9, however, the following provisions shall not terminate and shall continue in full force and effect after the Commencement Date, and shall survive the Commencement Date:
Sections 1 and 4 (both of which * shall terminate at such time as all punchlist items have been completed and all claims in connection therewith have been satisfied In full); Sections 8(b), 8(e), 8(f), 9 and 10 (which shall remain in effect for the duration of the Term); and Section 11 (which shall terminate at such time as the parties have executed the Confirmatory Memorandum).

10. Application of Work Letter. This Work Letter shall not be applicable to any space added to the Premises or in the event of a renewal or extension of the Term of the Lease or the exercise of any expansion option granted to Tenant pursuant to the Lease.

11. Confirmatory Memorandum. At the request of either party, at such time as the Substantial Completion Date has been finally determined, the parties shall jointly execute a written memorandum in the form attached to this Work Letter as Schedule 2, and such memorandum shall be attached to and become a part of the Lease.

B-5.


SCHEDULE 1

DESCRIPTION OF TENANT IMPROVEMENTS

Project No: 9718-9 prepared by Gordon, Wigodner, Chin & Associates, Ltd.

Preliminary Space Plan, Sheet No. SP-1 dated 3-8-99, 3-25-99, 3-29-99 and 4-8-99.

B-6.


SCHEDULE 2

Form of Confirmatory Memorandum

____________________ ("Landlord") and __________________ ("Tenant") hereby execute and deliver this Confirmatory Memorandum pursuant to Section 11 of the Work Letter attached as Exhibit B to that certain Lease between Landlord and Tenant dated ______, 199__.

1. This Confirmatory Memorandum is for the convenience and reference of the parties. The provisions of the Lease and the Work Letter shall be valid and given their full force and effect with respect to the terms contained in this Confirmatory Memorandum, notwithstanding the failure or refusal of either party to execute this document.

2. Landlord and Tenant further agree and acknowledge as follows:

(a) the Substantial Completion Date occurred on _____________, 199__ and

(b) the Commencement Date occurred on ____________, 199__

Executed and delivered as of ____________, 199__

TENANT:


By: ____________________________

Its: ____________________________

LANDLORD:


By:______________________________

Its:_____________________________

B-7.


Exhibit C

LEGAL DESCRIPTION OF THE LAND

PARCEL 11: LOT 281 IN AMHURST INDUSTRIAL CENTER RESUBDIVISION, BEING A RESUBDIVISION OF LOTS 79 THROUGH 94, BOTH INCLUSIVE, IN AMHURST LAKE BUSINESS PARK PHASE ONE, BEING A SUBDIVISION OF PARTS OF THE SOUTHWEST 1/4 OF SECTION 31, TOWNSHIP 45 NORTH, RANGE 12, EAST OF THE THIRD PRINCIPAL MERIDIAN, THE SOUTHEAST 1/4 OF SECTION 36, TOWNSHIP 45 NORTH, RANGE 11, EAST OF THE THIRD PRINCIPAL MERIDIAN, THE NORTHEAST 1/4 OF SECTION 1, TOWNSHIP 44 NORTH, RANGE 11, EAST OF THE THIRD PRINCIPAL MERIDIAN, AND THE NORTHWEST 1/4 OF SECTION 6, TOWNSHIP 44 NORTH, RANGE 12, EAST OF THE THIRD PRINCIPAL MERIDIAN, RECORDED SEPTEMBER 7, 1989 AS DOCUMENT 2828136, AND THE CERTIFICATE OF CORRECTION THEREOF RECORDED OCTOBER 3, 1989 AS DOCUMENT 2837031; AND LOTS 224 THROUGH 252, BOTH INCLUSIVE, IN AMHURST LAKE BUSINESS PARK PHASE FIVE, BEING A SUBDIVISION OF PART OF THE NORTH 1/2 OF SECTION 1, TOWNSHIP 44 NORTH, RANGE 11, EAST OF THE THIRD PRINCIPAL MERIDIAN, AND PART OF THE SOUTH 1/2 OF SECTION 36, TOWNSHIP 45 NORTH, RANGE 11, EAST OF THE THIRD PRINCIPAL MERIDIAN, RECORDED APRIL 2, 1996 AS DOCUMENT 3805401; ACCORDING TO THE PLAT OF SAID RESUBDIVISION RECORDED MARCH 18, 1998 AS DOCUMENT 4103113, IN LAKE COUNTY, ILLINOIS.

C-1.


Exhibit D

LANDLORD'S INSURANCE

D-1.


Exhibit E

TRAILER AREA

E-1.


Exhibit F

FORM OF TENANT ESTOPPEL LETTER

Lease Date:     ____________, 199__
----------

Landlord:
--------        ________________________________

Tenant:
------          ________________________________

Premises:       Unit No. ________,______________
--------

Rentable Area:  ____________________ square feet.
-------------

The undersigned, being the Tenant Under the above-described Lease hereby certifies to _____________ _________________ ("Lender" or "Purchaser") as follows:

1. The Lease requires monthly base rent installments of $_______ each, commencing on _____, 19___.

2. No advance rental or other payment has been made in connection with the Lease.

3. A security deposit in the amount of $ _____ is being held by Landlord, which amount is not subject to any setoff or reduction or to any increase for interest or other credit due to Tenant. The Lease is or ___________ is not (check applicable provision) guaranteed by a third party. If the Lease is guaranteed by a third party, the name of the guarantor is _________________

4. The Lease is a valid lease and is in full force and effect. Attached hereto is a true and complete copy of the Lease and all amendments thereto and other agreements relating to the Lease and the rent payable thereunder, which documents represent the entire agreement between the parties.

5. There is no existing default by Landlord, or to Tenant's knowledge, by Tenant under the Lease, and no event has occurred which, with the giving of notice or the passage of time, or both, would constitute an event of default by Landlord, or to Tenant's knowledge, by Tenant, under the Lease.

6. The Lease provides for a primary term of _______ (__) months, commencing on ________, 19__ and ending on ________, 19__. The Lease contains an option for _______ (__) additional terms of _______ (__) years each upon the terms and conditions as set forth in the Lease.

7. There are no actions, voluntary or involuntary, pending against Tenant under the bankruptcy laws of the United States or any state thereof.

8. Tenant is entitled to no rent concessions under the Lease other than the following:

9. All construction work to be completed to date by Landlord in the Premises has been completed.

10. Tenant has obtained or will obtain all necessary licenses and permits to carry on its business at the Premises prior to opening for business.

11. Tenant has received no notice of any claim, litigation or proceeding, pending or threatened, against or relating to Tenant that would adversely affect Tenant's ability to fulfill its obligations under the Lease or with respect to the Premises. Tenant has received no notice of, and has no knowledge of, any violations of any federal, state, county or municipal statutes, laws, codes, ordinances, rules, regulations,

F-1.


orders, decrees or directives relating to the use or condition of the Premises or Tenants operation thereon. Tenant has received no notice from any governmental body or agency or from any person or entity with respect to any actual or threatened taking of the Property or any portion thereof for any public or quasi-public purpose by the exercise of condemnation or eminent domain.

This certification is made knowing that [Lender] [Purchaser] is relying upon the representations herein made.

TENANT:


F-2

*****

Exhibit G

FORM OF LANDLORD ESTOPPEL LETTER

Lease Date: ____________, 199__

Landlord:    ______________________________
--------

Tenant:      ______________________________
------

Premises: Unit No. ________,_______________
--------

Rentable Area: _______________ square feet.

The undersigned, being the Landlord Under the above-described Lease hereby certifies to __________________________ ("Lender" or "Successor") as follows:

1. The Lease requires monthly base rent installments of $_______ each, commencing on _____, 19___.

2. A security deposit in the amount of $ _____ is being held by Landlord, which amount is not subject to any setoff or reduction or to any increase for interest or other credit due to Tenant.

3. The Lease is a valid lease and is in full force and effect. Attached hereto is a true and complete copy of the Lease and all amendments thereto and other agreements relating to the Lease and the rent payable thereunder, which documents represent the entire agreement between the parties.

4. There is no existing default by Tenant, or to Landlord's knowledge, by Landlord under the Lease, and no event has occurred which, with the giving of notice or the passage of time, or both, would constitute an event of default by Tenant, or to Landlord's knowledge, by Landlord, under the Lease.

5. The Lease provides for a primary term of _______ (__) months, commencing on ________, 19__ and ending on ________, 19__. The Lease contains an option for _______ (__) additional terms of _______ (__) years each upon the terms and conditions as set forth in the Lease.

6. There are no actions, voluntary or involuntary, pending against Tenant under the bankruptcy laws of the United States or any state thereof.

7. Landlord has received no notice of any claim, litigation or proceeding, pending or threatened, against or relating to Landlord that would adversely affect Landlord's ability to fulfill its obligations under the Lease or with respect to the Premises. Landlord has received no notice of, and has no knowledge of, any violations of any federal, state, county or municipal statutes, laws, codes, ordinances, rules, regulations, orders, decrees or directives relating to the use or condition of the Premises. Landlord has received no notice from any governmental body or agency or from any person or entity with respect to any actual or threatened taking of the Property or any portion thereof for any public or quasi-public purpose by the exercise of condemnation or eminent domain.

This certification is made knowing that [Lender] [Successor] is relying upon the representations herein made.

LANDLORD:


G-1.


Exhibit H

FORM OF SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT AGREEMENT

THIS INSTRUMENT WAS PREPARED BY AND                  This space is reserved for
AFTER RECORDING RETURN TO:                           Recorder's use only.


Rudnick & Wolfe
203 North LaSalle Street
Suite 1800
Chicago, Illinois 60601
Attn: C. Olivia Martinez, Esq.
                                                ________________________________

SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT AGREEMENT

THIS SUBORDINATION, NON-DISTURBANCE ATTORNMENT AGREEMENT (the "Agreement") is made as of the _____ day of ____________, 1998, between Bank One, Illinois, NA ("Bank One"), as agent (Bank One, in such capacity, being the "Agent") for the Banks (as such term is defined in the Credit Agreement), which has an office of 200 South Wacker Drive, Chicago, Illinois 60603, and _____________________ ("Tenant"), which has an office at _______________________________.

RECITALS

A. Tenant has entered into that certain lease agreement dated April 1, 1997 with AMLI ("Original Landlord"), as Lessor, which lease agreement covers certain premises (the "Premises") in that certain real property (the "Property") commonly known as Windham Industrial Center I and more particularly described in Exhibit A attached hereto and made a part hereof (herein, said lease agreement, together with any and all amendments, modifications, extensions, renewals, consolidations and replacement thereof now existing or hereafter entered into, are collectively referred to herein as the "Lease");

B. The Lessor's interest under the Lease has been assigned by the Original Landlord to AMLI Commercial Properties Limited Partnership ("Landlord");

C. Pursuant to that certain Credit Agreement dated as of _______, 1998 (the "Credit Agreement") among Landlord, the Banks (as such term is defined in the Credit Agreement) and Bank One as Agent for the Banks, the Banks have agreed to make loans (the "Loans") to Landlord in an outstanding principal amount up to $50,000,000, to be secured by the lien of a mortgage from Landlord to the Agent (herein, together with all amendments, modifications, extension, renewals, consolidations and replacements thereof now existing or hereafter entered into, collectively referred to as the "Mortgage") on the Property; and

D. Tenant has agreed to subordinate the Lease to the lien of the Mortgage and the Agent has agreed to grant non-disturbance to Tenant under the Lease on the terms and conditions hereinafter set forth.

NOW, THEREFORE, in consideration of the Premises and of the sum of One Dollar ($1.00) by each party in hand paid to the other, the receipt and sufficiency of which are hereby acknowledged, it is hereby agreed as follows:

H-1.


1. Subordination. The Lease (including all of the terms, covenants and provisions thereof) is and shall be subject and subordinate in all respects to the Mortgage, to the full extent of any and all amounts from time to time secured thereby and interest thereon, all with the same force and effect as if the Mortgage had been executed, delivered and recorded prior to the execution and delivery of the Lease.

2. Attornment. Tenant, for itself and its successors and assigns, agrees that it will attorn to and recognize any purchaser of the Property at a foreclosure sale under the Mortgage or any transferee who acquires the Property by deed in lieu of foreclosure or otherwise, and the successors and assigns of such purchaser or transferee, as its landlord for the unexpired balance (and any extensions or renewals, if previously, at that time or thereafter exercised by Tenant) of the term of the Lease upon the same terms and conditions set forth in the Lease.

3. Non-Disturbance. The Agent, for itself and its successors and assigns, for any purchaser at a foreclosure sale under the Mortgage, for any transferee who acquires the Property by deed in lieu of foreclosure or otherwise, and for the successors and assign of such purchaser and transferee (herein, the Agent and each such other party is called a "New Landlord"), hereby covenants and agrees with Tenant that if the Agent or other New Landlord shall commence any proceedings to foreclose the Mortgage for any reason whatsoever or shall succeed to the interest of Landlord by foreclosure, deed in lieu thereof or otherwise, provided Tenant is not then in default (after expiration of any applicable grace period) under the Lease, and so long as Tenant is not in default (after expiration of any applicable grace period) under the Lease, that: (a) Tenant shall not be named as a party defendant in any foreclosure action unless Tenant is deemed to be a necessary party; (b) subject to the next succeeding grammatical paragraph, the Lease, in accordance with its terms, shall remain in full force and effect as direct indenture or lease between the Agent, or such other New Landlord (as the case may be), and Tenant, with the same force and effect as if originally entered into with the Agent, or such other New Landlord (as the case may be); and (c) Tenant's possession of the Premises and Tenant's rights and privileges under the Lease shall not be diminished, interfered with or disturbed by such Agent or such other New Landlord by such foreclosure under the Mortgage or by any such attempt to foreclose or to succeed to the interests of Landlord by foreclosure, deed in lieu thereof or otherwise.

If the Agent or any other New Landlord shall succeed to the Interest of Landlord under the Lease, Tenant agrees as follows:

(a) The Agent or such other New Landlord shall not be: (i) subject to any credits, offsets, defenses, claims or counterclaims which Tenant might have against any prior landlord (including Landlord); (ii) bound by any rent or additional rent which Tenant shall have paid more than one (1) month in advance to any prior landlord (including Landlord); or (iii) bound by any covenant to undertake or complete any improvement to the Premises or the Property.

(b) No New Landlord (including, without limitation, Agent) shall be liable for: (i) any act or omission of any prior landlord (including Landlord);
(ii) return of any security deposit made by Tenant to Landlord unless such New Landlord shall have actually received such security deposit from Landlord; or
(iii) any payment to Tenant of any sums, or the granting to Tenant of any credit, in the nature of a contribution towards the cost of preparing, furnishing or moving into the Premises or any portion thereof; and

(c) Tenant shall look solely to the Property for recovery of any judgment or damages from the Agent or such other New Landlord, and neither the Agent, such other New Landlord, any partner, officer, director, shareholder or agent of them or any successor or assign of any of the foregoing shall have any personal liability, directly or indirectly, under or in connection with the Lease or this Agreement or any amendment or amendments to either thereof made at any time or times, heretofore or hereafter, and Tenant hereby forever and irrevocably waives and releases any and all such personal liability. The limitation of liability provided in this paragraph is in addition to, and not in limitation of, any limitation on liability applicable to the Agent or such other New Landlord provided by law or by any other contract, agreement or instrument.

2.


4. Landlord's Default. Tenant hereby agrees to provide the Agent with written notice of any casualty damage to the Premises and any default under the Lease by the Landlord and to provide the Agent thirty (30) days to remedy such default prior to exercising any right or remedy of Tenant under the Lease. Notwithstanding the foregoing, Tenant agrees that the Agent shall have no obligation to remedy any such default.

5. Estoppel Certificate. Tenant agrees at any time and from time to time to execute, deliver and acknowledge to Landlord, to the Agent or to any third party designated by Landlord or by the Agent within ten (10) days following Landlord's or the Agent's written request therefor, (a) a statement in writing certifying that the Lease is in full force and effect, that Landlord is not in default thereunder (or specifying any defaults by Landlord which Tenant alleges), that rent has not been prepaid more than one (1) month in advance, and specifying any further information about the Lease or the Premises which Landlord or the Agent or said third party may reasonably request; (b) a statement in writing, that Tenant will recognize the Agent as assignee of the Landlord's rights under the Lease; and (c) a statement in writing acknowledging or denying receipt of notice of any conditional or security assignment of the Lease to any third party. Tenant understands that the Agent and/or prospective purchasers, other agents or lessors of the Premises or any part thereof will rely on such certificates. Tenant's obligation to deliver such certificates within ten (10) days as described above is a material obligation of Tenant hereunder and under the Lease.

6. Further Subordination. Tenant, for itself and its successors and assigns, agrees that, without the prior written consent of the Agent, Tenant will not (a) enter into any subordination agreement with any person other than the Agent; or (b) agree to attorn to or recognize any purchaser of the Property at any foreclosure sale under any lien other than that of the Mortgage or any transferee who acquires the Property by deed in lieu of foreclosure or otherwise under any lien other than that of the Mortgage (provided, however, that this provision shall not be deemed to constitute the Agent's consent to the placing of any lien other than the Mortgage on the Property).

7. Insurance Proceeds and Condemnation Awards. Tenant hereby agrees that any interest of Tenant in any insurance, condemnation or eminent domain proceeds or awards made with respect to any interest in the Premises shall be subordinate to the interests of Agent in such proceeds or awards. Tenant will neither seek nor accept insurance, any condemnation or eminent domain proceeds or awards made with respect to any interest in the Premises until all amounts secured by the Mortgage have been paid in full. However, Tenant reserves the right to make a separate claim for trade fixtures and moving expenses if separately allocated.

8. Notice. Each notice, demand or other communication in connection with this Agreement shall be in writing and shall be deemed to be given to and served upon the addressee thereof on the earlier of (a) actual delivery to such addressee at its address set out above, or (b) the third business day after the deposit thereof in the United States mails, registered or certified mail, return receipt requested, first class postage prepaid, addressed to such addressee at its address set out above. By notice complying with this section, any party from time to time may designate a different address in the forty-eight (48) contiguous continental United States as its address for the purpose of the receipt of notice hereunder.

9. Binding Effect. This Agreement shall be binding upon the Tenant and its successors and assigns and shall inure to the benefit of the Agent and the Banks and their respective successors and assigns.

10. Recording. The parties hereto agree that this Agreement may be recorded in the public records of the county in which the Property is located.

11. Counterparts. This Agreement may be executed in any number of counterparts and by each of the undersigned on separate counterparts, and each such counterpart shall be deemed to be an original, but all such counterparts shall together constitute but one and the same Agreement.

3.


IN WITNESS WHEREOF, the parties hereto have executed and delivered this document as of the day and year first above written.

TENANT:


By:_____________________________ Name:___________________________ Title:__________________________

AGENT:

BANK ONE, ILLINOIS, NA

By:_____________________________
Name:___________________________
Title:__________________________

4.


STATE OF ILLINOIS        )
                         )    SS.
COUNTY OF COOK           )

I, ___________________, a notary public in and for said county, in the State aforesaid, DO HEREBY CERTIFY that________________________________________ personally known to me to be the ___________________of_____________________ and personally known to me to be the same person whose name is subscribed to the foregoing instrument, appeared before me this day in person and acknowledged that as such, he/she signed and delivered said instrument pursuant to proper authority given, as his/her free and voluntary act, and as the free and voluntary act and deed of said entity, for the uses and purposes therein set forth.

GIVEN under my hand and notarial seal this ____day of ________, 1999.


Notary Public
[Seal]

My Commission expires:

5.


STATE OF ILLINOIS        )
                         )    SS.
COUNTY OF COOK           )

I, ___________________, a notary public in and for said county, in the State aforesaid, DO HEREBY CERTIFY that________________________________________ personally known to me to be the _________________________ of _________________ and personally known to me to be the same person whose name is subscribed to the foregoing instrument, appeared before me this day in person and acknowledged that as such, he/she signed and delivered said instrument pursuant to proper authority given, as his/her free and voluntary act, and as the free and voluntary act and deed of said entity, for the uses and purposes therein set forth.

GIVEN under my hand and notarial seal this ____day of ________, 1998.


Notary Public
[Seal]

My Commission expires:

6.


Exhibit I

TRUCK DOCKS

I-1.


EXHIBIT 10.3

STANDARD FORM LEASE
(INDUSTRIAL; SINGLE TENANT; NET)

This Lease dated April 3, 1996 (this "Lease") is entered into by and between O'Donnell Palo Alto Associates, a California general partnership ("Landlord"), and Omnicell Technologies, Inc., a California corporation ("Tenant").

ARTICLE I.

BASIC LEASE PROVISIONS

Each reference in this Lease to the "Basic Lease Provisions" shall mean and refer to the following terms, the application of which shall be governed by the provisions in the remaining Articles of this lease:

1.     Address of Landlord:        c/o Insignia O'Donnell Commercial Group, Inc.
                                   160 W. Santa Clara St., Suite 1350
                                   San Jose, CA  95113  Attn:  Mark E. Schmidt

2.     Building Address:           1057 E. Meadow Circle
                                   Palo Alto, CA  94303

3.     Address of Tenant:

       (a) Notices:                1057 E. Meadow Circle
                                   Palo Alto, CA  94303

       (b) Billing:                1057 E. Meadow Circle
                                   Palo Alto, CA  94303

4. Tenant's Trade Name: Omnicell Technologies, Inc.

5. Tenant's Contact: Mr. Earl Fry Telephone: (415) 843-6124

6. Building Square Footage: Approximately 23,020 square feet

7. Anticipated Commencement Date: August 12, 1996

8. Term: Seven (7) years, 8/11/03

9. Initial Monthly Rent: $27,624.00/month (subject to adjustment per Addendum

10. Security Deposit: $29,926.00

11. Permitted Uses: General office, research and development, light manufacturing, warehousing and other lawful uses related thereto, all in accordance with Applicable Laws and Restrictions (or hereafter defined) and pursuant to approvals to be obtained by Tenant from all relevant City, County and other required governmental agencies and authorities.

12. Broker: Cornish & Carey Commercial

13. Landlord's Architect: Dowler & Associates

14. Guarantor: N/A

15. Vehicle parking Spaces: All on-site parking spaces

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16. Additional Insureds: Landlord and Landlord's constituent parts and management agents (including, without limitation, Insignia Commercial Group, Inc.)

17. Tenant's Liability Insurance Limits: $3,000,000

Exhibits:

       A      Description of Premises     G      Rules and Regulations
       B      Project Site Plan           H      Environmental Questionnaire
       C      Work Letter
       D      Commencement Date Memorandum

(Exhibits E, F, I, J and K have been intentionally omitted.

Riders: Addendum to Lease

ARTICLE II

DEFINITIONS

2.1 Certain Definitions. The capitalized terms set forth below, unless the context clearly requires otherwise, shall have the following meanings in this Lease:

"Additional Rent" means any and all sums (whether or not specifically called "additional Rent" in this Lease) other than Monthly Rent which Tenant is or becomes obligated to pay Landlord under this Lease. See also Rent.

"Alterations" means any alterations, decorations, modifications, additions or improvements made in, on, about, under or contiguous to the Building or the Premises after the Commencement Date, including, but not limited to, lighting, HVAC and electrical fixtures, pipes and conduits, transfer, storage and disposal facilities, partitions, drapery, wall coverings, shelves, cabinetwork, carpeting and other floor coverings, ceiling tiles, fixtures and carpentry installations.

"Applicable Laws" means the laws, rules, regulations, ordinances, restrictions, and practices described in Section 5.2.

"Applicable Rate" means the greater of ten percent (10%) per annum or five percent (5%) in excess of the discount rate of the Federal Reserve Ban of San Francisco in effect on the twenty-fifth 25th) day of the calendar month immediately prior to the event giving rise to the Applicable Rate imposition; provided, however, the Applicable Rate shall in no event exceed the maximum interest rate permitted to be charged by applicable law.

"Broker" means the person or entity identified in Item 12 of the Basic Lease Provisions.

"Building" means that certain building comprising a portion of the Premises located at the address set forth in Item 2 of the Basic Lease Provision.

"Building Square Footage" means the approximate floor area of the Building as set forth in Item 6 of the Basic Lease Provisions.

"Building Square Footage" means the approximate floor area of the Building as set forth in Item 6 of the Basic Lease Provisions.

"Casualty" is defined in Section 12.1.

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"CC&R's" means the Declaration of Covenants, Conditions and Restrictions applicable to the Project recorded in the Official Records of the County as the same may be amended from time to time.

"City" means the city in which the Premises are located.

"Commencement Date" means the commencement date of the Term, described in
Section 3.2.

"Common Area" means all areas and facilities within the Project exclusive of the Building and other portion of the Project leased (or to be leased) exclusively to other tenants which are specifically designated on the Project Site Plan for the use in common by Tenant with others. The Common Area may; but need not, include parking areas, access and perimeter roads, sidewalks, landscaped areas and similar areas and facilities. Tenant's use of the Common Area, and its rights and obligations with respect thereto, are more particularly described in Article X.

"County" means the county in which the Premises are located.

"Event of Default" means the Tenant defaults described in Section 15.1.

"Guarantor" means the person(s) or entity identified in Item 14 of the Basic Lease Provision, if any.

"HVAC" means the heating, ventilating and air conditioning system serving the Building.

"Hazardous Materials" is defined in Section 6.1.

"Landlord's Agents" means Landlord's authorized agents, representatives, property managers (whether as agents or independent contractors), consultants, contractors, partners, subsidiaries, affiliates, directors, officers and employees, including without limitation the Additional Insureds named in Item 16 of the Basic Lease Provisions.

"Landlord's Architect" means the architect or architectural firm from time to time designated by Landlord to perform the function of Landlord's Architect set forth in this Lease. Landlord' Architect initially shall be the architect or architectural firm designated in Item 13 of the basic Lease Provisions.

"Lease" means this instrument together with all exhibits, amendments, addenda and riders attached hereto and made a part hereof.

"Maintenance Expenses" is defined in Section 7.2.

"Monthly Rent" means the monthly rental which Tenant is to pay to Landlord pursuant to Section 4.1., as the same may be adjusted from time to time as set forth in this Lease. See also Rent.

"Mortgage" means any mortgage, deed of trust, or similar lien on or covering the Project or any part thereof.

"Mortgagee" means any mortgagee of a mortgage, beneficiary of a deed of trust or lender having a lien on or covering the Project or any part thereof.

"Notice" means each and ever notice, communication, request, demand, reply or advice, or duplicate thereof, in this Lease provided or permitted to be given, made or accepted by either party to any other party which shall be in writing and given in accordance with the provisions of Section 21.6.

"Outside Areas" means the areas of the Premises outside the exterior walls of the Building, including without limitation the roof of the Building, as shown in Exhibit A.

"Plans" means the final working drawings for the construction of the Tenant Improvements to be prepared and approved as set forth in the Work Letter.

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"Premises" means the premises shown in Exhibit A of the exclusive use of Tenant. The Premises include the Building at the address set forth in Item 2 of the Basic Lease Provisions.

"Project" means that certain real property, and all improvements thereon, including the Building and other buildings, if any, located within the boundaries of such property, shown on the Project Site Plan.

"Project Site Plan" means Exhibit B.

"REA" means the Reciprocal Easement Agreement applicable in the Project, if any, recorded in the Official Records of the County as the same may be amended from time to time.

"Real Property Taxes" is defined in Section 7.4.

"Rent" means Monthly Rent and Additional Rent, collectively.

"Restrictions" means, collectively, the CC&R's, the REA and any other covenants, conditions or restrictions affecting the Premises or any portion thereof, as the same may be amended from time to time.

"Rules and Regulations" means the rules and regulations attached hereto as Exhibit G and any modifications thereto promulgated by Landlord or Landlord's Agents from time to time.

"Security Deposit" means the amount set forth in Item 10 of the Basic Lease Provisions, which shall be paid to Landlord by Tenant pursuant to Section 4.6.

"Substantial Completion" and "substantially completed" means et Tenant Improvements, or repair of the Premises following a Casualty, have been fully completed except of minor details of construction , mechanical adjustments or decoration which do not materially interfere with Tenant's use and enjoyment of the Premises (items normally referred to as "punch list" items).

"Tenant Delays" means (i) any and all delays in the construction of the Tenant Improvements due to the fault of the Tenant, as defined and specified in the Work Letter, and (ii) Tenant's failure to deliver to Landlord prior to the Anticipated Commencement Date, executed copies of policies of insurance or certificates thereof as required under Section 11.8.

"Tenant Improvements" means those certain improvements, if any, to be constructed on the Premises as provided in Article XX and in the Work Letter.

"Tenant's Agents" means Tenant's agents, representatives, consultants, contractors, affiliates, subsidiaries, officers, directors, employees, subtenants, quests and invitees.

"Tenant's Personal Property" means Tenant's removal trade fixtures, furniture, equipment and other personal property located in or on the Premises.

"Term" means the term of this lese, as provided in Section 3.2.

"Unavoidable Delay" means any delays which are beyond a party's reasonable control, including, but not limited to, delays due to inclement weather, strikes, acts of God, inability to obtain labor or materials, inability to secure governmental approvals or permits, governmental restrictions, civil commotion, fire, earthquake, explosion, flood hurricane, the elements, or the public enemy, action or interference of governmental authorities or agents, war, invasion, insurrection, rebellion, riots, lockouts or any other cause whether similar or dissimilar to the foregoing which is beyond a party's reasonable control; provided however, that in no event shall any of the foregoing ever apply with respect to the payment of any monetary obligation.

"Work Letter" means the work letter between Landlord and Tenant regarding the construction of the Tenant Improvements, if any, in the form of Exhibit C.

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2.2. Other Definitions. Terms defined elsewhere in this Lease, unless the context clearly requires otherwise, shall have the meaning as there given.

ARTICLE III

PREMISES AND TERM

3.1 Lease of Premises. Subject to and upon the terms and conditions set forth therein, Landlord hereby leases the Premises to Tenant, and Tenant hereby leases the Premises from Landlord.

3.2 Term and Commencement. Unless sooner terminated as provided herein, the term of this Lease shall be for that period of years and months set forth in Item 8 of the Basic Lease Provisions, as the same may be extended in accordance with any option or options to extend the Term granted herein, and shall commence (the "Commencement Date") on the earlier of (i) the date upon which the City has approved the Tenant Improvements in accordance with its building code, as evidenced by its written approval thereof in accordance with the building permits issued for the Tenant Improvements, provided that in such event Landlord shall deliver to Tenant a certificate of occupancy (temporary or otherwise) from the City for the Premises with five (5) business days of such date, (ii) the date Landlord's Architect has certified in writing that the Tenant Improvements are substantially completed in accordance with the Plans, provided that in such event Landlord shall deliver to Tenant a certificate of occupancy (temporary or otherwise) from the City for the Premises within five
(5) business days of such date, or (iii) the date Tenant commences occupancy of the Premises. When the actual Commencement Date has occurred, Landlord and Tenant shall execute a Commencement Date Memorandum in the form shown in Exhibit
D. Landlord and Tenant anticipate that the Term will commence on the "Anticipate Commencement Date" set forth in Item 7 of the Basic Lease Provisions, but the Anticipated Commencement Date shall in no event affect the actual Commencement Date, which shall be determined as set forth in this Section 3.2.

3.3. Early Entry. Tenant and its authorized agents, contractors, subcontractors and employees shall be granted a license by Landlord to enter upon the Premises, at Tenant's sole risk and expense, during ordinary business hours prior t the Commencement Date, for the sole purpose of installing Tenant's trade fixtures and equipment in the Premises; provided, however, that (i) the provisions of this Lease, other than with respect to the payment of Monthly Rent, shall apply during such early entry, including, but not limited to, the provisions of Article XI relating to Tenant's indemnification of Landlord, (ii) prior to any such entry, Tenant shall pay for and provide evidence of the Insurance to be provided by Tenant pursuant to the provisions of Article XI,
(iii) Tenant shall pay all utility, service and maintenance charges for the Premises attributable to Tenant's early entry and use of the Premises as reasonably determined by Landlord, (iv) Tenant shall not unreasonably interfere, delay or hinder Landlord, its agents, contractors or subcontractors in the construction of the Tenant Improvements in accordance with the provisions of this Lease, and (v) Tenant shall not use the Premises of the storage of inventory or otherwise commence the operation of business during the period of such early entry. Upon Tenant's breach of any of the foregoing conditions, Landlord may, in addition to exercising any of its other rights and remedies set forth herein, revoke such license upon notice to Tenant. Early entry by Tenant in accordance with this Section 3.3 shall not constitute occupancy of the Premises of purposes of establishing the Commencement Date.

3.4 Delay in Possession. If for any reason Landlord cannot deliver possession of the Premises to Tenant with the Tenant Improvements substantially completed on or before the Anticipated Commencement Date, Landlord shall not be subject to any liability therefor, and such failure shall not affect the validity of this Lease or the obligations of Tenant hereunder, but in such case, Tenant shall not be obligated to pay Monthly Rent or Additional Rent other than as provided in Section 3.3 and Section 3.5 until the Commencement Date has occurred. If the Commencement Date has not occurred within one hundred twenty
(120) days following the Anticipated Commencement Date plus periods attributable to Tenant Delays or Unavoidable Delay, Tenant may, at its option, by Notice to Landlord within ten (10) days thereafter, terminate this Lease, in which event the parties shall be discharged from all further obligations hereunder; provided, however, if tenant fails to give such notice to Landlord within such ten-day period, Tenant shall no longer have the right to terminate this Lease under this Section 3.4. Tenant understands that, notwithstanding anything to the contrary contained herein, Landlord shall have no obligation to deliver possession of the Premises to Tenant for so long as Tenant fails to deliver to Landlord execute copies of policies of insurance or certificates thereof as required under Section 11.8.

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3.5 Tenant Delays. The Commencement Date shall not be delayed or postponed due to Tenant Delays, and the Term. Tenant's obligations to pay Rent and all of Tenant's other obligations under this Lease shall commence upon the date which would have been the Commencement Date but for Tenant Delays.

3.6 Condition of Premises. Landlord's sole construction obligations, if any, regarding Tenant Improvements of the Premises are set forth in Article XX and the Work Letter. The taking of possession or use of the Premises by Tenant for any purpose other than as provided in Section 3.3 shall conclusively establish that Tenant has inspected the Premises and accepts them as being in good and sanitary order, condition and repair and that the Tenant Improvements have been constructed in accordance with the Plans; provided, however, Tenant shall have a period of thirty (30) days after taking possession of the Premises in which to notify Landlord in writing of any construction deficiencies or defects and any uncompleted punch list items (the punch list shall be limited to items required to be accomplished by Landlord under the Work Letter) and, except as hereafter provided, Landlord will repair, replace or compete at its expense all items referenced in such notice within thirty (30) days after receipt of such notice, subject to Unavoidable Delay, or as soon thereafter as Landlord, acting in good faith, can repair, replace or complete the same. If Landlord reasonably contends that a particular item in such notice is not justified, the parties will refer the issue to Landlord's Architect for resolution. Landlord's Architect's determination shall be final and binding upon the parties. Nothing in this Section 3.6 shall limit or expand Landlord's maintenance and repair obligations set forth in Article IX.

3.7 No Representations. Tenant acknowledges that neither Landlord nor any of Landlord's Agents has made any representations or warranties as to the suitability or fitness of the Premises of the conduct of Tenant's business, including, but not limited to, any representations or warranties regarding zoning or other land use matters, or for any other purpose, and that neither Landlord nor any of Landlord's Agent has agreed to undertake any alterations or additions or construct any Tenant Improvements to the Premises except as expressly provided in this Lease.

ARTICLE IV

RENT AND ADJUSTMENTS

4.1 Monthly Rent, from and after the Commencement Date, Tenant shall pay to the Landlord, for each calendar month of the Term, the Monthly Rent set forth in Item 9 of the Basic Lease Provision, as the same may be adjusted from time to time as provided in Section 4.2. Monthly Rent shall be due and payable to Landlord in lawful money of the United States, in advance, on the first (1st) day of each calendar month of the Term, without abatement, deduction, claim or offset, and without prior notice, invoice or demand, at Landlord's address set forth in Item 1 of the Basic Lease Provisions or at such place as Landlord may from time to time designate tenant's payment of Monthly Rent for the first (1st) month of the Term shall be delivered to Landlord concurrently with Tenant's execution of this Lease.

4.2 Adjustments. Monthly Rent shall be adjusted from time to time as provided in the Addendum.

4.3 Additional Rent. All additional Rent shall be due and payable to Landlord in lawful money of the United States, at Landlord's address set forth in Item 1 of the Basic Lease Provisions or at such other place as Landlord may from time to time designate, without abatement, deduction, claim or offset, within ten (10) days of receipt of Landlord's invoice or statement for same, or, if this Lease provides another time for the payment of certain items of Additional Rent, then at such other time.

4.4 Prorations. If the Commencement Date is not the first (1st) day of the month, or if the expiration of the Term f this Lease is not the last day of a month, a prorated installment of Monthly Rent based on a thirty (30) day month shall be paid for the fractional month during which the Term commences or terminates.

4.5 Late Payment Charges. Tenant acknowledges that late payment by Tenant to Landlord of Rent under this Lease will cause Landlord to incur costs not contemplated by this Lease, the exact amount of which is extremely difficult or impracticable to determine. Such costs include, but are not limited to, processing and accounting changes, late charges that may be imposed on Landlord by the terms of any Mortgage, and late charges and penalties that may be imposed due to late payment of Real Property Taxes. Therefore, if any installment of

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Monthly Rent or any payment of Additional Rent due from Tenant is not received by Landlord in good funds by the second (2nd) calendar day from the applicable due date, Tenant shall pay to Landlord an additional sum equal to five percent (5%) of the amount overdue as a late charge for every month or portion thereof that such amount remains unpaid. The parties acknowledge that this late charge represents a fair and reasonable estimate of the costs that Landlord will incur by reason of the late payment by Tenant. Acceptance of any late Rent and late charge therefor shall not prevent Landlord from exercising any of the other rights and remedies available to Landlord for any other Event of Default under this Lease. Notwithstanding the foregoing (i) should any payment of Rent by personal check be rejected for insufficient funds, Landlord shall have the right, upon notice to Tenant, to require that all future payments by Tenant under this Lease be by cashier's check acceptable to Landlord, and (ii) upon the third (3rd) occurrence during the Term of Tenant's failure to timely pay Rent when due, Landlord may, upon notice to Tenant, require that Monthly Rent for the balance of the Term be made in quarterly installments, in advance, in an amount equal to the sum of the Monthly Rent amounts payable during such three (3) month period.

4.6 Security Deposit. Tenant has deposited with Landlord the sum set forth in Item 10 of the Basic Lease Provisions as a Security Deposit for the full and faithful performance of every provision of this Lease to be performed by Tenant. Landlord may apply, in its sole discretion at any time during the Term of this Lease, all or any part of the Security Deposit to the payment of all prepaid expenses by Landlord for which Tenant would be required to reimburse Landlord under this Lease, including without limitation for Tenant Improvements and Broker commissions. Such application of the Security Deposit is not and shall never be dependent upon an Event of Default. Upon an Event of Default, and whether or not Landlord is informed of or has knowledge of the Event of Default, the Security Deposit (if not already applied as hereinabove provided) shall be deemed to be automatically applied, without waiver of any rights Landlord may have under this Lease or at law or in equity as a result of an Event of Default, to the payment of any Rent not paid when due, the repair of damage to the Premises or the payment of any other amount which Landlord may spend or become obligated to spend by reason of an Event of Default, or to compensate Landlord for any other loss or damage which Landlord may suffer by reason of an Event of Default, to the full extent permitted by law. If any portion of the Security Deposit is so applied, Tenant shall, within ten (10) days after written demand therefor deposit cash with Landlord in an amount sufficient to restore the Security Deposit to its original amount. Landlord shall not be required to keep the Security Deposit separate from its general funds. The unused portion of the Security Deposit, if any, shall be returned to Tenant within thirty (30) days of the expiration of this Lease or any termination of this Lease not resulting from an Event of Default, so long as Tenant has vacated the Premises in the manner required by this Lease and paid all sums required to be paid under this Lease, providd however that Landlord may retain the Security Deposit until such time as any amounts of Additional Rent due from Tenant have been determined and paid in full. Tenant hereby waives the provisions of Section 1950.7(c) of the California Civil Code and any present or future laws otherwise governing the return of the Security Deposit to Tenant to the extent of reasonably anticipated Additional Rent retained by Landlord pursuant to the previous sentence.

ARTICLE V

USE

5.1 Tenant's Use. Tenant shall use the Premises solely for the purposes set forth in Item 11 of the Basic Lease Provisions and shall use the Premises for no other purpose. Tenant's use of the Premises shall be subject to all of the terms and conditions of this Lease, including, but not limited to, all the provisions of this Article V. Tenant, at Tenant's sole cost and expense, shall procure, maintain and make available for Landlord's inspection throughout the Term, all governmental approvals, licenses and permits required for the proper and lawful conduct of Tenant's permitted use of the Premises. At Landlord's request, Tenant shall deliver copies of all such approvals, licenses and permits to Landlord.

5.2 Compliance with Applicable Laws. Throughout the Term, Tenant, at Tenant's sole cost and expense, shall comply with, and shall not use the Premises, Building or Common Area, or suffer or permit anything to be done in or about the same which will in any way conflict with, (i) any and all present and future laws, statutes, zoning restrictions, ordinances, orders, regulations, directions, rules and requirements of all governmental or private authorities having jurisdiction over all or any part of the Premises (including, but not limited to, state, municipal, county and federal governments and their departments, bureaus, boards and officials) pertaining to the use or occupancy of, or applicable to, the Premises or privileges appurtenant to or in connection with the enjoyment of the

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Premises, (ii) any and all applicable federal, state and local laws, regulations or ordinances pertaining to air and water quality, hazardous materials (as defined in Section 6.1), waste disposal, air emissions and other environmental or health and safety matters, zoning, land use or occupation of the Project or any portion thereof, (iii) the requirements of the Board of Fire Underwriters or other similar body now or hereafter constituted relating to or affecting the condition, use or occupancy of the Project or any portion thereof, (iv) any covenants, conditions, easements or restrictions, including but not limited to the Restrictions, now or hereafter affecting or encumbering the Project or any portion thereof, regardless of when they become effective, (v) the Rules and Regulations, and (vi) good business practices (collectively, (i) through (vi) above are hereinafter referred to as "Applicable Laws"). Tenant shall not commit any waste of the Premises, Building or Project, or any public or private nuisance or any other act or thing which might or would disturb the quiet enjoyment of any other tenant of Landlord or any occupant of nearby property. Tenant shall not place or permit to be placed any loads upon the floors, walls or ceilings in excess of the maximum designed load specified by Landlord or which might damage the Building, or place or permit to be placed any harmful liquids in the drainage systems, and Tenant shall not dump or store, or permit to be dumped or stored, any inventory, waste materials, refuse or other materials or allow any such materials to remain in the Outside Areas or Common Area, except in designated enclosed trash areas. Tenant shall not conduct or permit any suctions, sheriff's sales or other like activities at the Project or any portion thereof.

5.4 Landlord's Right of Entry. Landlord and Landlord's Agents shall have the right to enter the Premises at all reasonable times upon reasonable notice to Tenant, except for emergencies in which case no notice shall be required, to inspect the Premises, to take samples and conduct environmental investigations, to post notices of nonresponsibility and similar notices and signs indicating the availability of the Premises for sale, to show the Premises to interested parties such as prospective lenders and purchasers, to make necessary Alterations or maintenance and repairs, to perform Tenant's obligations as permitted herein when Tenant has failed to do so and, at any reasonable time after one hundred eighty (180) days prior to the expiration of the Term, to place upon the Premises reasonable signs indicating the availability of the Premises for lease and to show the Premises to prospective tenants, all without being deemed to have caused an eviction of Tenant and without any liability to Tenant or abatement of Rent. The above rights are subject to reasonable security regulations of Tenant, and in exercising its rights set forth herein, Landlord shall endeavor to cause the least possible interference with Tenant's business. Landlord shall at all times have the right to retain a key which unlocks all of the doors in the Premises, excluding Tenant's vaults and safes, and Landlord and Landlord's Agents shall have the right to use any and all means which Landlord may deem proper to open the doors in an emergency to obtain entry to the Premises, and any entry to the Premises s obtained by Landlord or Landlord's Agents shall not under any circumstances be deemed to be a forcible or unlawful entry into, or a detainer of, the Premises, or an eviction of Tenant from the Premises.

ARTICLE VI

HAZARDOUS MATERIALS

6.1 Definition of Hazardous Materials. For purposes of this Lease, the term "Hazardous Materials" includes (i) any "hazardous materials" as defined in Section 25501(k) of the California Health and Safety Code unless Tenant establishes, to the satisfaction of Landlord, that because of the quantity, concentration, or physical or chemical characteristics, such substance or matter does not pose a present or potential hazard to human health and safety or to the environment, (ii) any other substance or matter which results in liability to any person or entity from exposure to such substance or matter under any statutory or common law theory, and (iii) any substance or matter which is in excess of relevant and appropriate levels set forth in any applicable federal, state or local law or regulation pertaining to any hazardous or toxic substance, material or waste, or for which any applicable federal, state or local agency orders or otherwise requires removal, treatment or remediation.

6.2 Use of Hazardous Materials. Tenant shall not cause or permit any Hazardous Materials to be brought upon, stored, used, generated, released into the environment or disposed of on, under, from or about the Premises (which for purposes of this Article VI shall include, but is not limited to, subsurface sell and ground water) by Tenant or Tenant's Agents without the prior written consent of Landlord. Landlord may, in its sole discretion, place such conditions as Landlord deems appropriate with respect to such Hazardous Materials, and may further require that Tenant demonstrates to Landlord that such Hazardous Materials are necessary or useful to Tenant's business and will be generated, stored, sued and disposed of in a manner that complies with all Applicable Laws regulating such Hazardous Materials and with good business practices. Tenant understands that Landlord may

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utilize an environmental consultant to assist in determining conditions of approval and monitoring in connection with the presence, storage, generation or use of Hazardous Materials on or about the Premises by tenant, and Tenant agrees that any costs reasonably incurred by Landlord in connection with any such environmental consultant's services shall be reimbursed by Tenant to Landlord as Additional Rent upon demand.

6.3 Environmental Questionnaire Disclosure. Prior to the execution of this Lease, Tenant shall complete, execute and deliver to Landlord an Environmental Questionnaire and Disclosure Statement (the "Environmental Questionnaire") in the form of Exhibit H, and Tenant shall certify to Landlord all information contained in the Environmental Questionnaire as true and correct to the best of Tenant's knowledge and belief. The completed Environmental Questionnaire shall be deemed incorporated into this Lease for all purposes, and Landlord shall be entitled to rely fully on the information contained therein. On each anniversary of the Commencement Date (each such date is hereinafter referred to as a "Disclosure Date"), until and including the first Disclosure Date occurring after the expiration or sooner termination of this Lease, Tenant shall disclose to Landlord in writing the names and amounts of all Hazardous Materials, or any combination thereof, which were stored, generated, used or disposed of on, under or about the Premises for the twelve-month period prior to each Disclosure Date, and which Tenant Intends to store, generate, use or dispose of on, under or about he Premises through the next Disclosure Date. At Landlord's option, Tenant's disclosure obligations under this Section 6.3 shall include a requirement that Tenant update, execute and deliver to Landlord the Environmental Questionnaire as the same may be modified by Landlord from time to time. In addition to the foregoing, Tenant shall promptly notify Landlord of, and shall promptly provide Landlord with true, correct, complete and legible copies of, all of the following environmental items relating to the Premises:
reports filed pursuant to any self-reporting requirements; reports filed pursuant to any Applicable Laws or this Lease; all permit applications, permits, monitoring reports, workplace exposure and community exposure warnings or notices, and all other reports, disclosures, plans or documents (even those which may be characterized as confidential) relating to water discharges, air pollution, waste generation or disposal, underground storage tanks or Hazardous Materials; all orders, reports, notices, listings and correspondence (even those which may be considered confidential) of or concerning the release, investigation, compliance, clean up, remedial and corrective actions, and abatement of Hazardous Materials whether or not required by Applicable Laws; and all complaints, pleading sand other legal documents filed against Tenant related to Tenant's use, handling, storage or disposal of Hazardous Materials.

6.4 Inspection; Compliance. Landlord and Landlord's Agents shall have the right, but not the obligation to Inspect, Investigate, sample and/or monitor the Premises, including any air, soil, water, groundwater or other sampling, and any other testing, digging, drilling or analyses, at any time to determine whether Tenant is complying with the terms of this Article VI, and in connection therewith, Tenant shall provide Landlord with full access to all relevant facilities, records and personnel. If Tenant is not in compliance with any of the provisions of this Article VI, or in the event of a release of any Hazardous Material on, under, from or about the Premises, Landlord and Landlord's Agents shall have the right, but not the obligation, without limitation on any of Landlord's other rights and remedies under this Lease, to immediately enter upon the Premises and to discharge Tenant's obligations under this Article VI at Tenant's expense, including without limitation the taking of emergency or long-term remedial action. Landlord and Landlord's Agents shall endeavor to minimize interference with Tenant's business but shall not be liable for any such interference. In addition, Landlord, at Tenant's sole cost and expense, shall have the right, but not the obligation, to join and participate in any legal proceedings or actions initiated in connection with any claims or causes of action arising out of the storage, generation, use or disposal by Tenant or Tenant's Agents of Hazardous materials on, under, from or about the Premises. All sums reasonably disbursed, deposited or incurred by Landlord in connection herewith, including, but not limited to, all costs, expenses and actual attorneys fees, shall be due and payable by Tenant to Landlord, as an Item of Additional Rent, on demand by Landlord, together with Interest thereon at the Applicable Rate from the date of such demand until paid by Tenant.

6.5 Tenant Obligations. If the presence of any Hazardous Materials on, under or about the Premises or the Project caused or permitted by Tenant or Tenant's Agents results in (i) injury to any person, (ii) injury to or contamination of the Premises or the Project, or (iii) injury to or contamination of any real or personal property wherever situated, Tenant, at its sole cost and expense, shall promptly take all actions necessary to return the Premises and the Project to the condition existing prior to the introduction of such Hazardous Materials to the Premises and the Project and to remedy or repair any such injury or contamination. Without limiting any other rights or remedies of Landlord under this Lease, Tenant shall pay the cost of any cleanup work performed on, under or about the Premises, the Building and the Project as required by this Lease or any Applicable Laws in connection

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with the removal, disposal, neutralization or other treatment of such Hazardous Materials caused or permitted by Tenant or Tenant's Agents. If Landlord has reason to believe that Tenant or Tenant's Agents may have caused or permitted the release of Hazardous Materials on, under, from or about the premises, then Landlord may require Tenant, at Tenant' sole cost and expense, to conduct monitoring activities on or about the Premises satisfactory to Landlord, in its sole and absolute judgment, concerning such release of Hazardous materials on, under, from or about the Premises. Notwithstanding anything in the foregoing, Tenant shall not, without Landlord's prior written consent take any remedial action in response to the presence of any Hazardous Materials on, under or about the Premises, or enter into any settlement agreement consent decree or other compromise with any governmental agency with respect to any Hazardous Materials claims; provided, however, Landlord's prior written consent shall not be necessary in the even that the presence of Hazardous Materials on, under or about the Premises (i) poses an immediate threat to the health, safety or welfare of any individual or (ii) is of such a nature that an immediate remedial response is necessary it is not possible to obtain Landlord's consent before taking such action.

6.6 Indemnification. To the fullest extent permitted by law, Tenant hereby agrees to indemnify hold harmless, protect and defend (with attorneys acceptable to Landlord) Landlord and Landlord's Agents, and any successors to all or any portion of Landlord's interest in the Premise, the Building and the Project and their directors, officers, partners, employees authorized agents, affiliates, representatives and Mortgagees, from and against any and all liabilities, losses, damages (including, but not limited to, damages for the loss or restriction on use of rentable or usable space or any amenity of the Premises, the Building and the Project or damages arising from any adverse impact on marketing of space in the Premises, the Building and the Project), diminution in the value of the Premises, the Building and the Project, judgments, fines, demands, claims, recoveries, deficiencies, costs and expenses (including, but not limited to, reasonable attorneys' fees, disbursements and court costs and all other professional or consultant's expenses), whether foreseeable or unforeseeable, arising directly or indirectly out of the presence, use, generation, storage, treatment, on or off-site disposal or transportation of Hazardous Materials on, into, from, under or about the Premises, the necessary repair, restoration, clean-up (including but not limited to, the costs of investigation and removal of Hazardous Materials) or detoxification of the Premises, the Building and the Project and the preparation of an closure or other required plans, whether or not such action is required or necessary during the Term or after the expiration of this lease.

6.7 Tenant's Responsibility at Conclusion of Lease. Promptly upon the expiration or sooner termination of this Lese, Tenant shall represent to Landlord in writing that (i) Tenant has made a diligent effort to determine whether any Hazardous Materials are on, under or about the Premises as a result of any acts or omissions of Tenant or Tenant's Agents and (ii) no such Hazardous Materials exist on, under or about the Premises other than as specifically identified to Landlord by Tenant in writing. If Tenant discloses the existence of Hazardous Materials on, under or about the Premises, or if Landlord at any time discovers that Tenant or Tenant's Agents caused or permitted the release of a hazardous Material on, under, from or about the Premises, Tenant shall, at Landlord's request, immediately prepare and submit to Landlord within thirty
(30) days after such request a comprehensive plan, subject to Landlord's approval, specifying the actions to be taken by Tenant to return the Premises to the condition existing prior to the Introduction of such Hazardous Materials. Upon Landlord's approval of such clean up plan, Tenant shall, at Tenant's sole cost and expense, without limitation on any rights and remedies of Landlord under this Lease or at law or in equity, immediately implement such plan and proceed to clean up such Hazardous Materials in accordance with all Applicable Laws and as required by such plan and this Lease.

6.8 Tenant shall not be responsible for any Hazardous Materials contamination of the Project occurring prior to the Commencement Date and not otherwise caused by the acts or omissions of Tenant or Tenant's Agents.

ARTICLE VII

MAINTENANCE EXPENSES; TAXES; UTILITIES

7.1 Payment of Maintenance Expenses. Prior to the Commencement Date and thereafter prior to the commencement of each of Landlord's fiscal years during the Term, Landlord shall give Tenant a written estimate of Maintenance Expenses (hereafter defined) for the ensuing fiscal year or partial fiscal year, as the case may be. Tenant shall pay, as an item of Additional Rent, such estimated amount in equal monthly installments, in advance, or on before the first (1st) day of each calendar month concurrent with its payment of Monthly Rent. If Landlord has

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not furnished its written estimate by the time set forth above, Tenant shall pay monthly installments of Maintenance Expenses at the rate established for the prior fiscal year, if any; provided that when the new estimate is delivered to Tenant, Tenant shall at the next monthly payment date pay Landlord any accrued deficiency based on the new estimate, or Landlord shall credit any accrued overpayment based on such estimate toward Tenant's next installment payment hereunder. Within a reasonable period of time after the end of each fiscal year (in no event less than one hundred (120) days after the end of each fiscal year unless sooner completed by Landlord) Landlord shall furnish Tenant a statement showing in reasonable detail the actual Maintenance Expenses incurred for the period in question. If Tenant's estimated payments are less than the actual Maintenance Expenses as shown by the applicable statement, Tenant shall pay the difference to Landlord within thirty (30) days thereafter. If Tenant shall have overpaid Landlord, Landlord shall credit such overpayment toward Tenant's next installment payment hereunder. When the final determination is made of the actual Maintenance Expenses of the fiscal year in which this lease terminates, Tenant shall, even if this Lease has terminated, pay to Landlord with fifteen
(15) days after notice the excess of such actual Maintenance Expenses over the estimate of Maintenance Expenses paid. Conversely, any overpayment shall be rebated by Landlord to Tenant. If Landlord shall determine at any time that the estimate of Maintenance Expenses of the current fiscal year is or will become inadequate to meet all such Maintenance Expenses for any reason, Landlord shall immediately determine the approximate amount of such inadequacy and issue a supplemental estimate as to such Maintenance Expenses and Tenant shall pay any increase as reflected by such supplemental estimate, Landlord shall keep or cause to be kept separate and complete books of accounting covering all Maintenance Expenses and shall preserve for at least twelve (12) months after the close of each fiscal year all material documents evidencing said Maintenance Expenses for that fiscal year. Tenant, at its sole cost and expense, through any certified public accountant designated by it, shall have the right, during reasonable business hours and not more frequently than once during any fiscal year, to examine and/or audit the books and documents mentioned above evidencing such costs and expenses of the previous fiscal year. Any delay or failure by Landlord in delivering any estimate or statement pursuant to this Section 7.1 shall not constitute a waiver of its right to require Tenant to pay all Maintenance Expenses pursuant hereto.

7.2 Definition of Maintenance Expenses. The term "Maintenance Expenses" means all costs and expenses incurred by Landlord or Landlord's Agents in connection with the operation, maintenance and repair of the Outside Areas and of the Building's proportionate share of the Project (such share determined as the ratio of the Building Square Footage to the total square footage of the floor area leased or held for lease by tenants as of the date upon which such computation is made of all buildings within the Project, as determined by Landlord), including, but not limited to, the following: actual costs and expenses incurred in connection with labor and materials utilized in the performance of Landlord's maintenance and repair obligations pursuant to Section 9.1; any and all assessments levied against the Premises or the Project pursuant to the Restrictions; water, electrical and other utility services not supplied directly to a tenant, removal of trash, rubbish and other refuse from the Project, cleaning of and replacement of signs of the Project, including relamping and repairs made as required; repair, operation and maintenance of the Common Area, including, but not limited to, removal of any obstructions not reasonably required for the Common Area uses, prohibition and removal of the sale or display of merchandise or the storing of materials and/or equipment in the Common Area, and payment of all electrical, water and other utility charges or fees for services furnished to the Common Area; obtaining and maintaining public liability, property damage and other forms of insurance which Landlord may or is required to maintain in connection with the Building and the Project (including the payment of any deductibles thereunder); costs incurred in connection with compliance of any laws or changes in laws applicable to the Project, including without limitation any laws or changes in laws regarding Hazardous materials; establishment of reasonable reserves for replacements and/or repair of Outside Areas and Common Area Improvements, equipment and supplies; employment of such personnel as Landlord may deem reasonably necessary, if any, to direct parking and police the Common Are and facilities; the cost of any capital improvements (other than tenant improvements for specific tenants) made by or on behalf of Landlord to the Outside Areas, the Project or Common Area to the extent of the amortized amount thereof over the useful life of such capital improvements calculated at a market cost of funds, all as determined by Landlord, for each such year of useful life during the Term; depreciation of machinery and equipment used in connection with the maintenance and operation of the Outside Areas of the Common Area for whicha reasonable reserve has not been established as herein provided; employment of personnel used in connection with any of the foregoing, including, but not limited to, payment or provision for unemployment insurance, worker's compensation insurance and other employee costs; the cost of bookkeeping, accounting and auditing and legal services provided in connection with any of the foregoing; the cost of any respect to Hazardous Materials; the cost of any tax, insurance or other consultant utilized in connection with the Project; and any other items reasonably necessary from time to time to property repair, replace,

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maintain and operate the Outside Areas of the Project. Maintenance Expenses shall also include a management fee to cover Landlord's management, overhead and administrative expenses (which management fee shall not exceed the then-prevailing market management fee being charged by professional property managers for projects located in the vicinity of the Project that are comparable to the Project provided, however, if Landlord elects to delegate its duties hereunder to a professional property manager then Maintenance Expenses shall not include any management fee to Landlord (except for any costs and/or administrative and overhead expenses reasonably incurred by Landlord in monitoring and auditing the performance delegated to the professional property manager), but under such circumstances any reasonable amounts paid to the professional property manager shall be added to and deemed a part of Maintenance Expenses. If Landlord elects to perform any maintenance or repair herein described in conjunction with properties other than the Project, and if a common maintenance contractor is contracted with for such purpose, the contract amount allocable to the project, as reasonably determined by Landlord, shall be added to and deemed a part of Maintenance Expenses hereunder. Increases in Maintenance Expenses by reason of a disproportionate impact by Tenant thereon (for example, and not by way of limitation, increases in costs of trash collection because of Tenant's excessive generation of trash or increases in costs of Outside Areas or Common Area maintenance because of Tenant's Unpermitted storage of inventory or materials in the Outside Areas or Common Area), in Landlord's reasonable judgment, may be billed by Landlord, as an item of Additional Rent, directly to Tenant.

7.3 Payment of Real Property Taxes. Landlord shall pay, at Tenant's expense and subject to reimbursement by Tenant as hereinafter set forth, all Real Property Taxes (as hereinafter defined) levied against the Premises during the Term. The amount of such payments by Landlord shall be based on tax bills and notices received by Landlord pertaining to the Premises (and if Tenant receives any such tax bills or notices, Tenant shall immediately forward same to Landlord) and such payment shall be made before the last day such Real Property Taxes are payable without penalty. Tenant shall reimburse to Landlord, as an item of Additional Rent, the full amount of such Real property Taxes paid by Landlord within ten (10) days after Landlord's statement or invoice thereof, which statement or invoice shall be accompanied by reasonable evidence of the amount of such Real Property Taxes. Alternatively, Landlord may elect to include the cost of Real Property Taxes in the definition of Maintenance Expenses, in which event Tenant shall pay such cost in the manner set forth in
Section 7.1.

7.4. Definition of Real Property Taxes. The term "Real Property Taxes" means any form of tax, assessment, charge, license, fee, rent tax, levy, penalty (if a result of Tenant's delinquency), real property or other tax (other than Landlord's net income, estate, succession, inheritance, or franchise taxes), now or hereafter imposed with respect to the Premises or any part thereof (including any Alterations), this Lease of any Rent payable under this Lease by any authority having the direct or indirect power to tax, or by any city, county, state or federal government or any improvement district or other district or division thereof, whether such tax or any portion thereof (i) is determined by the area of the Premises or any part thereof or the Rent payable under this Lease by Tenant including, but not limited to, any gross income or excise tax levied by any of the foregoing authorities with respect to receipt of the Rent due under this Lease, (ii) is levied or assessed in lieu of, in substitution for, or in addition to, existing or additional taxes with respect to the Premises or any part thereof whether or not now customary or within the contemplation of Landlord or Tenant, or (iii) is based upon any legal or equitable interest of Landlord in the Premises or any part thereof.

7.5 Apportionment of Taxes. If the Premises is assessed as part of a larger parcel, then Landlord shall equitably apportion the Real Property Taxes assessed against the real property which includes the Premises and reasonably determine the amount of Real property Taxes attributable to the Premises. If other buildings exist on the assessed parcel, the Real Property Taxes apportioned to the Premises shall be based upon the ration of the Building Square Footage to the square footage of all buildings on the assessed parcel. Landlord's reasonable determination of such apportionment shall be conclusive.

7.6 Taxes on Tenant's personal Property; Permitted Contests. Tenant shall be directly responsible for and shall pay the full amount of all taxes levied on Tenant's Personal property, and shall hold Landlord free and harmless therefrom. if any such taxes are included in the tax bill for Real Property Taxes of the Premises, Tenant shall reimburse Landlord therefor in the manner described in Section 7.3, and shall make every effort with the applicable tax authorities to have such personal property taxes removed from the Real Property Taxes bill. Tenant may contest the amount of validity of any Real Property Taxes or taxes levied on Tenant's Personal Property by appropriate proceedings, provided that Tenant gives Landlord prior Notice of any such contest and keeps Landlord

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advised as to all proceedings, and provided further than Tenant shall continue to reimburse Landlord for Landlord's payment of such Real Property Taxes unless such proceedings shall operate to prevent or stay such payment and the collection of the tax so contested. Landlord shall join in any such proceedings if any Applicable Laws shall so require, provided that Tenant shall hold harmless, indemnify, protect and defend Landlord from and against any liability, claim, demand, cost or expense in connection therewith including, but not limited to, actual attorneys' fees and costs reasonably incurred.

7.7 Utilities and Services. Tenant shall be responsible for and shall pay promptly, directly to the appropriate supplier, all charges for water, gas, electricity, heat, light, power, telephone, refuse pickup, janitorial service, interior landscape maintenance and all other utilities, materials and services furnished directly to Tenant or the Premises or used by Tenant in, on or about the Premises during the Term, together with any taxes thereon. If any utilities or services are not separately metered or assessed to Tenant, Landlord shall make a reasonable determination of Tenant's proportionate share of the cost of such utilities and services and Tenant shall pay such amount to Landlord, as an Item of Additional Rent, within ten (10) days after receipt of Landlord's statement or invoice therefor. Alternatively, Landlord may elect to include such cost in the definition of Maintenance Expenses, in which event Tenant shall pay such cost in the manner set forth in Section 7.1. Landlord may also require Tenant to have any Specialized HVAC system separately metered to Tenant, at Tenant's expense. Landlord shall not be liable in damages or otherwise for any failure to interruption of any utility or other service furnished to the Premises. No such failure or interruption shall be deemed an eviction or entitle Tenant to terminate this Lease or withhold or abate any Rent due hereunder.

ARTICLE VIII

ALTERATIONS

8.1 Permitted Alterations. After the Commencement Date, Tenant shall not make or permit any Alterations in, on or about the Premises without the prior written consent of Landlord, which consent may be withheld in Landlord's sole and absolute discretion. Notwithstanding the foregoing, Landlord shall not unreasonably withhold its consent to any Alterations not exceeding One Dollar $1.00) per square foot of the Building in aggregate cost over the Term and which do not (i) affect the exterior of the Building or the Outside Areas (or be visible from adjoining sites), (ii) affect or penetrate any of the structural portions of the Building, including, but not limited, the roof, (iii) require any change to the basic floor plan of the Building, any change to the structural or mechanical components of the Building, or any governmental approval or permit as a prerequisite to the construction thereof, (iv) interfere in any manner with the proper functioning of or Landlord's access to any mechanical, electrical, plumbing or HVAC systems, facilities or equipment located in or serving the Building, or (v) diminish the value of the Premises. All Alterations shall be constructed pursuant to plans and specifications previously provided to and, when applicable, approved in writing by Landlord, shall be installed by a licensed contractor at Tenant's sole expense in compliance with all Applicable Laws, and shall be accomplished in a good and workmanlike manner confirming in quality and design with the Building existing as of the Commencement Date. No Hazardous Materials, including, but not limited to, asbestos or asbestos-containing materials, shall be used by Tenant or Tenant's Agents in the construction of any Alterations permitted hereunder. Tenant shall, if required by Landlord, obtain and pay for, at its own expense, a completion and indemnity bond covering such work, the form and amount of which shall be subject to the approval of Landlord. All Alterations made by Tenant shall be and become the property of Landlord upon the installation thereof and shall not be deemed Tenant's Personal Property; provided, however, that Landlord may, at its option, require that Tenant, upon the termination of this Lease, at Tenant's expense, remove any or all no-structural Alterations installed by or on behalf of Tenant and return the Premises to its condition as of the Commencement Date of this Lease, normal wear and tear excepted. Notwithstanding any other provisions of this Lease, Tenant shall be solely responsible for the maintenance, repair and replacement of any and all Alterations made by or on behalf of Tenant (including without limitation by Landlord on behalf of Tenant) to the Premise.

8.2 Trade Fixtures. Tenant shall, at its own expense, provide, install and maintain in good condition all of Tenant's Personal Property required in the conduct of its business in the Premises.

8.3 Mechanics' Liens. Tenant shall give Landlord Notice of Tenant's intention to perform any work on the Premises which might result in any claim of lien at least twenty (20) days prior to the commencement of such

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work to enable Landlord to post and record a notice of nonresponsiblity or other notice Landlord deems proper prior to the commencement of any such work. Tenant shall not permit any mechanic's, materialmen's or other liens to be filed against the property of which the Premises are a part or against Tenant's leasehold interest in the Premises. If Tenant fails to cause the release of record of any lien(s) filed against the Premises or its leasehold estate therein by payment or posting of a proper bond within ten (10) days from the date of the lien filing(s), then Landlord may, at Tenant's expense, cause such lien(s) to be released by any means Landlord deems proper, including, but not limited to payment of or defense against the claim giving rise to the lien(s). All sums reasonably disbursed, deposited or incurred by Landlord in connection with the release of the lien(s), including, but not limited to, all costs, expenses and actual attorneys' fees, shall be due and payable by Tenant to Landlord, as an item of Additional Rent, on demand by Landlord, together with interest thereon at the Applicable Rate from the date of such demand until paid by Tenant.

ARTICLE IX

MAINTENANCE AND REPAIR

9.1 Landlord's Maintenance of Outside Areas. Landlord shall, subject to receiving Tenant's payment of Maintenance Expenses, and subject to Section 9.2, Article XII and Article XIII, maintain in good condition and repair the Outside Areas and every part thereof, including but not limited to, landscaping (including replacement thereof), sprinkler systems, walkways, parking areas, and approved signage. Such maintenance shall include pest control, restriping of the parking areas and painting of the exterior walls of the Building, as and when the same becomes necessary in Landlord's sole discretion. Such maintenance shall further include the roof of the Building (excluding any skylights, but including as needed any replacement thereof) _______________________ (including, without limitation, the foundation, load-bearing walls and roof structure), provided that Landlord shall not be required to make any repairs to the roof or the structural components unless and until Tenant has notified Landlord in writing of the need for such repair and Landlord shall have a reasonable period of time thereafter to commence and complete said repair. The cost of any maintenance and repairs on the part of Landlord provided for in this Section 9.1 shall be considered part of Maintenance Expenses and paid by Tenant in the manner set forth in Section 7.1, except that repairs which Landlord deems arise out of any act or omission of Tenant or Tenant's Agents shall be made at the expense of Tenant. Landlord's obligation to repair and maintain hereunder shall be limited to the cost of effecting such repair and maintenance and in no event shall Landlord be liable for any costs or expenses in excess of said amounts, including but not limited in any consequential damages, opportunity costs or lost profits incurred or suffered by Tenant. Notwithstanding the foregoing, Landlord may, by Notice to Tenant, elect at any time to cease maintaining all or any portion of the Outside Areas and/or the roof of the Building, in which event Tenant shall be responsible for such maintenance as set forth in Section 9.2 below.

9.2 Tenant's Maintenance and Repair Obligations. Tenant shall at all times during the Term of this Lease, at Tenant's sole cost and expense, clean, keep, maintain, repair and make necessary improvements to, the Building and every part thereof and all improvements therein or thereto, in good and sanitary order and condition to the reasonable satisfaction of Landlord and in compliance with all Applicable Laws, usual wear and tear excepted. Any damage or deterioration of the Building shall not be deemed usual wear and tear if the same could have been prevented by good maintenance practices by Tenant. Tenant's repair and maintenance obligations herein shall include, but are not limited to, all necessary maintenance and repairs to all portions of the Building, and all exterior entrances, all glass, windows, window easements, show window moldings, partitions, doors, doorjambs, door closures, hardware, fixtures, electrical lighting and outlets, plumbing fixtures, sewage facilities, interior walls, floors, ceilings, skylights, fans and exhaust equipment, fire extinguisher equipment and systems, and all repairs to the HVAC and any Specialized HVAC (as hereinafter defined). As part of its maintenance obligations hereunder, Tenant shall, at Landlord's request, provide Landlord with copies of all maintenance schedules, reports and notices prepared by, for, or on behalf of Tenant. Landlord may impose reasonable restrictions and requirements with respect to repairs by Tenant, which repairs shall be at least equal in quality to the original work, and the provisions of Section 8.3 shall apply to all such repairs. Tenant's obligation to repair includes the obligation to replace, as necessary, regardless of whether the benefit of such replacement extends beyond the Term; provided however, if the replacement in question is of a capital nature, the cost therefor shall be amortized over its useful life and, in the event such useful life extends beyond the expiration _____ sooner termination of the Lease (including any extensions of the Term), Landlord shall reimburse Tenant for the unamortized portion thereof promptly following the expiration or sooner termination of the Lease. All replacements by Tenant shall be subject to Landlord's prior

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approval. Any special or above-standard heating, ventilating and air conditioning installed by, on behalf of, or at the request of Tenant ("Specialized HVAC"), shall be paid for and maintained by Tenant at Tenant's sole cost and expense. Notwithstanding the foregoing, Landlord shall have the right, upon Notice to Tenant, to undertake the responsibility for maintenance and repair of automatic fire extinguisher equipment, such as sprinkler system and alarms, HVAC, specialized HVAC and other obligations of Tenant hereunder which Landlord deems appropriate to undertake, in which even the cost thereof shall be included as part of Maintenance Expenses and paid by Tenant in the manner set forth in Section 7.1. Tenant shall not permit or authorize any person to go onto the roof of the Building without the prior written consent of Landlord. After Landlord ceases to maintain all or any portion of the Outside Areas and/or the roof of the Building pursuant to Section 9.1, Tenant shall immediately become obligated at Tenant's sole cost and expense, to clean, keep, repair, replace and maintain in good, safe and sanitary order, condition and repair the same to the reasonable satisfaction of Landlord.

9.3 Waiver. Tenant hereby waives all rights provided for by the provisions of Sections 1941 and 1942 of the California Civil Code and any present or future laws regarding Tenant's right to make repairs at the expense of Landlord or to terminate this Lease because of the condition of the Premises.

9.4 Self-Help. If Tenant refuses or fails to repair and maintain the Premises as required hereunder within ten (10) days from the date on which Landlord makes a written demand on Tenant to effect such repair and maintenance, Landlord may enter upon the Premises and make such repairs or perform such maintenance without liability to Tenant for any loss or damage that may accrue to Tenant or its merchandise, fixtures or other property or to Tenant's business by reason thereof. All sums reasonably disbursed, deposited or incurred by Landlord in connection with such repairs or maintenance, plus ten percent (10%) for overhead, shall be due and payable by Tenant to Landlord, as an item of Additional Rent, on demand by Landlord, together with interest at the Applicable Rate on such aggregate amount from the date of such demand until paid by Tenant.

ARTICLE X

COMMON AREA AND PARKING

10.1 Grant of Nonexclusive Common Area License and Right. Landlord hereby grants to Tenant and its permitted subtenants, in common with Landlord and all persons, firms and corporations conducting business in the Project and their respective customers, guests, licensees, invitees, subtenants, employees and agents, to use the Common Area within the Project for such purposes and for doing such things as may be provided for, authorized and/or permitted by the Restrictions, such nonexclusive license and right to be appurtenant to Tenant's leasehold estate created by this Lease. The nonexclusive license and rights granted pursuant to the provisions of this Article X shall be subject to the provisions of the Restrictions, which pertain in any way to the Common Area covered by such Restrictions, and the provisions of this Lease.

10.2 Use of Common Area. Notwithstanding anything to the contrary herein, Tenant and its successors, assigns, employees, agents and invitees shall use the Common Area only of the purposes permitted hereby and by the Restrictions and the Rules and Regulations. All uses permitted within the Common Area shall be undertaken with reason and judgment so as not to interfere with the use of the Common Area by others. In no event shall Tenant erect, install, or place, or cause to be erected, installed, or placed any structure, building, trailer, fence, wall, signs or other obstructions on the Common Area except as otherwise permitted herein and in the Restrictions, and Tenant shall not store or sell any merchandise, equipment or materials on the Common Area.

10.3 Control of Common Area. Subject to provisions of the Restrictions, all Common Area and all improvements located from time to time within the Common Area shall at all times be subject to the exclusive control and management of the Landlord. Landlord shall have the right to construct, maintain and operate lighting facilities within the Common Area; to police the Common Area from time to time; to change the area, level, location and arrangement of the parking areas and other improvements within the Common Area; to restrict parking by tenants, their officers, agents and employees to employee parking areas; to enforce parking charges (by operation of meters or otherwise); to close all or any portion of the Common Area or Improvements therein to such extent as may, in the opinion of counsel for Landlord, be legally sufficient to prevent a dedication thereof or the accrual of any rights to any person or to the public therein; to close temporarily all or any portion of the Common Area and/or the improvements thereon; to discourage noncustomer parking; and to do and perform such other acts in and to said

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Common Area and improvements thereon as, in the use of good business judgment, Landlord shall determine to be advisable.

10.4 Maintenance of Common Area. Subject to the provisions of the Restrictions, Landlord shall operate and maintain (or cause to be operated and maintained) the Common Area in a first-class condition, in such manner as Landlord in its sole discretion shall determine from time to time. Without limiting the scope of such discretion, Landlord shall have the full right and authority to employ or cause to be employed all personnel and to make or cause to be made all rules and regulations pertaining to or necessary for the proper operation and maintenance of the Common Area and the improvements located thereon. The cost of such maintenance of the Common Area shall be included as part of Maintenance Expenses. No part of the Common Area may be used for the storage of any items, including without limitation, vehicles, materials, inventory and equipment. All trash and other refuse shall be placed in designated receptacles. No work of any kind, including, but not limited to, painting, drying, cleaning, repairing, manufacturing, assembling, cutting, merchandising or displaying shall be permitted upon the Common Area.

10.5 Revocation of License. All Common Area and improvements located thereon which Tenant is permitted to use and occupy pursuant to the provisions of this Lease are to be used and occupied under a revocable license and right, and if any such license be revoked, or if the amount of such areas be diminished, Landlord shall not be subject to any liability nor shall Tenant be entitled to compensation or diminution or abatement of Rent, and such revocation or diminution of such areas shall not be deemed constructive or actual eviction. It is understood and agreed that the condemnation or other taking or appropriation by any public or quasi-public authority, or sale in lieu of condemnation, of all or any portion of the Common Area shall not constitute a violation of Landlord's agreements hereunder, and Tenant shall not be entitled to participate in or make any claim for any award or other condemnation proceeds arising from any such taking or appreciation of the Common Area. Notwithstanding the foregoing, so long as no Event of Default has occurred and is continuing, Landlord shall provide to Tenant the number of vehicle parking spaces set forth in Item 15 of the Basic Lease Provisions throughout the Term (subject to the rights of Landlord under this Article X).

10.6 Landlord's Reserved Rights. Landlord reserves the right to install, use, maintain, repair, relocate and replace pipes, ducts, conduits, wires and appurtenant meters and equipment included in the Premises or outside the Premises, change the boundary lines of the Project and install, use, maintain, repair, alter or relocate, expand and replace any Common Area; provided, however, Landlord shall not unreasonably interfere with Tenant's use of the Premises. Such rights of Landlord shall include, but are not limited to, designating from time to time certain portion of the Common Area as exclusively for the benefit of certain tenants in the Project.

10.7 Parking. Tenant shall be entitled to the number of vehicle parking spaces set forth in Item 15 of the basic lease provisions, which spaces shall be unreserved and unassigned, on those portions of the Outside Areas and/or Common Area designated by Landlord for parking by Tenant and Tenant's Agents. Tenant shall not use more parking spaces than such number. Tenant shall not permit or allow any vehicles that belong to or are controlled by Tenant or Tenant's employees, suppliers, shippers, customers, or invitees to be loaded, unloaded, or parked in areas other than those designated by Landlord for such activities. If Tenant permits or allows any of the prohibited activities described above, then Landlord shall have the right, without notice, in addition to such other rights and remedies that Landlord may have, to remove or two away the vehicle involved and charge the cost to Tenant, which cost shall be immediately payable upon demand by Landlord. Parking shall be limited to striped parking stalls, and no parking shall be permitted in any driveways, accessways or in any area which would prohibit or impede the free flow of traffic within the Common Area. There shall be no overnight parking of any vehicles of any kind, an vehicles which have been abandoned or parking in violation of the terms hereof may be towed away at the owner's expense.

ARTICLE XI

INDEMNITY AND INSURANCE

11.1 Indemnification. To the fullest extent permitted by law, Tenant hereby agrees to defend (with attorneys acceptable to Landlord), indemnify protect and hold harmless Landlord and Landlord's Agents and any successors to all or any portion of Landlord's interest in the Premises and their directors, officers, partners,

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employees, authorized agents, representatives, affiliates and Mortgagees, from and against any and all damage, loss, claim, liability and expense including, but not limited to, actual attorneys' fees and legal costs incurred directly or indirectly by reason of any claim, suit or judgment brought by or on behalf of
(i) any person or persons for damage, loss or expense due to, but not limited to, bodily injury or property damage sustained by such person or persons which arise out of, are occasioned by, or are in any way attributable to the use or occupancy of the Premises or the acts or omissions of the Tenant or Tenant's Agents in or about the Premises or the Project (including but not limited to any Event of Default hereunder), or (ii) Tenant or Tenant's Agents for damage, loss or expense due to, but not limited to, bodily injury or property damage which arise out of, are occasioned by, or are in any way attributable to the use of any of the Common Area, except to the extent caused by the negligence or willful misconduct of Landlord.

11.2 Property Insurance. Landlord shall obtain and keep in force during the term of this Lease a policy or policies of insurance, with deductibles at the sole discretion of Landlord, covering loss or damage to the Premises and the Building, the Tenant Improvements and objects owned by Landlord and normally covered under a "Boiler and Machinery" policy (as such term is used in the nsurance industry) at least in the amount of the full replacement cost thereof, and in no event less than the total amount required by Mortgagees, against all perils included within the classification of fire, extended coverage, vandalism, malicious mischief, special extended perils ("all risk" or "special causes of action," as such terms are used in the insurance industry, including, at Landlord's option, collapse, earthquake and flood) and other perils as required by the Mortgagees or deemed necessary for Landlord. A stipulated value or agreed amount endorsement deleting any co-insurance provision of said policy or policies shall be procured with said insurance. The cost of such insurance policies shall be included in the definition of Maintenance Expenses, and shall be paid by Tenant in the manner set forth in
Section 7.1. Such insurance policies shall provide for payment of loss thereunder to Landlord or, at Landlord's election, the Mortgagees. If the Premises are part of a larger building, or if the Premises are part of a group of buildings owned by Landlord which are adjacent to the Premises, then Tenant shall pay for any increase in the property insurance of the Building or such other building or buildings within the Project if such increase is caused by Tenant's acts, omissions, use or occupancy of the Premises. Tenant shall obtain and keep in force during the Term, at its sole cost an expense, (i) an "all risk" or "special cause of action" property policy in the amount of the full replacement cost covering Tenant's Personal Property and any Alterations made by or at the request of Tenant, with Landlord insured as its interest may appear, and (ii) an "all risk" or "special causes of action" policy of business interruption and/or loss of income insurance covering a period of six (6) months, plus such additional period of time, if any , as will permit Tenant to be in a position to have the same revenues as were in effect the day before a loss giving rise to a claim under such insurance occurs.

11.3 Liability/Miscellaneous Insurance. Tenant shall maintain in full force and effect at all times during the Term (plus such earlier an later periods as Tenant may be in occupancy of the Premises), at its sole cost and expense, policies of insurance issued by a carrier or carriers acceptable to Landlord and the Mortgagees which afford the following coverages: (i) statutory workers' compensation, (ii) employer's liability with minimum limits of Five Hundred Thousand Dollars ($500,000), (iii) comprehensive/commercial general liability insurance including, but not limited to, blanket contractual liability (including the indemnity set forth in Section 11.1), fire and water legal liability, broad form property damage, personal injury, completed operations, products liability, independent contractors, warehouser's legal liability and, if alcoholic beverages are served, manufactured, distributed or sold in the Premises, comprehensive liquor liability, and owned, non-owned and hired vehicles, of not less than the limits set forth in Item 17 of the Basic Lease Provisions (or current limit carried, which ever is greater), naming Landlord, the Mortgagees, and the Additional Insureds named in Item 16 of the Basic Lease Provisions as additional insureds, and including a cross-liability or severability of interests endorsement, and (iv) such other insurance in such form and amounts as may be required by Landlord or the Mortgagees from time to time. Landlord or Landlord's Agents on behalf of Landlord may, at Landlord's election, obtain liability insurance in such amounts and on such terms as Landlord shall determine, and the cost thereof shall be included in Maintenance Expenses and paid by Tenant in the manner described in Section 7.1.

11.4 Hazardous Materials. In the event Landlord consents to Tenant's use, generation or storage of Hazardous Materials on, under or about the Premises pursuant to Section 6.2, Landlord shall have the continuing right to require Tenant, at Tenant's sole cost and expense, to purchase insurance specified and approved by Landlord, with coverage of no less than Five Million Dollars ($5,000,000.00), insuring (i) any Hazardous Materials shall be removed from the Premises, (ii) the Premises shall be restored to a clean, neat, attractive health, safe and

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sanitary condition, and (iii) any liability of Tenant, Landlord and Landlord's Agents arising from such Hazardous Materials.

11.5 Deductibles; Blanket Coverage. Any policy of insurance required pursuant to this Lease containing a deductible exceeding Ten Thousand Dollars ($10,000.00) per occurrence must be approved in writing by Landlord prior to the issuance of such policy. Tenant shall be solely responsible for the payment of any deductible. Any insurance required of Tenant pursuant to this Lease may be provided by means of a so-called "blanket policy", so long as (i) the Premises are specifically covered (by rider, endorsement or otherwise), (ii) the limits of the policy are applicable on a "per location" basis to the Premises and provide for restoration of the aggregate limits, and (iii) the policy otherwise complies with the provisions of this Lease.

11.7 Sufficiency of Coverage. Neither Landlord nor any of Landlord's Agents makes any representation that the types of insurance and limits specified to be carried by Tenant under this Lease are adequate to protect Tenant. If Tenant believes that any such insurance coverage is insufficient, Tenant shall provide, at its own expense, such additional insurance as Tenant deems adequate. Nothing contained herein shall limit Tenant's liability under this Lease, and Tenant's Liability under any provision of this Lease, including without limitation under any indemnity provisions, shall not be limited to the amount of any insurance obtained.

11.8 Insurance Requirements. Tenant's insurance (i) shall be in a form satisfactory to Landlord and the Mortgagees and shall be carried with companies that have a general policyholder's rating of not less than "A" and that are determined by Landlord, in its sole discretion, as financially sound on a current basis, (ii) shall provide that such policies shall not be subject to material alteration or cancellation except after at least thirty (30) days prior written notice to Landlord, and (iii) shall be primary, and any insurance carried by Landlord or Landlord's Agents shall be noncontributing. Tenant's policy or policies, or duly executed certificates for them in the form and content acceptable to Landlord, shall be deposited with Landlord prior to the Commencement Date, and prior to renewal of such policies. If Tenant fails to procure and maintain the insurance required to be procured by Tenant under this Lease, Landlord may, but shall not be required to, order such Insurance at Tenant's expense. All sums reasonably disbursed, deposited or incurred by Landlord in connection therewith, including, but not limited to, all costs, expenses and actual attorneys' fees, shall be due and payable by Tenant to Landlord, as an item of Additional Rent, on demand by Landlord, together with interest thereon at the Applicable Rate from the date of such demand until paid by Tenant.

11.9 Impound Funds. If requested by any Mortgagees to whom Landlord has granted a security interest in the Premises, or if any Event of Default occurs under this Lease, Tenant shall, at Landlord's election, pay Landlord, concurrently with each payment of Monthly Rent, a sum equal to one-twelfth (1/12) of the annual insurance premiums payable to Tenant for all insurance which Tenant is required to obtain pursuant to this Article XI. Such sums (the "Impound Funds") shall be held by Landlord and applied to the payment of such insurance premium when due; provided, however, Landlord shall not be required to keep the impound funds separate from other funds, Tenant shall not be entitled to interest on the Impound Funds and no trust relationship shall be created with respect to the Impound Funds. The amount of the Impound Funds when unknown shall be reasonably estimated by Landlord. If the Impound Funds paid to Landlord by Tenant under this Section 11.9 are insufficient to discharge the obligation of Tenant to pay such insurance premiums as the same become due, Tenant shall pay to Landlord, within ten (10) days after Landlord's written request therefor, such additional sums necessary to pay such obligations. If an Event of Default has occurred, any balance remaining from the Impound Funds may, at the option of Landlord, be applied to any obligation then due under this Lease in lieu of being applied to the payment of insurance premiums. The unused portion of the Impound Funds, if any, shall be returned to Tenant within thirty
(30) days of the expiration of this lease or any termination of this Lease not resulting from an Event of Default, provided that Tenant has vacated the Premises in the manner required by this Lease.

11.10 Landlord's Disclaimer. Notwithstanding any other provisions of this Lease, and to the fullest extent permitted by law, Landlord and Landlord's Agents shall not be liable for any loss or damage to persons or property resulting from theft, vandalism, fire, explosion, falling materials, glass, tile or sheetrock, steam, gas, electricity, water or rain which may leak from an part of the Premises, or from the pipes, appliances or plumbing works therein or from the roof, street or subsurface or whatsoever, unless caused by or due to the sole active negligence or willful misconduct of Landlord. Landlord and Landlord's Agents shall not be liable for interference

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with light or air, or for any latent defect in the Premises except as otherwise expressly provided in this Lease. Tenant shall give prompt Notice to Landlord in case of a casualty, accident or repair needed to the Premises.

11.11 Waiver of Subrogation. Landlord, except to the extent Tenant's insurance covers loss to Landlord plus Tenant's obligation with respect to maintenance and repair and payment of insurance deductibles hereunder, and Tenant each hereby waives all rights of recovery against the other and the other's agents on account of loss and damage occasioned to such waiving party to the extent only that such loss or damage is insured against under any insurance policies required by this Article XI (and to the extent such insurance is inadequate to cover such loss, this waiver shall not apply to amounts of loss above such coverage). Tenant and Landlord shall, upon obtaining policies of insurance required hereunder, give notice to the insurance carriers that the foregoing waiver of subrogation is contained in this lease. Notwithstanding the foregoing, it is agreed that in the event that any loss is due to the act, omission or negligence or willful misconduct of Tenant or Tenant's Agents, Tenant's liability insurance shall be primary and shall cover all losses and damages prior to any other insurance hereunder.

ARTICLE XII

DAMAGE OR DESTRUCTION

12.1 Landlord's Obligation to Rebuild. If the Premises are damaged or destroyed by fire or other casualty (a 'Casualty"), Tenant shall promptly give notice thereof to Landlord, and Landlord shall thereafter repair the Premises as set forth in Sections 12.4 and 12.5 unless Landlord has the right to terminate this Lease as provided in Section 12.2 and Landlord elects to so terminate or Tenant has the right to terminate this Lease as provided in Section 12.3 and Tenant elects to so terminate.

12.2 Landlord's Right to Terminate. Landlord shall have the right to terminate this Lease following a Casualty if any of the following occurs: (i) insurance proceeds (together with any additional amounts tenant elects, at its option, to contribute) are not available to Landlord to pay one hundred percent (100%) of the cost to fully repair the Premises, excluding the deductible (for which Tenant shall pay such deductible); (ii) Landlord's Architect determines that the Premises cannot, with reasonable diligence, be fully repaired by Landlord (or cannot be safety repaired because of the presence of hazardous factors, including, but not limited to, Hazardous Materials, earthquake faults, radiation, chemical waste and other similar dangers) within one hundred eighty
(180) days after the date of such Casualty; (iii) the Premises are destroyed or damaged during the last twelve (12) months of the Term; or (iv) an Event of Default has occurred and is continuing at the time of such Casualty. If Landlord elects to terminate this Lease following a Casualty pursuant to this
Section 12.2, Landlord shall give Tenant Notice of its election to terminate within thirty (30) days after Landlord has knowledge of such Casualty, and this Lease shall terminate fifteen (15) days after the date of such Notice.

12.3 Tenant's Right to Terminate. Subject to the later terms hereof, Tenant shall have the right to terminate this Lease following the destruction of the Premises (or damage to the Premises so extensive as to reasonably prevent Tenant's substantial use and enjoyment of the remises) if any if the following occurs: (i) the Premises cannot, with reasonable diligence, be fully repaired by Landlord within one hundred eighty (180) days after the date of the damage or destruction, as determined by Landlord's Architect; (ii) the Premises cannot safely be repaired because of the presence of hazardous factors, including Hazardous Materials, earthquake faults, radiation, chemical waste and other similar dangers; or (iii) the damage or destruction occurs during the last twelve (12) months of the Term and cannot, with reasonable diligence, be fully repaired by Landlord within ninety (90) days after the date of the destruction or damage, as determined by Landlord's Architect. Notwithstanding the foregoing, Tenant shall not have the right to terminate under this Section 12.3 if (a) an Event of Default has occurred and is continuing at the time of such damage or destruction or at the time of exercising the right to terminate, or
(b) the damage or destruction was caused, in whole or in part, by the act or omission of Tenant or Tenant's Agents. If Tenant elects to terminate this Lease pursuant to this Section 12.3, Tenant shall give Landlord Notice of its election to terminate within ten (10) days after the date of such damage or destruction, and this Lease shall terminate thirty (30) days after the date of such Notice.

12.4 Effect of Termination. If this Lease is terminated following a Casualty pursuant to Section 12.2 or Section 12.3, Landlord shall, subject to the rights of the Mortgagees, be entitled to receive and retain all the insurance proceeds resulting from or attributable to such Casualty, except for those proceeds payable under policies

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obtained by Tenant which specifically insure Tenant's Personal Property. If neither party exercises any such right to terminate this Lease, this Lease will continue in full force and effect, and Landlord shall, promptly following the tenth (10th) day after the date of such Casualty and receipt of the amounts set forth in clause (i) of Section 12.2, commence the process of obtaining necessary permits and approvals of the repair of the Premises, and shall commence such repair and prosecute the same diligently to completion as soon thereafter as is practicable. In the event that such repair is not completed within 225 days following the date of such Casualty, Tenant shall have the right, as its sole and exclusive remedy, to terminate this Lease by providing Landlord with written notice thereof within 5 days following the lapse of such 225 day period, and this Lease shall terminate upon such timely notice. In the event Tenant fails to provide Landlord with such notice of termination within such 5 day period, this Lease shall continue in full force and effect. Tenant shall fully cooperate with Landlord in removing Tenant's Personal Property and any debris from the Premises to facilitate the making of such repairs.

12.5 Limited obligation to Repair. Landlord's obligation, should it elect or be obligated to repair the Premises following a Casualty, shall be limited to the basic Building and Tenant Improvements and Tenant shall, at its expense, replace or fully repair all Tenant's Personal Property and any Alterations installed by Tenant existing at the time of such Casualty. If the Premises are to be repaired in accordance with the foregoing, Tenant shall make available to Landlord any portion of insurance proceeds it receives which are allocable to the Tenant Improvements.

12.6 Abatement of Monthly Rent. During any period when Landlord or Landlord's Architect reasonably determines that there is substantial interference with Tenant's use of the Premises by reason of a Casualty, Monthly Rent shall be temporarily abated in proportion to the degree of such substantial interference, but only to the extent of any business interruption or loss of income insurance proceeds received by Landlord from Tenant's insurance described in Section 11.2. Such abatement shall commence upon the date Tenant notifies Landlord of such Casualty and shall end upon the Substantial Completion of the repair of the Premises which Landlord undertakes or is obligated to undertake hereunder. Tenant shall not be entitled to any compensation or damages from Landlord for loss of the use of the Premises. Tenant's Personal Property or other damage or any inconvenience occasioned by a Casualty or by the repair or restoration of the Premises thereafter, including, but not limited to, any consequential damages, opportunity costs or lost profits incurred or suffered by Tenant, Tenant hereby waives the provisions of Section 1932(2) and Section 1933(4) of the California Civil Code, and the provisions of any similar or successor statutes.

12.7 Landlord's Determination. The determination in good faith by Landlord's Architect of or relating to the estimated cost of repair of any damage, replacement cost, the time period required for repair or the interference with or suitability of the Premises for Tenant's use or occupancy shall be conclusive for purposes of this Article XII and Article XIII.

ARTICLE XIII

CONDEMNATION

13.1 Total Taking - Termination. If title to the Building or so much thereof is taken for any public or quasi-public use under any statute or by right of eminent domain so that reconstruction of the Building will not result in the Building being reasonably suitable for Tenant's continued occupancy for the users and purposes permitted by this Lease, the Lease shall terminate as of the date possession of the Building or part thereof is to taken.

13.2 Partial Taking. If any part of the Building is taken for any public or quasi-public use under any statute or by right o eminent domain and the remaining part is reasonably suitable for Tenant's continued occupancy for the uses permitted by this Lease, this Leas shall, as to the part so taken, terminate as of the date that possession of such part of the Building is taken and the Monthly Rent shall be reduced in the same proportion that the floor area of the portion of the Building so taken (less any addition thereto by reason of any reconstruction) bears to the original Building Square Footage, as reasonably determined by Landlord or Landlord's Architect. Landlord shall, at its own cost and expense, make all necessary repairs or alterations to the Building so as to make the portion of the Building not taken a complete architectural unit, such work shall not, however, exceed the scope of the work done by Landlord in originally construction the Building. If severance damages from the condemning authority are not available to Landlord insufficient amounts to permit such restoration, Landlord may terminate this Lease upon Notice to Tenant. Monthly Rent due and payable hereunder shall be temporarily abated during such restoration

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period in proportion to the degree to which there is substantial interference with Tenant's use of the Building, as reasonably determined by Landlord or Landlord's Architect. Each party hereby waives the provisions of Section 1265.130 of the California Code of Civil Procedure and any present or future law allowing either party to petition the Superior Court to terminate this Lease in the event of a partial taking of the Building or Premises.

13.3 Taking of Parking Areas. In the event there shall be a taking of Outside Areas or portions of the Common Area made available to Tenant for vehicle parking under this Lease such that Landlord can no longer provide to Tenant the number of vehicle parking spaces set forth in Item 15 of the Basic Lease Provisions, Landlord may substitute reasonably equivalent parking spaces in a location reasonably cost to the Building; provided that if Landlord fails to make such substitution within one hundred eighty (180) days following the taking and if the taking materially impairs Tenant's use and enjoyment of the Premises, Tenant may, at its option, terminate this Lease by giving Landlord Notice of its election to terminate within thirty (30) days after the expiration of such 180-day period. In the event of such termination by Tenant, this Lease shall terminate thirty (30) days after the date of such Notice. If this Lease is not so terminated by Tenant, there shall be no abatement of Rent and this Lease shall continue in full force and effect.

13.4 No Apportionment of Award. No award for any partial or total taking shall be apportioned, it being agreed and understood that Landlord shall be entitled to the entire award for any partial or entire taking. Tenant assigns to Landlord its interest in any award which may be made in such taking or condemnation, together with any and all rights of Tenant arising in or to the same or any part thereof. Nothing contained herein shall be deemed to give Landlord any interest in or require Tenant to assign to Landlord any separate award made to Tenant for the taking of Tenant's Personal Property, for the interruption of Tenant's business or its moving costs, or for the loss of its goodwill.

13.5 Temporary Taking. No temporary taking of the Building (which for purposes hereof shall mean a taking of all or any part of the Building for one hundred eighty (180) days or less) shall terminate this Lease or give Tenant any right to any abatement of Rent. Any award made to Tenant by reason of such temporary taking shall belong entirely to Tenant and Landlord shall not be entitled to share therein. Each party agrees to execute and deliver to the other all instruments that may be required to effectuate the provisions of this
Section 13.5.

13.6 Sale Under Threat of Condemnation. A sale made in good faith to any authority having the power of eminent domain, either under threat of condemnation or while condemnation proceedings are pending, shall be deemed a taking under the power of eminent domain for all purposes of this Article XIII.

ARTICLE XIV

ASSIGNMENT AND SUBLETTING

14.1 Prohibition. Tenant shall not directly or indirectly, voluntarily or by operation of law, assign (which term shall include any transfer, assignment, pledge, mortgage or hypothecation) this Lease, or any right or interest hereunder, or sublet the Premises or any part thereof, or allow any other person or entity to occupy or use all or any part of the Premises without first obtaining the written consent of Landlord in each instance, which consent shall not be unreasonably withheld. No assignment, encumbrance, subletting, or other transfer in violation of the terms of this Article XIV, whether voluntary or involuntary, by operation of law, under legal process or proceedings, by receivership, in bankruptcy, or otherwise shall be valid or effective and, at the option of Landlord, shall constitute an Event of Default under this Lease. To the extent not prohibited by provisions of the Bankruptcy Code of 1978, 11 U.S.C. Section 101 et seq. (the "Bankruptcy Code"), Tenant on behalf of itself, creditors, administrators and assigns waives the applicability of Sections 541(c) and 365(e) of the Bankruptcy Code unless the proposed assignee of the trustee for the estate of the bankrupt meets Landlord's standards for consent as set forth below, Landlord has entered into this Lease with Tenant in order to obtain for the benefit of the Project the unique attraction of Tenant's name and business; the foregoing prohibition on assignment or subletting is expressly agreed to by Tenant in consideration of such fact. If this Lease is assigned to any person or entity pursuant to the provisions of the Bankruptcy Code, any and all monies or other considerations payable or otherwise to be delivered in connection with such assignment shall be paid or delivered to Landlord, shall be and remain the exclusive property of Landlord and shall not constitute property of Tenant or the estate of Tenant within the meaning of the Bankruptcy Code. Any and all monies or other considerations constituting Landlord's property under the preceding sentence not paid or delivered to Landlord shall be held in trust for the benefit of Landlord and be promptly paid or

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delivered to Landlord. Any person or entity to which this Lease is assigned pursuant to the provisions of the Bankruptcy Code shall be deemed without further act or deed to have assumed all of the obligations arising under this Lease on and after the date of such assignment. Any such assignee shall upon demand execute and deliver to Landlord an instrument confirming such assumption.

14.2 Landlord's Consent. In the event Landlord consents to any assignment or subletting, such consent shall not constitute a waiver of any of the restrictions of this Article XIV and the same shall apply to each successive assignment or subletting hereunder, if any, in no event shall Landlord's consent to an assignment or subletting affect the continuing primary liability of Tenant (which, following assignment, shall be joint and several with the assignee), or relieve Tenant of any of its obligations hereunder without an express written release being given by Landlord. In the even that Landlord shall consent to an assignment or subletting under this Article XIV, such assignment or subletting shall not be effective until the assignee or sublessee shall assume all of the obligations of this Lease on the part of Tenant to be performed or observed and whereby the assignee or sublessee shall agree that the provisions contained in this Lease shall, notwithstanding such assignment or subletting, continue to be binding upon it with respect to all future assignments and sublettings. Such assignment or sublease agreement shall be duly executed and a fully executed copy thereof shall be delivered to Landlord, and Landlord may collect Monthly Rent and Additional Rent due hereunder directly from the assignee or sublessee. Collection of Monthly Rent and Additional Rent directly from as assignee or sublessee shall not constitute a consent or a waiver of the necessity of consent to such assignment or subletting, nor shall such collection constitute a recognition of such assignee or sublessee as the Tenant hereunder or a release of Tenant from the performance of all of its obligations hereunder.

14.3 Information. Regardless of whether Landlord's consent is required under this Article XIV, Tenant shall notify Landlord in writing of Tenant's intent to assign this Lease or any right or interest hereunder, or to sublease the Premises or any part thereof, and of the name of the proposed assignee or sublessee, the nature of the proposed assignee's or sublessee's business to be conducted on the Premises, the terms and provisions of the proposed assignment or sublease, a copy of the proposed assignment or sublease form, and such other information as Landlord may reasonably request concerning the proposed assignee or sublessee, including, but not limited to, net worth, income statements and other financial statements for a two-year period preceding Tenant's request for consent, evidence of insurance complying with requirements of Article XI, a completed Environmental Questionnaire from the proposed assignee or sublessee, and the fee described in Section 14.7.

14.4 Standard for Consent. Landlord shall, within thirty (30) days of receipt of such Notice and all information requested by Landlord concerning the proposed assignee or sublessee, elect to take on of the following actions:

(a) consent to such proposed assignment or sublease;

(b) refuse to consent to such proposed assignment or sublease, which refusal shall be on reasonable grounds; or

(c) If Tenant proposes to sublease all or part of the Premises for the entire remaining Term, Landlord may, at its option exercised by thirty (30) days Notice to Tenant, elect to recapture such portion of the Premises as Tenant proposes to sublease and as of the thirtieth (30th) day after Landlord so notifies Tenant of its election to recapture, this Lease shall terminate as to the portion of the Premises recaptured and the Monthly Rent payable under this Lease shall be reduced in the same proportion that the floor area of that portion of the Premises so recaptured bears to the Building Square Footage prior to such recapture.

Tenant agrees, by way of exempt and without limitation, that it shall not be unreasonable for Landlord to withhold its consent to a proposed assignment or subletting if any of the following situations exist or may exist:

(i) Landlord determines that the proposed assignee's or sublesses's use of the Premises conflicts with Article V or Article VI, presents an unacceptable risk, as determined by Landlord, under Article VI (and Landlord may require such assignee or sublessee to complete the Environmental Questionnaire in the manner described in Section 6.5 prior to making such determination), or conflicts with any other provision under this Lease;

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(ii) Landlord determines that the proposed assignee or sublessee is not as financially responsible as Tenant as of the date of Tenant's request for consent or as of the effective date of such assignment or subletting;

(iv) Landlord determines that the proposed assignment or subletting would breach a covenant, condition or restriction in some other lease, financing agreement or other agreement relating to the Project, the Building, the Premises or this Lease;

(v) Landlord determines that the proposed assignee or sublessee (A) has been required by any prior Landlord, lender or governmental authority to take remedial action in connection with Hazardous Materials contaminating a property if such contamination resulted from the proposed assignee's or sublessee's actions or use of the property in question, or (B) is subject to any enforcement order issued by any governmental authority in connection with the use, disposal or storage of a hazardous material; or

(vi) An Event of Default has occurred and is continuing at the time of Tenant's request for Landlord's consent, or as of the effective date of such assignment or subletting.

Tenant acknowledges that if Tenant has any exterior sign rights under this Lease, such rights are personal to Tenant and may not be assigned or transferred to an assignee of this Lease or sublessee of the Premises without Landlord's prior written consent, which consent may be withheld in Landlord's sole and absolute discretion.

14.5 Bonus Value. Tenant agrees that fifty percent (50%) of any amounts paid by the assignee of sublessee, however described, in excess of (i) the Monthly Rent payable by Tenant hereunder (or, in the case of sublease of a portion of the Premises, in excess of the Monthly Rent reasonably allocable to such portion), plus (ii) Tenant's direct out-of-pocket costs which Tenant certifies to Landlord have been paid to provide occupancy related services to such assignee or sublessee of a nature commonly provided by Landlords of similar space, shall be the property of Landlord and such amounts shall be payable directly to Landlord by the assignee or sublessee. At Landlord's request, a written agreement shall be entered into by and among Tenant, Landlord and the proposed assignee or sublessee confirming the requirements of this Section 14.5.

14.6 Certain Transfers. The sale of all or substantially all of Tenant's assets (other than bulk sales in the ordinary course of business), or, if Tenant is a corporation, an unincorporated association, or a partnership, the transfer, assignment or hypothecation of any stock or interest in such corporation, association or partnership in the aggregate in excess of fifty percent (50%) which such transfer, assignment or hypothecation is also accompanied by a change in Tenant's management (excluding, however, a transfer of publicly trades shares of stock in the aggregate in excess of fifty percent (50%) shall be deemed an assignment within the meaning and provisions of this Article XIV.

14.7 Landlord's Fee and Expenses. If Tenant requests Landlord's consent to an assignment or subletting by Tenant under this Lease, Tenant shall pay to Landlord all of the Landlord's out-of-pocket expenses, including, but not limited to, attorneys' fees reasonably incurred related to such assignment or subletting by Tenant, whether or not the assignment or subletting is approved.

14.8 Transfer of the Premises by Landlord. Upon any conveyance of the Premises an assignment by Landlord of this Lease, Landlord shall and is hereby entirely released from all liability under any and all of its covenants and obligation contained in or derived from this Lease occurring after the date of such conveyance and assignment, and Tenant agrees to attorn to any entity purchasing or otherwise acquiring the Premises.

ARTICLE XV

DEFAULTS AND REMEDIES

15.1 Tenant's Default. At the option of the Landlord, a default under this Lease by Tenant shall exist if any of the following events shall occur (each is called an "Event of Default"):

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(a) Tenant fails to pay the Rent payable hereunder, as and when due, for a period of three (3) days after Notice by Landlord; provided, however, the Notice given hereunder shall be in lieu of, and not in addition to, any notice required under Section 1161, ET SEQ., of the California Code of Civil Procedure;

(b) Tenant attempts to make or suffers to be made any transfer, assignment or subletting, except as provided in Article XIV hereof;

(c) Any of Tenant's rights under this Lease are sold or otherwise transferred by or under court order or legal process or otherwise or if any of the actions described in Section 15.2 are taken by or against Tenant or any Guarantor;

(d) The Premises are used for any purpose other than as permitted pursuant to Article V;

(e) Any representation or warranty given by Tenant under or in connection with this Lease proves to be materially false or misleading;

(f) Tenant fails to timely comply with the provisions of Article VI ("Hazardous Materials"), Article XIV ("Assignment and Subletting"), Article XVI ("Subordination; Estoppel Certificate; Financials"), Section 21.5 ("Modifications for Mortgagees") or Section 21.19 ("Authority"); or

(g) Tenant fails to observe, keep, perform or cure within fifteen (15) days after Notice by Landlord any of the other terms, covenants, agreements or conditions contained in this Lease or those set forth in any other agreements or rules or regulations which Tenant is obligated to observe or perform. In the event such default reasonably could not be cured or corrected within such fifteen-day period, but is reasonably susceptible to cure or correction, then Tenant shall not be in default hereunder if Tenant commences the cure or correction of such default within such fifteen-day period and diligently prosecutes the same to completion after commencing such cure or correction. The Notice required by this subparagraph 15.1(b) shall be in lieu of, and not in addition to, any notice required under Section 1161, ET SEQ., of the California Code of Civil Procedure.

Notices given under this Section 15.1 shall specify the alleged default and shall demand that Tenant perform the provisions of this Lease or pay the Rent that is in arrears, as the case may be, within the applicable period of time, or quit the Premises. No such Notice shall be deemed a forfeiture or a termination of this Lease unless Landlord so elects in the Notice.

15.2 Bankruptcy or Insolvency. In no event shall this Lease be assigned or assignable by operation of law and in no event shall this Lease be an asset of Tenant in any receivership, bankruptcy, insolvency or reorganization proceeding. In the event:

(a) A court makes or enters any decree or order adjudging Tenant to be insolvent, or approving as properly filled by or against Tenant a petition seeking reorganization or other arrangement of Tenant under any provisions of the Bankruptcy Code or any applicable state law, or directing the winding up or liquidation of Tenant and such decree or order shall have continued for a period of thirty (30) days;

(b) Tenant makes or suffers any transfer which constitutes a fraudulent or otherwise avoidable transfer under any provisions of the Bankruptcy Code or any applicable state law;

(c) Tenant assigns its assets for the benefit of its creditors; or

(d) The material part of the property of Tenant or any property essential to Tenant's business or of Tenant's interest in this Lease is sequestered, attached or executed upon, and Tenant fails to secure a return or release of such property within ten (10) days thereafter, or prior to sale pursuant to such sequestration, attachment or levy, whichever is earlier;

then this Lease shall, at Landlord's election, immediately terminate and be of no further force or effect whatsoever, without the necessity for any further action by Landlord, except that Tenant shall not be relieved of obligations

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which have accrued prior to the date of such termination. Upon such termination, the provisions herein relating to the expiration or earlier termination of this Lease shall control and Tenant shall immediately surrender the Premises in the condition required by the provisions of this Lease. Additionally, Landlord shall be entitled to all relief, including recovery of damages from tenant, which may from time to time be permitted, or recoverable, under the Bankruptcy Code or any other applicable state laws.

15.3 Landlord's Remedies. Upon the occurrence of an Event of Default, then, in addition to and without waiving any other rights and remedies available to Landlord at law or in equity or otherwise provided in this Lease, Landlord may, at its option, cumulatively or in the alternative, exercise the following remedies:

(a) Landlord may terminate Tenant's right to possession of the Premises, in which case this Lease shall terminate and Tenant shall immediately surrender possession of the Premises to Landlord. No act by Landlord other than giving Notice to Tenant of Landlord's election to terminate Tenant's right to possession shall terminate this Lease. Acts of maintenance, efforts to relet the Premises, or the appointment of a receiver on Landlord's initiative to protect Landlord's interest under this Lease shall not constitute a termination of Tenant's right to possession. Termination shall terminate Tenant's right to possession of the Premises but shall not relieve Tenant of any obligation under this Lease which has accrued prior to the date of such termination. Upon such termination, Landlord shall have the right to re-enter the Premises, and remove all persons and property, and Landlord shall also be entitled to recover from Tenant:

(i) The worth at the time of award of the unpaid Monthly Rent and Additional Rent which had been earned at the time of termination;

(ii) The worth at the time of award of the amount by which the unpaid Monthly Rent and Additional Rent which would have been earned after termination until the time of award exceeds the amount of such rental loss that Tenant proves could have been reasonably avoided;

(iii) The worth at the time of award of the amount by which the unpaid Monthly Rent and Additional Rent for the balance of the Term after the time of award exceeds the amount of such rental loss that Tenant proves could be reasonably avoided;

(iv) Any other amount necessary to compensate Landlord for all the detriment proximately caused by Tenant's failure to perform its obligations under this Lease or which in the ordinary course of things would be likely to result from Tenant's default, including, but not limited to, the cost of recovering possession of the Premises, commissions and other expenses of reletting, including necessary repair, demolition and renovation of the Premises to the condition existing immediately prior to Tenant's occupancy, the unamortized portion of any Tenant Improvements and brokerage commissions funded by Landlord in connection with this Lease, the cost of rectifying any damage to the Premises occasioned by the act or omission of Tenant, reasonable attorneys' fees, and any other reasonable costs; and

(v) At Landlord's election, all other amounts in addition to or in lieu of the foregoing as may be permitted law.

As used in subsections (i) and (ii) above, the "worth at the time of award" shall be computed by allowing interest at the maximum legal rate permitted by law. As used in subsection (iii) above, the "worth at the time of award" shall be computed by discounting the amount at the discount rate of the Federal Reserve Bank of San Francisco at the time of award plus one percent (1%).

(b) Landlord may elect not to terminate Tenant's right to possession of the Premises, in which event this Lease will continue in full force and effect as long as Landlord does not terminate Tenant's right to possession, and Landlord may continue to enforce all of its rights and remedies under this Lease, including the right to collect all Rent as it becomes due. In the event that Landlord elects to avail itself of the remedy provided in this subparagraph 15.3(b), Landlord shall not unreasonably withhold its consent to an assignment or subletting of the Premises subject to the reasonable standards for Landlord's consent as are contained in this Lease. In addition, in the event Tenant has entered into a sublease which is valid under the terms of this Lease, Landlord may also, at its

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option, cause Tenant to assign to Landlord the Interest of Tenant under said sublease, including, but not limited to, Tenant's right to payment of Rent as it becomes due. Landlord may elect to enter the Premises and relet them, or any part of the, to third parties for Tenant's Premises, including, but not limited to, broker's commissions, expenses of cleaning and remodeling the Premises required by the reletting, attorneys' fees and like costs. Reletting can be for a period shorter or longer than the remaining Term of this Lease and for the entire Premises or any portion thereof. Tenant shall pay to Landlord the Monthly Rent and Additional Rent due under this lease on the dates the Monthly Rent and such Additional Rent are due, less the Rent Landlord actually collects from any reletting. Except as provided in the preceding sentence, if Landlord relets the Premises or any portion thereof, such reletting shall not relieve Tenant of any obligation hereunder. Notwithstanding the above, no act by Landlord allowed by this subparagraph 15.3(b) shall terminate this Lease unless Landlord notifies Tenant in writing that Landlord elects to terminate this Lease.

15.4 No Surrender. Tenant waives any right of redemption or relief from forfeiture under California Code of Civil Procedure Sections 1174 and 1179, or under any other present or future law in the event Tenant is evicted or Landlord takes possession of the Premises by reason of an Event of Default. No act or thing done by Landlord or Landlord's Agents during the Term shall be deemed an acceptance of a surrender of the Premises, an no agreement to accept a surrender shall be valid unless in writing and signed by Landlord. No employee of Landlord or of Landlord's Agents shall have any power to accept the keys to the Premises prior to the termination of this Lease, and the delivery of the keys to any employee shall not operate as a termination of this Lease or a surrender of the Premises.

15.5 Interest on Late Payments. Any Rent due under this Lease that is not paid to Landlord within three (3) days of the date when due shall commence to bear interest at the Applicable Rate until fully paid. Neither the accrual nor the payment of Interest shall cure any default by Tenant under this Lease.

15.6 Attorneys' and Other Fees. All sums reasonably incurred by Landlord in connection with an Event of Default or holding over of possession by Tenant after the expiration or termination of this Lease, including, but not limited to, all costs, expenses and actual accountants', appraisers', attorneys' and other professional fees, and any collection agency or other collection charges, shall be due and payable by Tenant to Landlord on demand, and shall bear Interest at the Applicable Rate from the date of such demand until paid by Tenant. In addition, in the event that any action shall be instituted by either of the parties hereto for the enforcement of any of its rights in and under this Lease, the party in whose favor judgment shall be rendered shall be entitled to recover from the other party all expenses reasonably incurred by the prevailing party in such action, including actual costs and reasonable attorneys' fees.

15.7 Landlord's Default. Landlord shall not be deemed to be in default in the performance of any obligation required to be performed by it hereunder unless it has failed to perform such obligation within thirty (30) days after receipt of Notice by Tenant to Landlord (and the Mortgages who have provided Tenant with notice) specifying the nature of such default; provided, however, that if the nature of Landlord's obligation is such that more than thirty (30) days are required for its performance, then Landlord shall not be deemed to be in default if it shall commence such performance within such thirty (30) day period and thereafter diligently prosecutes the same to completion.

15.8 Limitation of Landlord's Liability. The obligations of Landlord do not constitute the personal obligations of the individual partners, trustees, directors, officers or shareholders of Landlord or its constituent partners. If Landlord shall fail to perform any covenant, term, or condition of this Lease upon Landlord's part to be performed, Tenant shall recover a money judgment against Landlord, such judgment shall be satisfied only out of the proceeds of sale received upon execution of such judgment and levied thereon against the right, title and interest of Landlord in the Building and out of rent or, other Income from such property receivable by Landlord or out of consideration received by Landlord from the sale or other disposition of all or any part of Landlord's right, title or Interest in the Building, and no action for any deficiency may be sought or obtained by Tenant.

15.9 Mortgage Protection. Upon any default on the part of Landlord, Tenant will give notice by registered or certified mail to any Mortgagee who has provided Tenant with notice of its interest together with an address for receiving notice, and shall offer such Mortgagee a reasonable opportunity to cure the default (which in no event shall be less than sixty (60) days), including time to obtain possession of the Premises by power of sale or a

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judicial foreclosure, if such should prove necessary, to effect a cure. Tenant agrees that each of the Mortgagees to whom this Lease has been assigned by Landlord is an express third party beneficiary hereof. Tenant shall not make any prepayment of Monthly Rent more than one (1) month in advance without the prior written consent of such Mortgage. Tenant waives any right under California Civil Code Section 1950.5 or any other present or future law to the collection of any deposit from such Mortgagee or any purchaser at a foreclosure sale of such Mortgagee's Interest unless such Mortgage or such purchaser shall have actually received and not refunded the deposit. Tenant agrees to make all payments under this Lease to the Mortgages with the most senior encumbrance upon receiving a direction, in writing, to pay said amounts to such Mortgagee. Tenant shall comply with such written direction to pay without determining whether an event of default exists under such Mortgagee's Loan to Landlord.

15.10 Landlord's Right to Perform. If Tenant shall at any time fail to make any payment or perform any other act on its part to be made or performed under this Lease. Landlord may (but shall not be obligated to), at Tenant's expense, and without waiving or releasing Tenant from any obligation of Tenant under this Lease, make such payment or perform such other act to the extent Landlord may deem desirable, and in connection therewith, pay expenses and employ counsel. All sums paid by Landlord and all penalties, interest and costs, including, but not limited to, collection costs and attorneys' fees reasonably incurred in connection therewith, shall be due and payable by Tenant to Landlord, as an Item of Additional Rent, on demand by Landlord, together with Interest thereon at the Applicable Rate from the date of such demand until paid by Tenant.

15.11 Limitation of Actions Against Landlord. Any claim, demand or right of any kind by Tenant which is based upon or arises in connection with this Lease shall be barred unless Tenant commences an action thereon within six
(6) months after the date that the act, omission, event or default upon which the claim, demand or right arises, has occurred.

15.12 Waiver of Jury Trial. To the full extent permitted by law, Tenant hereby waives the right to trial by jury in any action, proceeding or counterclaim brought by Tenant on any matter whatsoever arising out of or in any way connected with this Lease, the relationship of Landlord and Tenant, Tenant's use or occupancy of the Premises and/or any claim of injury or damage.

ARTICLE XVI

SUBORDINATION; ESTOPPEL CERTIFICATE; FINANCIALS

16.1. Subordination, Attornment and Non-Disturbance. Without the necessity of any additional document being executed by Tenant for the purpose of effecting a subordination, and at the election of Landlord or any Mortgagee or any ground lessor with respect to the land of which the Premises are a part, this Lease shall be subject and subordinate at all times to (i) all ground leases or underlying leases which may now exist or hereafter be executed affecting the Building, and (ii) the lien of any Mortgage which may now exist or hereafter be executed in any amount for which the Project, the Building, ground leases or underlying leases, or Landlord's interest or estate in any of said items is specified as security. Landlord or any such Mortgagee or ground lessor shall have the right, at its election, to subordinate or cause to be subordinated any such ground leases or underlying leases or any such liens to this Lease. No subordination shall permit material interference with Tenant's rights hereunder, and any ground lessor or Mortgagee shall recognize Tenant and its permitted successors and assigns as the tenant of the Premises and shall not disturb Tenant's right to quiet possession of the Premises during the Term so long as no Event of Default has occurred and is continuing under this Lease. If Landlord's Interest in the Premises is acquired by any ground lessor or Mortgagee, or in the event proceedings are brought for the foreclosure of, or in the event of exercise of the power of sale under, any Mortgage made by Landlord covering the Premises or any part thereof, or in the event a conveyance in lieu of foreclosure is made for any reason, Tenant shall, notwithstanding any subordination and upon the request of such successor in interest to Landlord, attorn to and become the Tenant of the successor in interest to Landlord and recognize such successor in interest as the Landlord under this Lease. Although this Section 16.1 is self-executing, Tenant covenants and agrees to execute and deliver, upon demand by Landlord and in the form requested by Landlord, or any Mortgagee or ground lessor, any additional documents evidencing the priority or subordination of this Lease with respect to any such ground lessee or underlying leases or the lien of any such Mortgagee, or evidencing the attornment of Tenant to any successor in interest to Landlord as herein provided, Tenant's failure to timely execute and deliver such additional documents shall, at Landlord's option, constitute an Event of Default hereunder.

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16.2. Estoppel Certificate. Tenant shall within ten (10) days following written request by Landlord, execute and deliver to Landlord any documents, including estoppel certificates, in a form required by Landlord (i) certifying that this Lease is unmodified and in full force and effect or, if modified, attaching a copy of such modification and certifying that this Lease, as so modified, is In full force and effect and the date to which the Rent and other charges are paid in advance, if any, (ii) acknowledging that there are not, to Tenant's knowledge, any uncured defaults on the part of the Landlord or stating the nature of any uncured defaults, (iii) evidencing the status of this Lease as may be required by a Mortgagee or a purchaser of the Premises, (iv) certifying the current Monthly Rent amount and the amount and form of Security Deposit on deposit with Landlord, and (v) certifying to such other Information as Landlord, Landlord's Agents, Mortgagees and prospective purchasers may reasonably request, including, but not limited to, any requested information regarding Hazardous Materials. Tenant's failure to deliver an estoppel certificate within ten (10) days after delivery of Landlord's written request therefor shall constitute an Event of Default hereunder.

16.3. Financial Information. Tenant shall deliver to Landlord, prior to the execution of this Lease, and within ten (10) days following written request therefor by Landlord at any time during the Term, Tenant's current financial statements, and Tenant's financial statements for the two (2) years prior to the current fiscal financial statement's year, certified to be true, accurate and complete by the chief financial officer of Tenant, including a balance sheet and profit and loss statement for the most recent prior year (collectively, the "Statements"), which Statements shall accurately and completely reflect the financial condition of Tenant. Landlord agrees that it will keep the Statements confidential, except that Landlord shall have the right to deliver the same to any proposed purchaser of the Premises, the Project or any portion thereof, and to the Mortgagees of Landlord or such purchaser. Tenant acknowledges that Landlord is relying on the Statements in its determination to enter into his Lease, and Tenant represents to Landlord, which representation shall be deemed made on the date of this Lease and again on the Commencement Date, that no material change in the financial condition of Tenant, as reflected in the Statements, has occurred since the date Tenant delivered the Statements to Landlord. If any material change in Tenant's financial condition, as reflected in the Statements, to inform Landlord of any such material change, Landlord shall have the right, in addition to any other rights and remedies of Landlord, to terminate this Lease by notice to Tenant given within thirty (30) days after Landlord learns of such material change.

ARTICLE XVII

SIGNS AND GRAPHICS

Landlord shall designate the location on the Premises for one (1) or more exterior identification signs for Tenant on the Project for one (1) monument identification sign for Tenant. Prior to installation and thereafter throughout the Term, Tenant shall, at its sole cost and expense, secure all necessary governmental permits and approvals relating to the installation and continued maintenance of such permitted signs, and Landlord makes no representation or warranty to Tenant as to the availability of such permits and approvals. Tenant shall have no right to maintain identification signs in any other location in, on or about the Premises and shall not display or erect any other signs, displays or other advertising materials that are visible from the exterior of the Building. The size, design, color and other physical aspects of permitted signs shall be subject to Landlord's written approval prior to installation, which approval may be withheld in Landlord's discretion, any Restrictions and any applicable municipal or other governmental permits and approvals. All such signs and graphics shall conform to the Sign criteria established by Landlord. The cost of all signs and graphics, including the installation, maintenance and removal thereof, shall be at Tenant's sole cost and expense. If Tenant fails to maintain its signs, or if Tenant fails to remove same upon termination of this Lease and repair any damage caused by such removal (including, but not limited to, repainting the affected area, if required by Landlord), Landlord may do so at Tenant's expense. All sums reasonably disbursed, deposited or incurred by Landlord in connection with such removal, including, but not limited to, all costs, expenses and actual attorneys' fees, shall be due and payable by Tenant to Landlord on demand by Landlord, together with interest thereon at the Applicable Rate from the date of such demand until paid by Tenant.

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ARTICLE XVIII

QUIET ENJOYMENT

Landlord covenants that Tenant, upon performing the terms, conditions and convenants of this Lease, shall have quiet and peaceful possession of the Premises as against any person claiming the same by, through or under Landlord.

ARTICLE XIX

SURRENDER; HOLDING OVER

19.1. Surrender of the Premises. Upon the expiration or earlier termination of this Lease, and subject to Section 4.2 of the Addendum relating to the Dock Wall, tenant shall surrender the Premises to Landlord in its condition existing as of the Commencement Date, normal wear and tear and acts of God excepted, with all Interior walls in good repair, all carpets shampooed and cleaned, the HVAC equipment, plumbing, electrical and other mechanical installations to the condition existing as of the Commencement Date (or, with respect to any equipment or installations repaired by Landlord pursuant to
Section 3 of the Addendum, to the condition existing immediately following such repair) and all floors cleaned and waxed, all to the reasonable satisfaction of Landlord. Tenant shall remove from the Premises all of Tenant's Alterations which Landlord requires Tenant to remove pursuant to Section 8.1 and all Tenant's Personal Property, and shall repair any damage and perform any restoration work caused by such removal. If Tenant fails to remove such Alterations and Tenant's Personal Property which Tenant is authorized and obligated to remove pursuant to the above, and such failure continues after the termination of this Lease, Landlord may retain such property and all rights of Tenant with respect to it shall cease, or Landlord may place all or any portion of such property in public storage for Tenant's account. Tenant shall pay to Landlord, upon demand, the costs of removal of any such Alterations and Tenant's Personal Property and storage and transportation costs of same, and the cost of repairing and restoring the Premises, together with attorneys' fees and interest on said amounts at the Applicable Rate from the date of expenditure by Landlord. If the Premises are not so surrendered at the termination of this Lease, Tenant hereby agrees to Indemnify Landlord and Landlord's Agents against all loss or liability resulting from any delay by Tenant in so surrendering the Premises, including but not limited to, any claims made by any succeeding tenant, losses to Landlord due to lost opportunities to lease to succeeding tenants, and actual attorneys' fees and costs.

19.2. Holding Over. If Tenant remains in possession of all or any part of the Premises after the expiration of the Term with the prior written consent of Landlord, such possession shall constitute a month-to-month tenancy only and shall not constitute a renewal or extension for any further term. If Tenant remains in possession of all or any part of the Premises after the expiration of the Term without the prior written consent of Landlord, such possession shall constitute a tenancy at sufferance. In either of such events, Monthly Rent shall be increased to an amount equal to one hundred fifty percent (150%) of the Monthly Rent payable during the last month of the Term, and any other sums due hereunder shall be payable in the amounts and at the times specified in this Lease. Any such tenancy shall be subject to every other term, condition, and covenant contained in this Lease.

ARTICLE XX

CONSTRUCTION OF TENANT IMPROVEMENTS

The obligations of Landlord and Tenant, if any, with respect to the Tenant Improvements, are set forth in the Work Letter attached on EXHIBIT C. It is acknowledged and agreed that all Tenant Improvements under this lease are and shall be the property of Landlord from and after their installation.

ARTICLE XXI

MISCELLANEOUS AND INTERPRETIVE PROVISIONS

21.1 Broker. Landlord and Tenant each warrant and represent to the other that neither has had any dealing with any real estate broker, agent or finder in connection with the negotiation of this Lease or the

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introduction of the parties to this transaction, except for the Broker (whose commission shall be paid by Landlord), and that it knows of no other real estate broker, agent or finder who is or might be entitled to a commission or fee in connection with this Lease. In the event of any additional claims for brokers' or finders' fees with respect to this Lease, Tenant shall indemnify, hold harmless, protect and defend Landlord from and against such claims if they shall be based upon any statement or representation or agreement made by Tenant, and Landlord shall indemnify, hold harmless, protect and defend Tenant from and against such claims if they shall be based upon any statement, representation or agreement made by Landlord.

21.2 Examination of Lease. Submission of this Lease for examination or signature by Tenant does not create a reservation of or option to lease. This Lease shall become effective and binding only upon full execution of this Lease by both Landlord and Tenant.

21.3 No Recording. Tenant shall not record this Lease or any memorandum of this Lease without Landlord's prior written consent, but if Landlord so requests, Tenant agrees to execute, have acknowledged and deliver a memorandum of this Lease in recordable form which Landlord thereafter may file for record.

21.4 Quitclaim. Upon any termination of this Lease, Tenant shall, at Landlord's request, execute, have acknowledged and deliver to Landlord an instrument in writing releasing and quitclaiming to Landlord all right, title and interest of Tenant in and to the Premises by reason of this Lease or otherwise.

21.5 Modifications for Mortgagees. In connection with obtaining financing for the Premises or any portion thereof, Landlord's Mortgagees shall request reasonable modifications to this Lease as a condition to such financing, Tenant shall not unreasonably withhold, delay or defer its consent thereto, provided such modifications do not adversely affect Tenant's rights hereunder. Tenant's failure to so consent shall constitute an Event of Default under this Lease.

21.6 Notice. Any Notice required or desired to be given under this Lease shall be in writing and shall be addressed to the address of the party to be served. The addresses of Landlord and Tenant are as set forth in Items 1 and 3, respectively, of the Basic Lease Provisions, except that (a) prior to the Commencement Date, the address for Notices to Tenant shall be as set forth opposite Tenant's signature on this Lease, and (b) from and after the Commencement Date, notwithstanding the addresses for Tenant set forth in Item 3 of the Basic Lease Provisions, all Notices regarding the operation and maintenance of the Project shall be delivered to Tenant at the Premises. Each such notice shall be deemed effective and given (i) upon receipt, if personally delivered (which shall include delivery by courier or overnight delivery service), (ii) upon being telephonically confirmed as transmitted, if sent by telegram, telex or telecopy, (iii) two (2) business days after deposit in the United States mail in Orange County or in the county in which the Premises are located, certified and postage prepaid, properly addressed to the party to be served, or (iv) upon receipt if sent in any other way. Any party hereto may from time to time, by Notice to the other in accordance with this Section 21.6, designate a different address than that set forth above for the purposes of Notice.

21.7. Caption. The captions and headings used in this Lease are for the purposes of convenience only and shall not be construed to limit or extend the meaning of any part of this Lease.

21.8. Executed Copy. Any fully executed copy of this Lease shall be deemed an original for all purposes.

21.9. Time. Time is of the essence for the performance of each term, condition and convenant of this Lease.

21.10 Severability. If any one or more of the provisions contained herein shall for any reason be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality, or unenforceability shall not affect any other provision of this Lease, but this Lease shall be construed as if such invalid, illegal or unenforceable provision had not been contained herein.

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21.11. Survival. All covenants and indemnities set forth herein which contemplate the payment of sums, or the performance by Tenant after the Term or following and Event of Default, including specifically, but not limited to, the covenants and indemnities set forth in Section 5.3., Article VI, Article VII,
Section 8.1, Section 9.2, Section 11.1, Section 11.10, Article XV, and Article XIX, and all representations and warranties of Tenant, shall survive the expiration or sooner termination of this Lease.

21.12. Choice of Law. This Lease shall be construed and enforced in accordance with the laws of the State of California. The language in all parts of this Lease shall in all cases be construed as a whole according to its fair meaning and not strictly for or against either Landlord or Tenant.

21.13. Gender: Singular or Plural. When the context of this Lease requires, the neutral gender includes the masculine, the feminine, a partnership or corporation or joint venture, the singular includes the plural and the plural includes the singular.

21.14. Non-Agency. It is not the intention of Landlord or Tenant to create hereby a relationship of master-servant or principal-agent, and under no circumstance shall tenant herein be considered the agent of Landlord, it being the sole purpose and intent of the parties hereto to create a relationship of Landlord and tenant.

21.15. Successors. The intent, covenants, conditions and agreements contained in this Lease shall, subject to the provisions as to assignment, subletting, and bankruptcy contained herein and any other provisions restricting successors or assign, apply to and bind the heirs, successors, legal representatives and assigns of the parties hereto.

21.16. Waiver: Remedies, Cumulative. The waiver by either party of any term, covenant, agreement or condition herein contained shall not be deemed to be a waiver of any subsequent breach of the same or any other term, covenant, agreement or condition herein contained, nor shall any custom or practice which may grow up between the parties in the administration of this Lease be construed to waive or to lessen the right of either party to insist upon the performance by the other party in strict accordance with all of the provisions of this Lease. The subsequent acceptance of Rent hereunder by Landlord shall not be deemed to be a waiver of any preceding breach by Tenant of any provisions, covenant, agreement or condition of this Lease, other than the failure of Tenant to pay the particular Rent payment so accepted, regardless of Landlord's knowledge of such preceding breach at the time of acceptance of such Rent payment. Landlord's acceptance of any check, letter or payment shall in no event be deemed an accord and satisfaction, and Landlord shall accept the check, letter or payment without prejudice to Landlord's right to recover the balance of the Rent or pursue any other remedy available to it. The rights and remedies of either party under this Lease shall be cumulative and in addition to any and all other rights and remedies which either party have or may have.

21.17. Unavoidable Delay. Except for the monetary obligations of Tenant under this Lease, neither party shall be chargeable with, liable for, or responsible to the other for anything or in any amount for any Unavoidable Delay and any Unavoidable Delay shall not be deemed a breach of or default in the performance of this Lease, it being specifically agreed that any time limit provision contained in this Lease (other than the scheduled expiration of the Term) shall be extended for the same period of time lost by Unavoidable Delay.

21.18. Entire Agreement. This Lease is the entire agreement between the parties, and supersedes any prior agreements, representations, negotiations or correspondence between the parties except as expressed herein. Except as otherwise provided herein, no subsequent change or obligation to this Lease shall be binding unless in writing and signed by the parties herein.

21.19. Authority. If Tenant is a corporation or a partnership, each individual executing this Lease on behalf of the corporation or partnership, as the case may be, represent and warrants that he is duly authorized to execute and deliver this Lease on behalf of said entity in accordance with its corporate bylaws, statement of partnership or certificate of limited partnership, as the case may be, and that this Lease is by Landlord, within thirty (30) days after execution of this Lease and prior to entering into possession of the Premises, deliver to Landlord a certified copy of a resolution of the Board of Directors of the corporation or certificate of the Secretary of the corporation, authorizing, ratifying or confirming the execution of this Lease. If Tenant is a partnership, Tenant shall, if requested by Landlord, within thirty (30) days after the execution of this Lease and prior to entering into

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possession of the Premises, deliver to Landlord's certified copy of its partnership agreement authorizing such execution.

21.20. Guaranty. As a condition to the execution of this Lease by Landlord, the obligations, covenants and performance of the Tenant as herein provided shall be guaranteed in writing by the Guarantor listed in Item 14 of the Basic Lease Provisions, if any, on a form of guarantee provided by Landlord.

21.21. Exhibits; References. All exhibits, amendments, riders and addenda attached to this Lease are hereby incorporated into and made a part off this Lease. In the event of variation or discrepancy, the duplicate original hereof (including exhibits, amendments, riders and addenda, if any, specified above) held by Landlord shall control. All references in this Lease to Articles, Sections, Exhibits, Riders and clauses are made, respectively, to Articles, Sections, Exhibits, Riders and clauses of this Lease, unless otherwise specified.

21.22. Basic Lease Provisions. The Basic Lease Provisions at the beginning of this Lease are intended to provide general information only. In the event of any inconsistency between the basic Lease Provisions and the specific provisions of this Lease, the specific provisions of this Lease shall prevail.

21.23. No Merger. The voluntary or other surrender of this Lease by Tenant, or a mutual cancellation thereof, or a termination by Landlord, shall not work a merger, and shall, at the option of Landlord, teerminate all or any existing subtenancies or may, at the option of Landlord, operate as an assignment to Landlord of any or all such subtenancies.

21.24. Joint and Several Obligations. If more than one person or entity is Tenant, the obligations imposed on each such person or entity shall be joint and several.

21.25. No Light or Air Easement. Any diminution or shutting off of light or air by any structure which may be erected on lands adjacent to the Building shall in no way affect this Lease, abate Rent or otherwise impose any liability on Landlord. This Lease does not confer any right with regard to the subsurface below the ground level of the Building.

21.26. Security Measures. Tenant hereby acknowledges that Landlord shall have no obligation whatsoever to provide guard service or other security measures for the benefit of the Premises or the Project. Tenant assumes all responsibility for the protection of Tenant, Tenant's Agents and the property of Tenant and of Tenant's Agents from acts of third parties. Nothing herein contained shall prevent Landlord, at Landlord's sole option, from providing security protection for the Project or any part thereof, in which event the cost thereof shall be included within the definition of Maintenance Expenses and paid by Tenant in the manner set forth in Section 7.1.

32.


THIS LEASE is effective as of the date the last signatory necessary to execute this Lease shall have executed this Lease.

"LANDLORD"

O'DONNELL PALO ALTO ASSOCIATES,
a California general partnership

By:    /s/ Donald S. Grant
       ------------------------------
       DONALD S. GRANT
Its:   Authorized Signature

ADDRESS FOR NOTICES PRIOR TO       "TENANT"

COMMENCEMENT DATE:

                                   OMNICELL TECNHOLOGIES, INC.,
                                   a California corporation

1101 E. Meadow Drive
--------------------
Palo Alto, CA 94303                By:    /s/ Earl E. Fry
-------------------                       ------------------------------
Attn:  Earl Fry
                                   Name:  Earl E. Fry
                                          ------------------------------
                                   Title: VP & CFO

33.


EXHIBIT A

DESCRIPTION OF PREMISES

This Exhibit is attached to and made a part of that certain Standard Form Lease dated April 3, 1996, by and between O'DONNELL PALO ALTO ASSOCIATES, a California general partnership ("Landlord"), and OMNICELL TECNHOLOGIES, INC., a California corporation ("Tenant"), for the Premises known as 1057 E. Meadow Circle, Palo Alto, California.

[FLOOR PLAN]

1.


EXHIBIT B

PROJECT SITE PLAN

This Exhibit is attached to and made a part of that certain Standard Form Lease dated April 3, 1996, by andBetween O'DONNELL PALO ALTO ASSOCIATES, a California general partnership ("Landlord"), and OMNICELL TECHNOLOGIES, INC., a California corporation ("Tenant"), for the Premises known as 1057 E. Meadow Circle, Palo Alto, California.

EAST MEADOW CIRCLE BUILDING

[SITE PLAN]

1.


EXHIBIT C

WORK LETTER

This Exhibit is attached to and made a part of that certain Standard Form Lease dated April 3, 1996, by and between O'DONNELL PALO ALTO ASSOCIATES, a California general partnership, as "Landlord", OMNICELL TECHNOLOGIES, INC., a California corporation, as "Tenant", for the Premises known as 1057 E. Meadow Circle, Palo Alto, California.

1. APPLICATION OF EXHIBIT

Capitalized terms used and not otherwise defined heroin shall have the same definitions as set forth in the Lease. The provisions of this Work Latter shall apply to the planning and completion of leasehold improvements requested by Tenant (the "Tenant Improvements") for the fitting out of the Promises, as more fully set forth herein.

2. LANDLORD AND TENANT PRE-CONSTRUCT ION OBLIGATIONS

(a) PRELIMINARY PLANS. Within seven (7) business days following full execution of this Lease by both Landlord and Tenant, Landlord's Architect shall prepare preliminary space plans for the Tenant Improvements (the "Preliminary Plans") which shall include, without limitation, sketches and/or drawings showing the locations of door, partitioning, electrical fixtures, outlets and switches, plumbing fixtures, floor loads and other requirements, and a list of all specialized installations and improvements and upgrade specifications determined by Tenant as required for its use of the Premises. Tenant agrees to and shall promptly and fully cooperate with Landlord's Architect and shall supply all information Landlord's Architect dooms necessary for the preparation of the Preliminary Plans. Tenant acknowledges that the Preliminary Plans shall be prepared by Landlord's Architect after consultation and cooperation between Tenant and Landlord's Architect regarding the proposed Tenant Improvements and Tenant's requirements. Landlord and Landlord's Architect shall be entitled, in all respects, to rely upon all information supplied by Tenant regarding the Tenant Improvements. The costs associated with preparation of the Preliminary Plans shall be borne by Tenant and paid as set forth in Sections 5 and 6 of the Work Letter.

(b) WORKING DRAWINGS. Within fifteen (15) business days following full execution of this Lease by both Landlord and Tenant Landlord's Architect shall prepare working drawings (the "Working Drawings") for the Tenant improvements based upon the approved Preliminary Plans. The Working Drawings shall include architectural, mechanical and electrical construction drawings for the Tenant Improvements based on the Preliminary Plans. Notwithstanding the Preliminary Plans, in all cases the Working Drawings (i) shall be subject to Landlord's final approval, which approval shall not be unreasonably withhold,
(ii) shall not be in conflict with building codes for the City or County or with insurance requirements for a fire resistive class A building, and (iii) shall be in a form satisfactory to appropriate governmental authorities responsible for issuing permits and licenses required for construction. The costs associated with preparation of the Working Drawings shall be borne by Tenant and paid as set forth in Sections 5 and 6 of this Work Letter.

(c) APPROVAL OF WORKING DRAWINGS. Landlord or Landlord's Architect shall submit the working Drawings to Tenant for Tenant's review, and Tenant shall notify Landlord and Landlord's Architect within five (5) days after delivery thereof of any requested revisions. Within three (3) business days after receipt of Tenant's notice, Landlord's Architect shall make all approved revisions to the Working Drawings and submit two (2) copies thereof to Tenant for its final review and approval, which-approval shall be given within three
(3) days thereafter. Concurrently with the above review and approval process, Landlord may submit all plans and specifications to City and other applicable governmental agencies in an Attempt to expedite City approval and issuance of all necessary permits and licenses to construct the Tenant Improvements as shown on the Working Drawings. Any changes

1.


which are required by City or other governmental agencies shall be immediately submitted to Landlord for Landlord's review and reasonable approval, and Landlord shall promptly notify Tenant of such changes.

(d) SCHEDULE OF CRITICAL DATES. Set forth below is a schedule of certain critical dates relating to Landlord's and Tenant's respective obligations for the design and construction of the Tenant Improvements. Such dates and the respective obligations of Landlord and Tenant are more fully described elsewhere in this Work Letter. The purpose of the following schedule in to provide a reference for Landlord and Tenant and to make certain the Final Approval Date occurs as set forth herein. Following the Final Approval Date, Tenant shall be deemed to have released Landlord to commence construction of the Tenant Improvements As set forth in Section 4 below.

                  Reference                                   Date Due                     Responsible Party
                  ----------                                  ---------                    -----------------
A.     "Preliminary Plan Completion"          Seven (7) business days after full              Tenant and
                                              execution of the Lease                           Landlord

B.     "Working Drawings Completion"          Fifteen (15) business days after full            Landlord
                                              execution of the Lease

C.     "Working Drawings Revision"            Five (5) days after Landlord submits the          Tenant
                                              Working Drawings to Tenant

D.     "Working Drawings Revision"            Three (3) business days after Tenant             Landlord
                                              returns the Working Drawings to Landlord

E.     "Final Approval Date"                  Three (3) days after Landlord submits the         Tenant
                                              revised Working Drawings to Tenant

3. BUILDING PERMIT

After the Final Approval Date has occurred, Landlord shall, if Landlord ham not already done so, submit the Working Drawings to the appropriate governmental body or bodies for final plan checking and a building permit, Landlord, with Tenant's cooperation, shall cause to be made any change in the Working Drawings necessary to obtain the building permit; provided, however, after the Final Approval Data, no changes shall be made to the Working Drawings without the prior written approval of both Landlord and Tenant, and than only after agreement by Tenant to pay any excess costs resulting from such changes.

4. CONSTRUCTION OF TENANT IMPROVEMENTS

After the Final Approval Date has occurred and a building permit for the work has been issued, Landlord shall, through a guaranteed maximum cost or fixed price (at Landlord's sole option) construction contract ("Construction Contract") with a reputable, licensed contractor selected by Landlord ("Contractor"), cause the construction of the Tenant Improvements to be carried out in substantial conformance with the Working Drawings in a good and workmanlike manner using first-class materials. The costs associated with the construction of the Tenant Improvements shall be paid as set forth in Sections 5 and 6 of this Work Letter. Landlord shall see that the construction complies with all applicable building, fire, health, and sanitary codes and regulations, the satisfaction of which shall be evidenced by a certificate of occupancy for the Premises.

5. TENANT IMPROVEMENT ALLOWANCE

Landlord shall provide Tenant with a Tenant Improvement Allowance in the amount of One Hundred Fifteen Thousand One Hundred Dollars ($115,000) towards the cost of the design, purchase and construction of the Tenant Improvements, including without limitation design, engineering and consulting fees (collectively, the "Tenant Improvement Costs"). The Tenant Improvement Allowance shall be used for payment of the following Tenant Improvements Costs:

2.


(i) Preparation by Landlord's Architect of the Preliminary Plans and the Working Drawings as provided in Section 2 of this Work Letter, including without limitation all fees charged by City (including without limitation fees for building permits and plan checks) in connection with the Tenant Improvements work in the Promises;

(ii) Construction work for completion of the Tenant Improvements as reflected in the Construction Contract; and

(iii) All contractors' charges, general conditions, performance bond premiums and construction fees.

6. COSTS IN EXCESS OF TRUANT IMPROVEMENT ALLOWANCE AT TENANT'S EXPENSE

(a) COST APPROVAL. Tenant shall pay the excess of the Tenant Improvement Costs over the amount of the Tenant Improvement Allowance available to defray such costs. Concurrent with the plan checking referred to in Section 3 of this Work Letter, Landlord shall prepare and submit to Tenant a written estimate of the amount of the remaining Tenant Improvement Costs and the cost of the Tenant Improvement Allowance still available to defray such costs (after preparation of the Preliminary Plans and Working Drawings). Tenant shall approve or disapprove any such estimate by written notice to Landlord within three (3) days after receipt thereof. It Tenant fails to notify Landlord of its disapproval within such three (3) day period, Tenant shall be deemed to have approved such estimate. If such estimate exceeds the Tenant Improvement Allowance then still available and Tenant approves such estimate, Tenant's notice of approval shall include payment to Landlord for the full amount of such excess. If Tenant disapproves such estimate within the three (3) day period, Tenant shall be required to direct Landlord and Landlord's Architect to amend the Working Drawings in a manner satisfactory to Landlord so as to reduce the estimated costs to an amount acceptable to Tenant, and any excess estimated costs remaining after such amendment shall be paid by Tenant in the manner described in the preceding sentence. Tenant shall additionally pay any costs resulting from such amendment and Tenant shall be liable for the delay in completing the Tenant improvements and the increased costs, if any, resulting from such delay. If Tenant is unwilling or unable to amend the Working Drawings in a manner acceptable to Landlord, then Tenant shall be, deemed to have approved of the estimate for the Working Drawings as prepared, and shall pay in full the amount of any excess estimated costs together with any costs arising from delay as a result of Tenant's actions hereunder, in the manner hereinabove provided.

(b) FINAL COSTS. Within sixty (60) days after completion by Landlord of the Tenant Improvements, Landlord shall determine the actual final Tenant Improvements Costs and shall submit a written statement of such amount to Tenant. If any estimate previously paid by Tenant exceeds the amount due hereunder from Tenant for such work, such excess shall be refunded to Tenant. If any amount is still due from Tenant for such work, then Tenant shall pay such amount in full within ten (10) days of receipt of Landlord's statement.

7. CHANGE ORDERS

Tenant may from time to time request and obtain change orders during the course of construction provided that; (i) each such request shall be reasonable, shall be in writing and signed by or on behalf of Tenant, and shall not result in any structural change in the Building, as reasonably determined by Landlord, (ii) all additional charges and costs, Including without limitation architectural and engineering costs, construction and material costs, and processing costs of any governmental entity shall be the sale and exclusive obligation of Tenant, and (iii) any resulting delay in the completion of the Tenant improvements shall be doomed a Tenant Delay and in no event shall extend the Commencement Date of the Lease. Upon Tenant's request for a change order, Landlord shall as soon as reasonably possible submit to Tenant a written estimate of the increased or decreased cost and anticipated delay, if any, attributable to such requested change. Within three (3) days of the date such estimated cost adjustment and delay are delivered to Tenant, Tenant shall advise Landlord whether it wishes to proceed with the change order, and if Tenant elects to proceed with the change order, Tenant shall remit, concurrently with Tenant's notice to proceed, the amount of the increased cost, if any, attributable to such change order. Unless Tenant includes in its initial change order request that the work in process at the time such request in made be halted pending approval and execution of a change order, Landlord shall not be obligated to stop construction of the Tenant Improvements, whether or not the change order relates to the work then in process or about to be started.

3.


8. TENANT DELAYS

In no event shall the Commencement Date of the Lease be extended or delayed due or attributable to delays due to the fault of Tenant ("Tenant Delays"). Tenant Delays shall include, but are not limited to, delays caused by or resulting from any one or more of the following

(a) Tenant's failure to timely review and reasonably approve the Working Drawings or to promptly cooperate with Landlord's Architect and furnish information to Landlord for the preparation of the Preliminary Plans and Working Drawings

(b) Tenant's request for or use of special materials, finishes or installations which are not readily available, provided that Landlord shall notify Tenant in writing that the particular material, finish, or installation is not readily available promptly upon Landlord's discovery of same;

(c) Change orders requested by Tenant;

(d) Interference by Tenant or by Tenant's Agents with Landlord's construction activities;

(e) Tenant's failure to approve any other item or perform any other obligation in accordance with and by the dates specified herein or in the Construction Contract;

(f) Tenant's requested changes in the Preliminary Plans, Working Drawings or any other plans and specifications after the approval thereof by Tenant or submission thereof by Tenant to Landlord;

(g) Tenant's failure to approve written estimates of costs in accordance with this Work Letter; or

(h) Tenant's obtaining or failure to obtain any necessary governmental approvals or permits for Tenant's intended use of the Premises.

If the Commencement Date at the Lease is delayed by any Tenant Delays, whether or not within the control of Tenant, then the Commencement Data of the Lease and the payment of Rent shall be accelerated by the number of days of such delay. Landlord shall give Tenant written notice within a reasonable time of any circumstance that Landlord believes constitutes a Tenant Delay.

9. TRADE FIXTURES AND EQUIPMENT

Tenant acknowledges and agrees that Tenant is solely responsible for obtaining, delivering and installing in the Promises all necessary and desired furniture, trade fixtures, equipment and other similar items, and that Landlord shall have no responsibility whatsoever with regard thereto. Tenant further acknowledges and agrees that neither the Commencement Date of the Lease nor the payment of Rent shall be delayed for any period of time whatsoever due to any delay in the furnishing of the Premises with such items.

10. FAILURE OF TENANT TO COMPLY

Any failure of Tenant to comply with any of the provisions contained in this Work Letter within the times for compliance herein set forth shall be deemed a default tinder the Lease. In addition to the remedies provided to Landlord in this Work Letter upon the occurrence of such a default by Tenant, Landlord shall have all remedies available at law or equity to a Landlord against a defaulting tenant pursuant to a written lease, including but not limited to those met forth in the Lease.

4.


EXHIBIT D

COMMENCEMENT DATE MEMORANDUM

DATE:     August 8, 1996

RE:  Standard Form Lease dated April 3, 1996, by and between O'Donnell Palo
     Alto Associates as "Landlord", and OmniCell Technologies, Inc. as
     "Tenant", for the Premises known an 1057 East Meadow Circle, Palo Alto,
     California.

                                     AGREEMENT

The undersigned hereby agree as follows:

1. The Tenant Improvements (as defined in the Lease) to the Promises have been substantially completed in accordance with the terms and conditions of the Lease, subject only to "punch list" items agreed to by Landlord and Tenant pursuant to the terms of the Lease.

2. The Commencement Date, as defined in and determined in accordance with the Lease, is hereby stipulated for all purposes to be August 12, 1996.

3. In accordance with the Lease, Monthly Rent (as defined In the Lease) in the amount of Twenty-Seven Thousand Six Hundred Twenty-Four and no/100 Dollars ($27,624.00), subject to adjustment in accordance with the terms of the Lease, commences to accrue on August 12, 1996, and is due and payable in advance on the first day of each and every month during the Term (as defined in the Lease). Unless and until notified by Landlord to the contrary, Tenant shall make its Rent chocks payable to O'Donnell Palo Alto Associates, Dept. 66221, El Monte, CA 91735-6221.

"LANDLORD"

O'DONNELL PALO ALTO ASSOCIATES,

a California general partnership

By: /s/ Donald S. Grant
   -------------------------------------
          Donald S. Grant

Its: Authorized Signature

"TENANT"

OMNICELL TECHNOLOGIES, INC.,
a California corporation

By:  /s/ Earl E. Fry
   -------------------------------------

Its: VP & CFO
    ------------------------------------

1.


EXHIBIT 10.4

AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION

STANDARD INDUSTRIAL/COMMERCIAL SINGLE-TENANT LEASE-NET
(Do not use this form for Multi-Tenant Property)

1. Basic Provisions ("Basic Provisions")

1.1 Parties: This Lease ("Lease"), dated for reference purposes only, March 25, 1994, is made by and between W.F. Batton & Co., Inc., a California corporation and OmniCell Technologies, Inc., a California corporation ("Lessee"), (collectively the "Parties," or individually a "Party").

1.2 Premises: That certain real property, including all improvements therein or to be provided by Lessor under the terms of this Lease, and commonly known by the street address of 1101 East Meadow Drive, Palo Alto, CA located in the County of Santa Clara, State of California and generally described as (describe briefly the nature of the property) approximately 30,600 sq. ft.

1.3 Term: Five (5) years commencing on the later of (i) May 1, 1994 and
(ii) the date by which all of the following have occurred: (a) Lessor has substantially completed the Lessee Interior Improvements in accordance with the Work Letter attached hereto as Exhibit "A", (b) Lessor has delivered possession of the Premises to Lessee, and (c) Lessee may lawfully occupy the Premises under applicable law.

If the Commencement Date has not occurred for any reason whatsoever on or before August 1, 1994, then in addition to Lessee's other rights or remedies,
(i) Lessee may terminate this Lease by written notice to Lessor, whereupon any monies previously paid by Lessee to Lessor shall be reimbursed to Lessee, together with interest thereon from the date of the termination until paid at two percent (2%) plus the "prime rate" charged by Bank of America N.T. & S.A. ("Bank") or the highest rate permitted by law, whichever is less (herein the "Interest Rate"); or (ii) at Lessee's election, the date Lessee is otherwise obliged to commence payment of rent shall be delayed by one day for each day that the Commencement Date is delayed beyond August 1, 1994.

1.4 Early Possession: ________________________ ("Early Possession Date").
(See Paragraphs 3.2 and 3.3 for further provisions.)

1.5 Base Rent:

BASE MONTHLY

RENT SCHEDULE:      Months     Base Monthly  Rent NNN

                    1          $     0
                    2-6        $19,890       $ 99,450   5
                    7-12       $22,950        137,700   6
                    13-24      $24,480        293,760  12
                    25-36      $28,458        341,496  12
                    37-48      $31,518        378,216  12
                    49-60      $33,354        400,248  12
                    (59)       $27,980
                    (60)       $27,514

1.6 Base Rent Paid Upon Execution: See Attached Addendum (insert 2) as Base Rent for the period ___________________________.

1.7 Security Deposit: $27,450 ("Security Deposit"). (See Paragraph 5 for further provisions.)

1.8 Permitted Use: General office, marketing, research and development, light assembly, engineering and other legal uses (See Paragraph 6 for further provisions.)

1.


1.9 Insuring Party: Lessor is the "Insuring Party" unless otherwise stated herein. (See Paragraph 8 for further provisions.)

1.10 Real Estate Brokers: The following real estate brokers (collectively, the "Brokers") and brokerage relationships exist in this transaction and are consented to by the Parties (check applicable boxes): Wayne Mascia Associates represents Lessor exclusively ("Lessor's Broker"); and Cornish & Carey Commercial represents Lessee exclusively ("Lessee's Broker"). (See Paragraph 15 for further provision.)

1.11 Guarantor. The obligations of the Lessee under this Lease are to be guaranteed by _________________________________ ("Guarantor"). (See Paragraph 37 for further provisions.)

1.12 Addenda. Attached hereto is an Addendum or Addenda consisting of Inserts 1 through 36 and Exhibit "A" Work Letter all of which constitute a part of this Lease.

2. Premises.

2.1 Letting. Lessor hereby leases to Lessee, and Lessee hereby leases from Lessor, the Premises, for the term, at the rental, and upon all of the terms, covenants and conditions set forth in this Lease. Unless otherwise provided herein, any statement of square footage set forth in this Lease, or that may have been used in calculating rental, is an approximation which Lessor and Lessee agree is reasonable and the rental based thereon is not subject to revision whether or not the actual square footage is more or less.

2.2 Condition. Lessor shall deliver the Premises to Lessee clean and free of debris on the Commencement Date and warrants to Lessee that the premises, including, without limitation, the roof, structural elements of the Building and all building systems serving the Premises, including, without limitation, electrical, plumbing, fire sprinkler system, lighting, air conditioning, heating, and loading doors, if any, in the Premises, other than those constructed by Lessor shall, except as otherwise provided in this Lease, promptly after receipt of written notice from Lessee setting forth with specificity the nature and extent of such non-compliance, rectify same at Lessor's expense. If Lessee does not give Lessor written notice of a non- compliance with this warranty within thirty (30) days after the Commencement Date, correction of that non-compliance shall be the obligation of Lessee at Lessee's sole cost and expense.

2.3 Compliance with Covenants, Restrictions and Building Code. Lessor warrants to Lessee that the Premises and improvements on the Premises comply with all applicable covenants or restrictions of record and applicable building codes, regulations and ordinances in effect on the Commencement Date. Said warranty does not apply to the specific use to which Lessee will put the Premises or to any Alterations or Utility Installations (as defined in Paragraph 7.3(a)) made or to be made by Lessee. If the Premises do not comply with said warranty, Lessor shall, except as otherwise provided in this Lease, promptly after receipt of written notice from Lessee setting forth with specificity the nature and extent of such non-compliance, rectify the same at Lessor's expense.

2.4 Acceptance of Premises. Lessee hereby acknowledges: (a) that it has been advised by the Brokers to satisfy itself with respect to the condition of the Premises (including but not limited to the electrical and fire sprinkler systems, security, environmental aspects, compliance with Applicable Law, as defined in Paragraph 6.3) and the present and future suitability of the Premises for Lessee's intended use, (b) that Lessee has made such investigation as it deems necessary with reference to such matters and assumes all responsibility therefor as the same relate to Lessee's occupancy of the Premises and/or the term of this Lease, and (c) that neither Lessor, nor any of Lessor's agents, has made any oral or written representations or warranties with respect to the said matters other than as set forth in this Lease.

2.5 Operating Expenses. Prior to the execution of this Lease, Lessor shall have provided Lessee with a breakdown of current operating expenses relating to the Premises for which Lessee shall be responsible in addition to the Monthly Base Rent. Lessee shall be responsible for paying any actual increases in said operating expenses which occur during the initial term, and the option term if the option to extend is exercised.

2.


2.6 Parking. Lessee shall have the right to the use of one hundred twenty
(120) parking spaces in the parking lot adjacent to the building.

3. Term.

3.1 Term. The Commencement Date, expiration Date and Original Term of this Lease are as specified in Paragraph 1.3.

3.2 Early Possession. If Lessee totally or partially occupies the Premises prior to the Commencement Date, the obligation to pay Base Rent shall be abated for the period of such early possession. All other terms of this Lease, however, (including but not limited to the obligations to pay Real Property Taxes and insurance premiums and to maintain the Premises) shall be in effect during such period. Any such early possession shall not affect nor advance the Expiration Date of the Original Term.

3.3 Option.

(a) Lessee shall have an option to extend the term of the Lease for an additional five (5) year term commencing on the day following the Expiration Date, subject to all the terms and provisions of this Lease, except that (1) there shall be no additional options to extend, and (2) the Base Monthly Rent for the option period shall be equal to ninety-five percent (95%) of the fair market rent of the Premises as of the commencement date of the option extension period, but the Base Monthly Rent shall not be less than $27,515 per month, (the "Option Base Monthly Rent"). The Option Base Monthly Rent for the Premises shall be determined by comparison with base monthly rents being obtained under new leases of premises in similar office buildings located in the Palo Alto area. The Option Base Monthly Rent for the option extension period (and rental adjustments during the option term, if any) shall be determined by agreement between the Lessor and Lessee, if possible, and by the process of appraisal if the parties cannot reach agreement.

(b) At lease six (6) months, but not more than twelve (12) months, prior to the expiration of the initial term, Lessee shall deliver written notice to Lessor of Lessee's exercise of its option to extend the Lease Term. If Lessee fails to give such written notice of exercise within said period, said option shall automatically lapse, time being of the essence with respect to the exercise of the option. If Lessee gives such notice, the parties shall then attempt to in good faith to agree upon the Option Base Monthly Rent within thirty (30) days. If Lessor and Lessee reach such agreement, Lessor and Lessee shall promptly execute an amendment to this Lease stating the amount of Option Base Monthly Rent for the Premises during the option extension period (including rental adjustments, if any).

(c) If after the expiration of said thirty (30) day period the parties have not reached agreement as to the Option Base Monthly Rent for the Premises, then the Option Base Monthly Rent shall be determined by appraisal in accordance with the then customary practice in the Santa Clara County industrial/commercial real estate industry for determining rent for option periods by appraisal.

(d) Notwithstanding anything to the contrary contained in this Paragraph, if the Option Base Monthly Rent is determined by appraisal and if Lessee does not, in its sole discretion, approve the rental amount established by such appraisal, Lessee may rescind its exercise of the option by giving Lessor written notice of such election to rescind within ten (10) days after receipt of the results of appraisal. If Lessee rescinds its exercise of the option, then
(I) the Lease shall terminate on the thirtieth (30th) day after Lessee's notice of rescission or on the date the Lease would have otherwise terminated absent Lessee's exercise of the option, whichever date is later; and (ii) Lessee shall pay all costs and expenses of the appraisal.

4. Rent.

4.1 Base Rent. Lessee shall cause payment of Base Rent and other rent or charges, as the same may be adjusted from time to time as herein provided to be received by Lessor in lawful money of the United States, without offset or deduction, on or before the day on which it is due under the terms of this Lease. Base Rent and all other rent and charges for any period during the term hereof which is for less than one (1) full calendar month shall be prorated based upon the actual number of days of the calendar month involved. Payment of Base Rent and other

3.


charges shall be made to Lessor at its address stated herein or to such other persons or at such other addresses as Lessor may from time to time designate in writing to Lessee.

5. Security Deposit. Lessee shall deposit with Lessor upon execution hereof the Security Deposit set forth in Paragraph 1.7 as security for Lessee's faithful performance of Lessee's obligations under this Lease. If Lessee fails to pay Base Rent or other rent or charges due hereunder, or otherwise Defaults under this Lease (as defined in Paragraph 13.1), Lessor may use, apply or retain all or any portion of said Security Deposit for the payment of any amount due Lessor or to reimburse or compensate Lessor for any liability, cost, expense, loss or damage (including attorneys' fees) which Lessor may suffer or incur by reason thereof. If Lessor uses or applies all or any portion of said Security Deposit, Lessee shall within ten (10) days after written request therefor deposit moneys with Lessor Sufficient to restore said Security Deposit to the full amount required by this Lease. Lessor shall not be required to keep all or any part of the Security Deposit separate from its general accounts. Lessor shall, at the expiration or earlier termination of the term hereof and after Lessee has vacated the Premises, return to Lessee (or, at Lessor's option, to the last assignee, if any, of Lessee's interest herein), that portion of the Security Deposit not used or applied by Lessor. Unless otherwise expressly agreed in writing by Lessor, no part of the Security Deposit shall be considered to be held in trust, to bear interest or other increment for its use, or to be prepayment for any moneys to be paid by Lessee under this Lease.

6. Use.

6.1 Use. Lessee shall use and occupy the Premises only for the purposes set forth in Paragraph 1.8, or any other use which is comparable thereto, and for no other purpose unless approved in writing by Lessor, which approval shall not be unreasonably withheld. Lessee shall not use or permit the use of the Premises in a manner that creates waste or a nuisance, or that disturbs owners and/or occupants of, or causes damage to, neighboring premises or properties. Lessor hereby agrees to not unreasonably withhold or delay its consent to any written request by Lessee, Lessees assignees or subtenants, and by prospective assignees and subtenants of the Lessee, its assignees and subtenants, for a modification of said permitted purpose for which the premises may be used or occupied, so long as the same will not impair the structural integrity of the improvements on the Premises, the mechanical or electrical systems therein, is not significantly more burdensome to the Premises and the improvements thereon, and is otherwise permissible pursuant to this Paragraph 6. If Lessor elects to withhold such consent, Lessor shall within five (5) business days give a written notification of same, which notice shall include an explanation of Lessor's reasonable objections to the change in use.

6.2 Hazardous Substances.

(a) Definition; covenant by Lessee. The term "Hazardous Substance" as used in this Lease shall mean any product, substance, chemical, material, or waste whose presence, nature, quantity and/or intensity of existence, use, manufacture, disposal, transportation, spill, release or effect, either by itself or in combination with other materials expected to be on the Premises, is either (i) regulated or monitored by any governmental authority, or (ii) a basis for liability of Lessor to any governmental agency or third party under any applicable statute or common law theory. Hazardous Substance shall include, but not be limited to, hydrocarbons, petroleum, gasoline, crude oil or any products, by-products or fractions thereof. Lessee shall not cause any contamination or damage to the Premises or the neighboring properties or cause Lessor to incur any liability, loss, or damage as a result of the generation, possession, storage, use, transportation, or disposal by Lessee of any Hazardous Substances in the conduct of Lessee's business on the Premises. Notwithstanding the foregoing, Lessee may, without Lessor's prior consent, but in compliance with all Applicable Law, use any ordinary and customary materials reasonably required to be used by Lessee in the normal course of Lessee's business permitted on the Premises, so long as such use does not expose the Premises or neighboring properties to any meaningful risk of contamination or damage or expose Lessor to any liability therefor. Prior to the occupancy of the Premises by Lessee, Lessee shall deliver to Lessor a list of the Hazardous Substances which Lessee considers to be ordinary and customary materials reasonably required to be used by Lessee in the normal course of Lessee's permitted use of the Premises. If Lessor concurs therewith, Lessor shall so confirm in writing to Lessee, and such confirmation shall constitute Lessor's consent to the existence, use, manufacture, storage, and transportation of such Hazardous Substances in, on, and about the Premises during the term of this Lease.

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(b) Duty to Inform Lessor. Upon the commencement of the Lease term and on each anniversary date thereafter, Lessee shall provide to Lessor a list of the primary Hazardous Substances which lessee uses or stores on the Premises, along with, as to each such Hazardous Substance, its purpose and the approximate volume brought onto the Premises since the last report to Lessor under this Paragraph 6.2(b).

(c) Indemnification.

(i) Lessee shall indemnify, protect, defend and hold Lessor, and Lessor's agents, employees, successors and assigns, harmless from and against any and all loss of rents and/or damages, liabilities, judgments, costs, claims, liens, expenses, penalties, permits and attorneys' and consultants' fees if incurred as a result of the release, discharge or emission of any Hazardous Substance or storage tank brought on the Premises during the Lease term by or for Lessee or under Lessee's control. Lessee's obligations under this Paragraph 6.2 shall include, but not be limited to, the effects of any contamination or injury to person, property, or the environment created by Lessee, and the cost of investigation (including consultants' and attorneys' fee), testing, removal, remediation, restoration and/or abatement thereof, or of any contamination therein involved, and shall survive the expiration or earlier termination of this Lease. No termination, cancellation, or release agreement entered into by Lessor and Lessee shall release Lessee from Lessee's obligations under this Lease with respect to Hazardous Substances or storage tanks, unless specifically so agreed by Lessor in writing at the time of such agreement.

(ii) Lessor represents and warrants to Lessee that to the best of Lessor's knowledge there are no Hazardous Substances located in, on, under, or about the Premises as of the Commencement Date of the term of this Lease. Lessee shall have no responsibility to Lessor or to any other person with respect to the existence of any Hazardous Substances or storage tank on the Premises that is not brought onto the Premises or caused by any of Lessee's employees, agents, contractors, or other persons under Lessee's control or acting for or on behalf of Lessee.

(iii) Lessor shall indemnify, defend, protect and hold Lessee, its employees' agents, shareholders, licensees, invitees, officers and directors, harmless from and against any claims, actions, losses, costs, damages, liabilities or expenses (including, without limitation, reasonable attorneys', experts' and consultants fees, investigation and laboratory fees), arising out of or in connection with any Hazardous Substance (including, without limitations, asbestos) which Lessee establishes was present on the Commencement Date of the term of this Lease on, under, in or about the Premises, soil, air, groundwater or surface water thereof and was not caused by the acts or omissions of Lessee or its agents, contractors, or employees.

(d) Lessee's Compliance with Law. Except as otherwise provided in the Lease, Lessee, shall, at Lessee's sole costs and expense, fully diligently and in a timely manner, comply with all "Applicable Law," which term is used in this Lease shall include all laws, rules, regulations, ordinances, directives, covenants, easements and restrictions of record, permits, the requirements of any applicable fire insurance underwriter or rating bureau, relating to Lessee's particular use of the Premises, including, but not limited to, matters pertaining to (i) industrial hygiene, (ii) environmental conditions on, in, under or about the Premises, including soil and groundwater conditions, and
(iii) the use, generation, manufacture, production, installation, maintenance, removal, transportation, storage, spill or release of any Hazardous Substance or storage tank, now in effect or which may hereafter come into effect, and whether or not reflecting a change in policy from any previously existing policy. Lessee shall, within ten (10) business days after receipt of Lessor's written request, provide Lessor with copies of all documents and information, including, but not limited to permits, registrations, manifests, applications, reports and certifications, evidencing compliance with any Applicable Law specified by Lessor in writing (with copies or any documents involved) or any threatened or actual claim known to Lessee, notice, citation, warning, complaint or report within Lessee's possession and control pertaining to or involving failure by Lessee or the Premises to comply with any Applicable Law.

(e) Inspection Compliance. Lessor shall have the right to enter the Premises at any time in the case of an emergency, and otherwise at reasonable times upon at least 24 hours notice to the Lessee and subject to Lessee's reasonable security precautions, for the purpose of inspecting the condition of the Premises and for verifying the compliance by Lessee with this Lease and all Applicable Laws (as defined in subparagraph (d) above), and to employ experts and/or consultants in connection therewith and/or to advise Lessor with respect to Lessee's

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activities, including, but not limited to, the installation, operation, use, monitoring, maintenance, or removal of any Hazardous Substance or storage tank on or from the Premises. The costs and expenses of any such inspections shall be paid by the party requesting same, unless a Breach of this Lease is found to exist, or unless the inspection is requested or ordered by a governmental authority as the result of any such existing violation or contamination. In any such case, Lessee shall upon request reimburse Lessor for the reasonable costs and expenses of such inspections.

7. Maintenance; Repairs; Utility Installations; Trade Fixtures and Alterations.

7.1 Lessee's Obligations.

(a) Subject to the provisions of Paragraphs 2.2 (Lessor's warranty as to condition), 2.3 (Lessor's warranty as to compliance with covenants, etc).
7.2 (Lessor's obligations to repair), 9 (damage and destruction), and 14 (condemnation) and except to the extent required as a result of the negligence or willful misconduct of Lessor or Lessor's employees, agents, licensees or invitees, Lessee shall, at Lessee's sole cost and expense and at all times keep the Premises and every part thereof in good order, condition and repair excluding structural elements of the Premises, the roof, exterior walls and foundation of the Premises whether or not such portion of the Premises requiring repairs, or the means of repairing the same, are reasonably or readily accessible to Lessee, and whether or not the need for such repairs occurs as a result of Lessee's use, any prior use, the elements or the age of such portion of the Premises, including, without limiting the generality of the foregoing, all equipment or facilities serving the Premises, such as plumbing, heating, air conditioning, ventilating, electrical, lighting facilities, boilers, fired or unfired pressure vessels, fire sprinkler and/or standpipe and hose or other automatic fire extinguishing system, including fire alarm and/or smoke detection systems and equipment, fire hydrants, fixtures, walls (interior and exterior), foundations, ceilings, roofs, floors, windows, doors, plate glass, skylights, landscaping, driveways, parking lots, fences, retaining walls, signs, sidewalks and parkways located in, or, about, or adjacent to the Premises. Lessee shall not cause or permit any Hazardous Substance to be spilled or released in, on, under or about the Premises (including through the plumbing or sanitary sewer system) and shall promptly, at Lessee's expense, take all investigatory and/or remedial action reasonably recommended, whether or not formally ordered or required, for the cleanup of any contamination of, and for the maintenance, security and/or monitoring of the Premises, the elements surrounding same, or neighboring properties, that was caused or materially contributed to by Lessee, or pertaining to or involving any Hazardous Substance and/or storage tank brought onto the Premises by or for Lessee or under its control. Lessee, in keeping the Premises in good order, condition and repair, shall exercise and perform good maintenance practices. Lessee's obligations shall include restorations, replacements or renewals when necessary to keep the Premises and all improvements thereon or a part thereof in good order, condition and state of repair. If Lessee occupies the Premises of seven (7) years or more, Lessor may require Lessee to repaint the exterior of the buildings on the Premises as reasonably required, but not more frequently than once every seven (7) years.

(b) Lessee shall, at Lessee's sole cost and expense, procure and maintain contracts, with copies to Lessor, in customary form and substance for, and with contractors specializing and experienced in, the inspection, maintenance and service of the following equipment and improvements, if any, located on the Premises: (I) heating, air conditioning and ventilation equipment, (ii) boiler, fired or unfired pressure vessels, (iii) fire sprinkler and/or standpipe and hose or other automatic fire extinguishing systems, including fire alarm and/or smoke detection, (iv) landscaping and irrigation systems, (v) roof covering and drain maintenance and (vi) asphalt and parking lot maintenance.

7.2 Lessor's Obligations. Except for the warranties and agreements of Lessor contained in Paragraphs 2.2 (relating to condition of the Premises), 2.3 (relating to compliance with covenants, restrictions and building code), 9 (relating to destruction of the Premises) and 14 (relating to condemnation of the Premises), it is intended by the Parties hereto that Lessor have no obligation, in any manner whatsoever, to repair and maintain the Premises, the improvements located thereon, or the equipment therein, whether structural or non structural, all of which obligations are intended to be that of the Lessee under Paragraph 7.1 hereof. It is the intention of the Parties that the terms of this Lease govern the respective obligations of the Parties as to maintenance and repair of the Premises. Lessee and Lessor expressly waive the benefit of any statute now or hereafter in effect to the extent it is inconsistent with the terms of this Lease with respect to, or which affords Lessee the right to make repairs at the expense of Lessor or to terminate this Lease by reason of any needed repairs. Notwithstanding anything to the

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contrary in the Lease, Lessor shall perform and construct, at Lessor's sole cost and expense, any repair, maintenance or improvement (i) necessitated by the acts or omissions of Lessor or its agents, employees, invitees, or licensees (ii) required as a consequence of any violation of Applicable Laws or a construction defect in the Premises as of the Commencement Date (iii) which would be treated as a "capital expenditure" under generally accepted accounting principles; (iv) occasioned by fire, acts of God or other casualty or by the exercise of the power of eminent domain, (v) for which Lessor has a right of reimbursement from others, (vi) to the structural elements of the Premises, the structural elements of the roof (but excluding the roof membrane), exterior walls and foundation of the Premises, and (vii) relating to the abatement, removal, encapsulation, or other handling of asbestos in, on or about the Premises existing on the Commencement Date. Notwithstanding the foregoing, Lessee shall reimburse Lessor for costs incurred with respect to (iii) above (excluding costs of asbestos abatement) but only to the extent that (a) the same reduces the expenses otherwise payable by Lessee under the Lease and (b) Lessee's share of such costs during any twelve-month period of the Lease is amortized over the useful life of the capital item in question.

7.3 Utility Installations; Trade Fixtures; Alterations.

(a) Definitions; Consent Required. The term "Utility Installations" is used in this Lease to refer to all carpeting, window coverings, all lines, power panels, electrical distribution, security, fire protection systems, communication systems, lighting fixtures, heating, ventilating, and air conditioning equipment, plumbing, and fencing in, on or about he Premises installed at Lessee's sole expense. The term "Trade Fixtures" shall mean Lessee's furniture, fixtures, signage, machinery and equipment that can be removed without doing material damage to the Premises. The term "Alterations" shall mean any modification of the improvements on the Premises from that which are provided by lessor under the terms of this Lease, other than Utility Installations or Trade Fixtures, whether by addition or deletion. "Lessee Owned Alterations and/or Utility Installations" are defined as Alterations and/or Utility Installations made by Lessee that are not yet owned by Lessor as defined in Paragraph 7.49a). Lessee shall not make any Alterations or Utility Installations in, on, under or about the Premises without Lessor's prior written consent. Lessee may, however, make non-structural Utility Installations or non- structural alternations to the interior of the Premises (excluding the roof) without Lessor's consent as long as they are not visible from the outside, do not involve puncturing, relocating or removing the roof or any existing walls, and the cumulative cost thereof during the term of this Lease as extended does not exceed $25,000.

(b) Consent. Any Alterations or Utility Installations that Lessee shall desire to make and which require the consent of the Lessor shall be presented to Lessor in written form with proposed detailed plans. All consents given by Lessor, whether by virtue of Paragraph 7.3(a) or by subsequent specific consent, shall be deemed conditioned upon: (i) Lessee's acquiring all applicable permits required by governmental authorities, (ii) the furnishing of copies of such permits together with a copy of the plans and specifications of the Alteration or Utility Installation to Lessor prior to commencement of the work thereon, and (iii) the compliance by Lessee with all conditions of said permits in a prompt and expeditious manner. Any Alterations or Utility Installations by Lessee during the term of this Lease shall be done in a good and workmanlike manner, with good and sufficient materials, and in compliance with all Applicable Law. Lessee shall promptly upon completion thereof furnish Lessor with as-built plans and specifications therefor. Lessor may (but without obligation to do so) condition its consent to any requested Alteration or Utility Installation that costs $10,000 or more upon Lessee's providing Lessor with a lien and completion bond in an amount equal to one and one-half times the estimated cost of such Alteration or Utility Installation and/or upon Lessee's posting an additional Security Deposit with Lessor under Paragraph 36 hereof.

(c) Indemnification. Lessee shall pay, when due, all claims for labor or materials furnished or alleged to have been furnished to or for Lessee at or for use on the Premises, which claims are or may be secured by any mechanics' or materialmen's lien against the Premises or any interest therein. Lessee shall give Lessor not less than ten (10) days' notice prior to the commencement of any work in, on or about the Premises, and Lessor shall have the right to post notices of non-responsibility in or on the Premises as provided by law. If Lessee shall, in good faith, content the validity of any such lien, claim or demand, then Lessee shall, at its sole expense defend and protect itself, Lessor and the Premises against the same and shall pay and satisfy any such adverse judgment that may be rendered thereon before the enforcement thereof against the Lessor or the Premises. If Lessor shall require, Lessee shall furnish to Lessor a surety bond satisfactory to Lessor in an amount equal to one and one-half times the amount of such contested lien claim or demand, indemnifying Lessor against liability for the same, as required by law for the holding of the Premises free from the effect of such lien or claim. In addition, Lessor may require Lessee to pay

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Lessor's attorney's fees and costs in participating in such action if Lessor shall decide it is to its best interest to do so.

7.4 Ownership; Removal; Surrender; and Restoration.

(a) Ownership. Subject to Lessor's right to require their removal or become the owner thereof as hereinafter provided in this Paragraph 7.4, all Alterations and Utility Additions made to the Premises by Lessee shall be the property of and owned by Lessee. Unless otherwise instructed per subparagraph 7.4(b) hereof, all Lessee Owned Alterations and Utility Installations shall, at the expiration or earlier termination of this Lease, become the property of Lessor and remain upon and be surrendered by Lessee with the Premises.

(b) Removal. Unless otherwise agreed in writing, Lessor may require that any or all Lessee Owned Alterations or Utility Installations be removed by the expiration or earlier termination of this Lease, notwithstanding their installation may have been consented to by Lessor. Lessor may require the removal at any time of all or any part of any Lessee Owned Alterations or Utility Installations made without the required consent of Lessor. Upon request, Lessor shall advise Lessee in writing whether it reserves the right to require Lessee to remove any Alterations or Utility Installations from the Premises upon termination of the Lease.

(c) Surrender/Restoration. Lessee shall surrender the Premises by the end of the last day of the Lease term or any earlier termination date, with all of the improvements, parts and surfaces thereof clean and free of debris and in good operating order, condition and state of repair, ordinary wear and tear, acts of God, casualties, condemnation, Hazardous Substances (other than those stored, used or disposed of by Lessee in or about the Premises), and Alterations or Utility Installations which Lessor states in writing may be surrendered at the termination of the Lease excepted. "Ordinary wear and tear" shall not include any damage or deterioration that would have been prevented by good maintenance practice or by Lessee performing all of its obligations under this Lease. Except as otherwise agreed or specified in writing by Lessor, the Premises, as surrendered, shall include the Utility Installations. The obligation of Lessee shall include the repair of any damage occasioned by the installation, maintenance or removal of Lessee's Trade Fixtures, furnishings, equipment, and Alterations and/or Utility Installations, as well as the removal of any storage tank installed by or for Lessee, and the removal, replacement, or remediation of any soil, material or ground water contaminated by Lessee, all as may then be required by Applicable Law and/or good service practice. Lessee's Trade Fixtures shall remain the property of Lessee and shall be removed by Lessee subject to its obligation to repair and restore the Premises per this Lease.

8. Insurance; Indemnity.

8.1 Payment for Insurance. Regardless of whether the Lessor Lessee is the Insuring Party, Lessee shall pay for all insurance required under this Paragraph 8 except to the extent of the cost attributable to liability insurance carried by Lessor in excess of $3,000,000 per occurrence. Premiums for policy periods commencing prior to or extending beyond the Lease term shall be prorated to correspond to the Lease term. Payment shall be made by Lessee to Lessor within ten (10) days following receipt of an invoice for any amount due.

8.2 Liability Insurance.

(a) Carried by Lessee. Lessee shall obtain and keep in force during the term of this Lease a Commercial General Liability policy of insurance protecting Lessee and Lessor (as an additional insured) against claims for bodily injury, personal injury and property damage based upon, involving or arising out of the ownership, use, occupancy or maintenance of the Premises and all areas appurtenant thereto. Such insurance shall be on an occurrence basis providing single limit coverage in an amount not less than $3,000,000 per occurrence with an "Additional Insured-Managers or Lessors of Premises" Endorsement and contain the "Amendment of the Pollution Exclusion" for damage caused by heat, smoke or fumes from a hostile fire. The policy shall not contain any intra-insured exclusions as between insured persons or organizations, but shall include coverage for liability assumed under this Lease as an "insured contract" for the performance of Lessee's indemnity obligations under this Lease. The limits of said insurance required by this Lease or as carried by Lessee shall not, however, limit the liability of Lessee nor relieve Lessee of any obligation hereunder. All insurance to be carried by Lessee shall be primary to and not contributory with any similar insurance carried by Lessor, whose insurance shall be considered excess insurance only.

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(b) Carried by Lessor. In the event Lessor is in the Insuring Party, Lessor shall also maintain liability insurance described in Paragraph 8.2(a), above, in addition to, and not in lieu of, the insurance required to be maintained by Lessee. Lessee shall not be named as an additional insured therein.

8.3 Property Insurance - Building, Improvements and Rental Value.

(a) Building and Improvements. The Insuring Party shall obtain and keep in force during the term of this Lease a policy or policies in the name of Lessor, with loss payable to Lessor and to the holders of any mortgages, deeds of trust or ground leases on the Premises ("Lender(s)"), insuring loss or damage to the Premises. The amount of such insurance shall be equal to the full replacement cost of the Premises, as the same shall exist from time to time, or the amount required by Lenders, but in no event more than the commercially reasonable and available insurable value thereof if, by reason of the unique nature or age of the improvements involved, such latter amount is less than full replacement cost. If Lessor is the Insuring Party, however, Lessee Owned Alterations and Utility Installations shall be insured by Lessee under Paragraph 8.4 rather than by Lessor. If the coverage is available and commercially appropriate, such policy or policies shall insure against all risks of direct physical loss or damage (except the perils of flood and/or earthquake unless required by a Lender), including coverage for any additional costs resulting from debris removal and reasonable amounts of coverage for the enforcement of any ordinance or law regulating the reconstruction or replacement of any undamaged sections of the Premises required to be demolished or removed by reason of the enforcement of any building, zoning, safety or land use laws as the result of a covered cause of loss. Said policy or policies shall also contain an agreed valuation provision in lieu of any coinsurance clause, waiver of subrogation, and inflation guard protection causing an increase in the annual property insurance coverage amount by a factor of not less than the adjusted U.S. Department of Labor Consumer Price Index for All Urban Consumers for the City nearest to where the Premises are located. If such insurance coverage has a deductible clause, the deductible amount shall not exceed $1,000 per occurrence, and Lessee shall be liable for such deductible amount in the event of an Insured Loss, as defined in Paragraph 9.1(c).

(b) Rental Value. The Insuring Party shall, in addition, obtain and keep in force during the term of this Lease a policy or policies in the name of Lessor, with loss payable to Lessor and Lender(s), insuring the loss of the full rental and other charges payable by Lessee to Lessor under this Lease for one
(1) year (including all real estate taxes, insurance costs, and any scheduled rental increases). Said insurance shall provide that in the event the Lease is terminated by reason of an insured loss, the period of indemnity for such coverage shall be extended beyond the date of the completion of repairs or replacement of the Premises, to provide for one full year's loss of rental revenues from the date of any such loss. Said insurance shall contain an agreed valuation provision in lieu of any coinsurance clause, and the amount of coverage shall be adjusted annually to reflect the projected rental income, property taxes, insurance premium costs and other expenses, if any, otherwise payable by Lessee, for the next twelve (12) month period. Lessee shall be liable for any deductible amount in the event of such loss.

(c) Tenant's Improvements. If the Lessor is the Insuring Party, the Lessor shall not be required to insure Lessee Owned Alterations and Utility Installations unless the item in question has become the property of Lessor under the terms of this Lease. If Lessee is the Insuring Party, the policy carried by Lessee under this Paragraph 8.3 shall insure Lessee Owned Alterations and Utility Installations.

8.4 Lessee's Property Insurance. Subject to the requirements of Paragraph 8.3, Lessee at its cost shall either by separate policy or Lessee's option, by endorsement to a policy already carried, maintain insurance coverage on all of Lessee's personal property, Lessee Owned Alterations and Utility Installations and Tenant Improvements in, on, or about the Premises similar in coverage to that carried by the Insuring Party under Paragraph 8.3. Such insurance shall be full replacement cost coverage with a deductible of not to exceed $1,000 per occurrence. The proceeds from any such insurance shall be used by Lessee for the replacement of personal property or the restoration of Lessee Owned Alterations and Utility Installations. Lessee shall be the Insuring Party with respect to the insurance required by this Paragraph 8.4 and shall provide Lessor with written evidence that such insurance is in force.

8.5 Insurance Policies. Insurance required hereunder shall be in companies duly licensed to transact business in the state where the Premises are located, and maintaining during the policy term a "General Policyholders Rating" of at least B+, V, or such other rating as may be required by a Lender having a lien on the

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Premises, as set forth in the most current issue of "Best's Insurance Guide." Lessee shall not do or permit to be done anything which shall invalidate the insurance policies referred to in this Paragraph 8. If Lessee is the Insuring Party, Lessee shall cause to be delivered to Lessor certified copies of policies of such insurance or certificates evidencing the existence and amounts of such insurance with the insureds and loss payable clauses as required by this Lease. No such policy shall be cancellable or subject to modification except after thirty (30) days prior written notice to Lessor. Lessee shall at least thirty
(30) days prior to the expiration of such policies, furnish Lessor with evidence of renewals or "insurance binders" evidencing renewal thereof, or Lessor may order such insurance and charge the cost thereof to Lessee, which amount shall be payable by Lessee to Lessor upon demand. If the Insuring Party shall fail to procure and maintain the insurance required to be carried by the Insuring Party under this Paragraph 8, the other Party may, but shall not be required to, procure and maintain the same, but at Lessee's expense.

8.6 Waiver of Subrogation. The parties hereto release each other and their respective agents, employees, successors, assignees and subtenants from all liability for injury to any person or damage to any property that is caused by or results from a risk which is actually insured against, which is required to be insured against under this Lease, or which would normally be covered by the standard form of "all risk-extended coverage" casualty insurance, without regard to the negligence or willful misconduct of the entity so released. Each party shall use its best efforts to cause each insurance policy it obtains to provide that the insurer thereunder waives all right of recovery by way of subrogation as required herein in connection with any injury or damage covered by the policy. If such insurance policy cannot be obtained with such waiver of subrogation, or if such waiver of subrogation is only available at additional cost and the party for whose benefit the waiver is not obtained does not pay such additional cost, then the party obtaining such insurance shall immediately notify the other party of that fact.

8.7 Indemnity. Except for Lessor's negligence and/or breach of express warranties or other provisions of this Lease by Lessor or Lessor's agents, employees, licensees or invitees, and subject to Paragraph 8.6 above, Lessee shall indemnify, protect, defend and hold harmless, Lessor and its agents, Lessor's master or ground lessor, partners and Lenders, from and against any and all claims, loss of rents and/or damages, costs, liens, judgments, penalties, permits, attorney's and consultant's fees, expenses and/or liabilities arising out of, involving, or in dealing with use of the Premises by Lessee, negligence or willful misconduct of Lessee, its agents, contractors, employees or invitees, and out of any Default or Breach by Lessee in the performance in a timely manner of any obligation on Lessee's part to be performed under this Lease. The foregoing shall include, but not be limited to, the defense or pursuit of any claim or any action or proceeding involved therein, and whether or not (in the case of claims made against Lessor) litigated and/or reduced to judgment, and whether well founded or not. In case any action or proceeding be brought against Lessor by reason of any of the foregoing matters, Lessee upon notice from Lessor shall defend the same at Lessee's expense by counsel reasonably satisfactory to Lessor and Lessor shall cooperate with Lessee in such defense. Lessor need not have first paid any such claim in order to be so indemnified.

8.8 Exemption of Lessor from Liability. Lessor shall not be liable for injury or damage to the person or goods, wares, merchandise or other property of Lessee, Lessee's employees, contractors, invitees, customers, or any other person in or about the Premises, whether such damage or injury is caused by or results from fire, steam, electricity, gas, water or rain, or from the breakage, leakage, obstruction or other defects of pipes, fire sprinklers, wires, appliances, plumbing, air conditioning or lighting fixtures, or from any other cause, whether the said injury or damage results from conditions arising upon the Premises or upon other portions of the building of which the Premises are a part, or from other sources or places, and regardless of whether the cause of such damage or injury or the means of repairing the same is accessible or not. Lessor shall not be liable for any damages arising from any act or neglect of any other tenant of Lessor. Notwithstanding Lessor's negligence or breach of this Lease, Lessor shall under no circumstances be liable for injury to Lessee's business or for any loss of income or profit therefrom.

9. Damage or Destruction.

9.1 Definitions.

(a) "Premises Partial Damage" shall mean damage or destruction to the improvements on the Premises, other than Lessee Owned Alterations and Utility Installations, the repair cost of which damage or destruction to the improvements on the Premises, other than Lessee Owned Alterations and Utility

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Installations, the repair cost of which damage or destruction is less than 50% of the then Replacement Cost of the Premises immediately prior to such damage or destruction, excluding from such calculation the value of the land and Lessee Owned Alterations and Utility Installations.

(b) "Premises Total Destruction" shall mean damage or destruction to the Premises, other than Lessee Owned Alterations and Utility Installations the repair cost of which damage or destruction is 50% or more of the then Replacement Cost of the Premises immediately prior to such damage or destruction, excluding from such calculation the value of the land and Lessee Owned Alterations and Utility Installations.

(c) "Insured Loss" shall mean damage or destruction to improvements on the Premises, other than Lessee Owned Alterations and Utility Installations, which was caused by an event required to be covered by the insurance described in Paragraph 8.3(a), irrespective of any deductible amounts or coverage limits involved.

(d) "Replacement Cost" shall mean the cost to repair or rebuild the improvements owned by Lessor at the time of the occurrence to their condition existing immediately prior thereto, including demolition, debris removal and upgrading required by the operation of applicable building codes, ordinances or laws, and without deduction for depreciation.

(e) "Hazardous Substance Condition" shall mean the occurrence or discovery of a condition involving the presence of, or a contamination by, a Hazardous Substance as defined in Paragraph 6.2(a), in, on , or under the Premises.

9.2 Partial Damage - Insured Loss. If a Premises Partial Damage that is an Insured Loss occurs, then Lessor shall, at Lessor's expense, repair such damage (but not Lessee's Trade Fixtures or Lessee Owned Alterations and Utility Installations) as soon as reasonably possible and this Lease shall continue in full force and effect; provided, however, that Lessee shall, at Lessor's election, make the repair of any damage or destruction the total cost to repair of which is $10,000 or less, and, in such event, Lessor shall make the insurance proceeds available to Lessee on a reasonable basis of that purpose. Notwithstanding the foregoing, if the required insurance was not in force or the insurance proceeds are not sufficient to effect such repair, the Insuring Party shall promptly contribute the shortage in proceeds (except as to the deductible which is Lessee's responsibility) as and when required to complete said repairs. In the event, however, the shortage in proceeds was due to the fact that, by reason of the unique nature of the improvements, full replacement cost insurance coverage was not commercially reasonable and available, Lessor shall have no obligation to pay for the shortage in insurance proceeds or to fully restore the unique aspects of the Premises unless Lessee provides Lessor with the funds to cover same, or adequate insurance thereof, within ten (10) days following receipt of written notice of such shortage and request therefor. If Lessor receives said funds or adequate assurance thereof within said ten (10) day period, the party responsible for making the repairs shall complete them as soon as reasonably possible and this Lease shall remain in full force and effect. If Lessor does not receive such funds or assurance within said period, Lessor may nevertheless elect by written notice to Lessee within ten (10) days thereafter to make such restoration and repair as is commercially reasonable with Lessor paying any shortage in proceeds, in which case this Lease shall remain in full force and effect. If in such case Lessor does not so elect, then this Lease shall terminate sixty (60) days following the occurrence of the damage or destruction. Unless otherwise agreed, Lessee shall in no event have any right to reimbursement from Lessor for any funds contributed by Lessee to repair any such damage or destruction. Premises Partial Damage due to flood or earthquake shall be subject to Paragraph 9.3 rather than Paragraph 9.2 notwithstanding that there may be some insurance coverage, but the net proceeds of any such insurance shall be made available for the repairs if made by either Party.

9.3 Partial Damage - Uninsured Loss. If a Premises Partial Damage that is not an Insured Loss occurs, unless caused by a negligent or willful act of Lessee (in which event Lessee shall make the repairs at Lessee's expense and this Lease shall continue in full force and effect, but subject to Lessor's rights under Paragraph 13), Lessor may at Lessor's option, either: (i) repair such damage as soon as reasonably possible at Lessor's expense, in which event this Lease shall continue in full force and effect, or (ii) give written notice to Lessee within thirty (30) days after receipt by Lessor of knowledge of the occurrence of such damage of Lessor's desire to terminate this Lease as of the date sixty (60) days following the giving of such notice. In the event Lessor elects to give such notice of Lessor's intention to terminate this Lease, Lessee shall have the right within ten (10) days after the receipt of such notice to give written notice to Lessor of Lessee's commitment to pay for the repair of such

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damage totally at Lessee's expense and without reimbursement from Lessor. Lessee shall provide Lessor with the required funds or satisfactory assurance thereof within thirty (30) days following Lessee's said commitment. In such event this Lease shall continue in full force and effect, and Lessor shall proceed to make such repairs as soon as reasonably possible and the required funds are available. If Lessee does not give such notice and provide the funds or assurance thereof within the time specified above, this Lease shall terminate as of the date specified in Lessor's notice of termination.

9.4 Total Destruction. Notwithstanding any other provision hereof, if a Premises Total Destruction occurs (including any destruction required by any authorized public authority), this Lease shall terminate sixty (60) days following the date of such Premises Total Destruction, whether or not the damage or destruction is an Insured Loss or was caused by a negligent or willful act of Lessee. In the event, however, that the damage or destruction was caused by Lessee, Lessor shall have the right to recover Lessor's damages from Lessee except as released and waived in Paragraph 8.6.

9.5 Damage Near End of Term. If at any time during the last six (6) months of the term of this Lease there is damage for which the cost to repair exceeds one (1) month's Base Rent, whether or not an Insured Loss, Lessor may, at Lessor's option, terminate this Lease effective sixty (60) days following the date of occurrence of such damage by giving written notice to Lessee of Lessor's election to do so within thirty (30) days after the date of occurrence of such damage. Provided, however, if Lessee at that time has an exercisable option to extend this Lease or to purchase the Premises, then Lessee may preserve this Lease by, within twenty (20) days following the occurrence of the damage, or before the expiration of the time provided in such option for its exercise, whichever is earlier ("Exercise Period"), (i) exercising such option and (ii) providing Lessor with any shortage in insurance proceeds (or adequate assurance thereof) needed to make the repairs. If Lessee duly exercises such option during said Exercise Period and provides Lessor with funds (or adequate assurance thereof) to cover any shortage in insurance proceeds. Lessor shall, at Lessor's expense repair such damage as soon as reasonably possible and this Lease shall continue in full force and effect. If Lessee fails to exercise such option and provide such funds or assurance during said Exercise Period, then Lessor may at Lessor's option terminate this Lease as of the expiration of said sixty (60) day period following the occurrence of such damage by giving written notice to Lessee of Lessor's election to do so within ten (10) days after the expiration of the Exercise Period, notwithstanding any term or provision in the grant of option to the contrary.

9.6 Abatement of Rent; Lessee's Remedies.

(a) In the event of damage described in Paragraph 9.2 (Partial Damage
- Insured), whether or not Lessor or Lessee repairs or restores the Premises, the Base Rent, Real Property Taxes, insurance premiums, and other charges, if any, payable by Lessee hereunder of the period during which such damage, its repair of the restoration continues (not to exceed the period for which rental value insurance is required under Paragraph 8.3(b)), shall be abated in proportion to the degree to which Lessee's use of the premises is impaired. Except for abatement of Base Rent, Real Property Taxes, insurance premiums, and other charges, if any, as aforesaid, all other obligations of Lessee hereunder shall be performed by Lessee, and Lessee shall have no claim against Lessor for any damage suffered by reason of any such repair or restoration.

(b) If Lessor shall be obligated to repair or restore the Premises under the provisions of this Paragraph 9 and shall not commence, in a substantial and meaningful way, the repair of restoration of the Premises within ninety (90) days after such obligation shall accrue, Lessee may, at any time prior to the commencement of such repair or restoration, give written notice to Lessor and to any Lenders of which Lessee has actual notice of Lessee's election to terminate this Lease on a date not less than sixty (60) days following the giving of such notice. If Lessee gives such notice to Lessor and such Lenders and such repair or restoration is not commenced within thirty (30) days after receipt of such notice, this Lease shall terminate as of the date specified in said notice. If Lessor or a Lender commences the repair or restoration of the Premises within thirty (30) days after receipt of such notice, this Lease shall continue in full force and effect. "Commence" as used in this Paragraph shall mean either the unconditional authorization of the preparation of the required plans, or the beginning of the actual work on the Premises, whichever first occurs.

9.7 Hazardous Substance Conditions. If a Hazardous Substance Condition occurs, unless Lessee is legally responsible therefor (in which case Lessee shall make the investigation and remediation thereof

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required by Applicable Law and this Lease shall continue in full force and effect, but subject to Lessor's rights under Paragraph 13), Lessor may at Lessor's option either (i) investigate and remediate such Hazardous Substance Condition, if required, as soon as reasonably possible at Lessor's expense, in which event this Lease shall continue in full force and effect, or (ii) if the estimated cost to investigate and remediate such condition exceeds twelve (12) times the then monthly Base Rent or $100,000, whichever is greater, give written notice to Lessee within thirty (30) days after receipt by Lessor of knowledge of the occurrence of such Hazardous Substance Condition of Lessor's desire to terminate this Lease as of the date sixty (60) days following the giving of such notice. In the event Lessor elects to give such notice of Lessor's intention to terminate this Lease, Lessee shall have the right within ten (10) days after the receipt of such notice to give written notice to Lessor of Lessee's commitment to pay for the investigation and remediation of such Hazardous Substance Condition totally at Lessee's expense and without reimbursement from Lessor except to the extent of an amount equal to twelve (12) times the then monthly Base Rent or $100,000, whichever is greater. Lessee shall provide Lessor with the funds required of Lessee or satisfactory assurance thereof within thirty
(30) days following Lessee's said commitment. In such even this Lease shall continue in full force and effect, and Lessor shall proceed to make such investigation and remediation as soon as reasonably possible and the required funds are available. If Lessee does not give such notice and provide the required funds or assurance thereof within the times specified above, this Lease shall terminate as of the date specified in Lessor's notice of termination. If a Hazardous Substance Condition occurs for which Lessee is not legally responsible, there shall be abatement of Lessee's obligations under this Lease to the same extent as provided in Paragraph 9.6(a) for a period of not to exceed twelve (12) months.

9.8 Termination - Advance Payments. Upon termination of this Lease pursuant to this Paragraph 9, an equitable adjustment shall be made concerning advance Base Rent and any other advance payments made by Lessee to Lessor. Lessor shall, in addition, return to Lessee so much of Lessee's Surety Deposit as has not been, or is not then required to be, used by Lessor under the terms of this Lease.

9.9 Waive Statutes. Lessor and Lessee agree that the terms of this Lease shall govern the effect of any damage to or destruction of the Premises with respect to the termination of this Lease and hereby waive the provisions of any present or future statute to the extent inconsistent herewith.

10. Real Property Taxes.

10.1 (a) Payment of Taxes. Lessee shall pay the Real Property Taxes, as defined in Paragraph 10.2, applicable to the Premises during the term of this Lease. Subject to Paragraph 10.19b), all such payment shall be made at least ten (10) days prior to the delinquency date of the applicable installment. Upon Lessor's request, Lessee shall promptly furnish Lessor with satisfactory evidence that such taxes have been paid. If any such taxes to be paid by Lessee shall cover any period of time prior to or after the expiration or earlier termination of the term hereof, Lessee's share of such taxes shall be equitably prorated to cover only the period of time within the tax fiscal year this Lease is in effect, and Lessor shall reimburse Lessee for any overpayment after such proration. If Lessee shall fail to pay any Real Property Taxes required by this Lease to be paid by Lessee, Lessor shall have the right to pay the same, and Lessees shall reimburse Lessor therefor upon demand.

10.2 Definition of "Real Property Taxes." As used herein, the term "Real Property Taxes" shall include any form of real estate tax or assessment, general, special, ordinary or extraordinary, and any license fee, commercial rental tax, improvement bond or bonds, levy or tax (other than inheritance, personal income, gift transfer or estate taxes) imposed upon the Premises by any authority having the direct or indirect power to tax, including any city, state or federal government, or any school, agricultural, sanitary, fire, street, drainage or other improvement district thereof, levied against any legal or equitable interest of Lessor in the Premises or in the real property of which the Premises are a part. Lessor's right to rent or other income therefrom, and/or Lessor's business of leasing the Premises. The term "Real Property Taxes" shall also include any tax, levy, assessment or charge, or any increase therein, imposed by reason of events occurring, or changes in applicable law taking effect, during the term of this Lease, including but not limited to a change in the ownership of the Premises or in the improvements thereon, the execution of this Lease, or any modification, amendment or transfer thereof, and whether or not contemplated by the Parties.

10.3 Joint Assessment. If the Premises are not separately assessed, Lessee's liability shall be an equitable proportion of the Real Property Taxes of all of the land and improvements included within the tax parcel

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assessed, such proportion to be determined by Lessor from the respective valuations assigned in the assessor's work sheets or such other information as may be reasonably available. Lessor's reasonable determination thereof, in good faith, shall be conclusive.

10.4 Personal Property Taxes. Lessee shall pay prior to delinquency all taxes assessed against and levied upon Lessee Owned Alterations, Utility Installations, Trade Fixtures, furnishings, equipment and all personal property of Lessee contained in the Premises or elsewhere. When possible, Lessee shall cause its Trade Fixtures, furnishings, equipment and all other personal property to be assessed and billed separately from the real property of Lessor. If any of Lessee's said personal property shall be assessed with Lessor's real property, Lessee shall pay Lessor the taxes attributable to Lessee within ten
(10) days ___________ to delinquency thereof as stated in a written statement setting for the taxes applicable to Lessee's property or, at Lessor's option, as provided in Paragraph 10.1(b).

11. Utilities. Lessee shall pay for all water, gas, heat, light, power, telephone, trash disposal and other utilities and services supplied to the Premises, together with any taxes thereon.

12. Assignment and Subletting.

12.1 Lessor's Consent Required.

(a) Lessee shall not voluntarily or by operation of law assign, transfer, mortgage or otherwise transfer or encumber (collectively, "assignment") or sublet all or any part of Lessee's interest in this Lease or in the Premises without Lessor's prior consent given under and subject to the terms of Paragraph 36.

(b) Lessee may, without Lessor's prior written consent and without any participation by Lessor in assignment and subletting proceeds, sublet the Premises or assign the Lease to: (i) a subsidiary, affiliate, division or corporation controlling, controlled by or under common control with Lessee; (ii) a successor corporation related to Lessee by merger, consolidation, nonbankruptcy reorganization, or government action; (iii) a purchaser of substantially all of Lessee's assets located in the Premises. Any such sublease shall expressly state therein that such sublease shall be subject to all of the terms and provisions of this Lease. The assignee in any such assignment shall expressly assume in writing for the benefit of Lessor all of the obligations of the Lessee under this Lease. Executed counterparts of the foregoing sublease or assignment documents shall be delivered to Lessor upon request. For the purposes of this Lease, sale or transfer of Lessee's capital stock through any public exchange, shall not be deemed an assignment, subletting, or any other transfer of the Lease or the Premises.

(c) Lessee's remedy for any breach of this Paragraph 12.1 by Lessor shall be limited to compensatory damages and injunctive relief.

12.2 Terms and Conditions Applicable to Assignment and Subletting.

(a) Regardless of Lessor's consent, any assignment or subletting shall not: (i) be effective without the express written assumption by such assignee or sublessee of the obligations of Lessee under this Lease, (ii) release Lessee of any obligations hereunder, or (iii) after the primary liability of Lessee for the payment of Base Rent and other sums due Lessor hereunder or for the performance of any other obligations to be performed by Lessee under this Lease.

(b) Lessor may accept any rent of performance of Lessee's obligations from any person other than Lessee pending approval or disapproval of an assignment. Neither a delay in the approval or disapproval of such assignment nor the acceptance of any rent or performance shall constitute a waiver or estoppel of Lessor's right to exercise its remedies for the Default or Breach by Lessee of any of the terms, covenants or conditions of this Lease.

(c) The consent of Lessor to any assignment of subletting shall not constitute a consent to any subsequent assignment or subletting by Lessee or to any subsequent or successive assignment or subletting by the sublessee. However, Lessor may consent to subsequent sublettings and assignments of the sublease or any

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amendments or modifications thereto if Lessor notifies Lessee or anyone else liable on the Lease or sublease and obtains their consent, and such action shall not relieve such persons from liability under this Lease or sublease.

(d) In the event of any Default or Breach of Lessee's obligations under this Lease, Lessor may proceed directly against Lessee, any Guarantors or any one else responsible for the performance of the Lessee's obligations under this Lease, including the sublessee, without first exhausting Lessor's remedies against any other person or entity responsible therefor to Lessor, or any security held by Lessor or Lessee.

(e) Each request for consent to an assignment or subletting shall be in writing, accompanied by information relevant to Lessor's determination as to the financial and operational responsibility and appropriateness of the proposes assignee or sublessee, including but not limited to the intended use and/or required modification of the Premises, if any, together with a non-refundable deposit of $500 as reasonable consideration for Lessor's considering and processing the request for consent. Lessee agrees to provide Lessor with such other or additional information and/or documentation as may be reasonably requested by Lessor.

(f) Any assignee of, or sublessee under, this Lease shall, by reason of accepting such assignment or entering into such sublease, be deemed, for the benefit of Lessor, to have assumed and agreed to conform and comply with each and every term, covenant, condition and obligation herein to be observed or performed by Lessee during the term of said assignment or sublease, other than such obligations as are contrary to or inconsistent with provisions of an assignment or sublease to which Lessor has specifically consented in writing.

12.3 Additional Terms and Conditions Applicable to Subletting. The following terms and conditions shall apply to any subletting by Lessee of all or any part of the Premises and shall be deemed included in all subleases under this Lease whether or not expressly incorporated therein:

(a) Lessee hereby assigns and transfers to Lessor all of Lessee's interest in all rentals and income arising from any sublease of all or a portion of the Premises heretofore or hereafter made by Lessee, and Lessor may collect such rent and income and apply same toward Lessee's obligations under this Lease; provided, however, that until a Breach (as defined in Paragraph 13.1) shall occur in the performance of Lessee's obligations under this Lease. Lessee may, except as otherwise provided in this Lease, receive, collect and enjoy the rents accruing under such sublease. Lessor shall not, by reason of this or any other assignment of such sublease to Lessor, nor by reason of the collection of the rents from a sublessee, be deemed liable to the sublessee for any failure of Lessee to perform and comply with any of Lessee's obligations to such sublessee under such sublease. Lessee hereby irrevocably authorizes and directs any such sublessee, upon receipt of a written notice from Lessor stating that a Breach exists in the performance of Lessee's obligations under this Lease, to pay to Lessor the rents and other charges due and to become due under the sublease. Sublessee shall rely upon any such statement and request from Lessor and shall pay such rents and other charges to Lessor without any obligation or right to inquire as to whether such Breach exists and notwithstanding any notice from or claim from Lessee to the contrary. Lessee shall have no right or claim against said sublessee, or, until the Breach has been cured, against Lessor, for any such rents and other charges so paid by said sublessee to Lessor unless received by Lessor.

(b) In the event of a Breach by Lessee in the performance of its obligations under this Lease, Lessor, at its option and without any obligation to do so, may require any sublease to attorn to Lessor, in which event Lessor shall undertake the obligations of the subleasor under such sublease from the time of the exercise of said option to the expiration of such sublease; provided, however, Lessor shall not be liable for any prepaid rents or security deposit ;aid by such subleases to such sublessor for any other prior Defaults or Breaches of such subleasor under such sublease.

(c) Any matter or thing requiring the consent of the sublessor under a sublease shall also require the consent of Lessor herein.

(d) No sublessee shall further assign or sublet all or any part of the Premises without Lessor's prior written consent.

(e) Lessor shall deliver a copy of any notice of Default or Breach by Lessee to the sublessee, who shall have the right to cure the Default of Lessee within the grace period, if any, specified in such notice. The

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sublessee shall have a right to reimbursement and offset from and against Lessee for any such Defaults cured by the sublessee.

13. Default; Breach; Remedies.

13.1 Default; Breach. A "Default" is defined as a failure by the Lessee to observe, comply with or perform any of the terms, covenants, conditions or rules applicable to Lessee under this Lease. A "Breach is defined as the occurrence of any one or more of the following Defaults, and, where a grace period for cure after notice is specified herein, the failure by Lessee to cure such Default prior to the expiration of the applicable grace period, shall entitle Lessor to pursue the remedies set forth in Paragraphs 13.2 and/or 13.1:

(a) The vacating of the Premises without payment of Rent or performance of Lessee's other obligations hereunder.

(b) Except as expressly otherwise provided in this Lease, the failure by Lessee to make any payment of Base Rent or any other monetary payment required to be made by Lessee hereunder, whether to Lessor to a third party, as and when due, the failure by Lessee to provide Lessor with reasonable evidence of insurance or surety bond required under this Lease, where such failure continues for a period of ten (10) days following written notice thereof by or on behalf of Lessor to Lessee.

(c) A Default by Lessee as to the terms, covenants, conditions or provisions of this Lease, or of the rules adopted under Paragraph 40 hereof, that are to be observed, complied with or performed by Lessee, other than those described in subparagraphs (a), (b) or (c), above, where such Default continues for a period of thirty (30) days after written notice thereof by or on behalf of Lessor to Lessee; provided, however, that if the nature of Lessee's Default is such that more than thirty (30) days are reasonably required for its cure, then it shall not be deemed to be a Breach of this Lease by Lessee if Lessee commences such cure within said thirty (30) day period and thereafter diligently prosecutes such cure to completion.

(d) The occurrence of any of the following events: (i) The making by Lessee of any general arrangement or assignment for the benefit of creditors;
(ii) Lessee's becoming a "debtor" as defined in 11 U.S.C. (S)101 or any successor statute thereto (unless, in the case of a petition filed against Lessee, the same is dismissed within sixty (60) days); (iii) the appointment of a trustee or receiver to take possession of substantially all of Lessee's assets located at the Premises or of Lessee's interest in this Lease, where possession is not restored to Lessee within sixty (60) days; or (iv) the attachment, execution or other judicial seizure of substantially all of Lessee's assets located at the Premises or of Lessee's interest in this Lease, where such seizure is not discharged within sixty (60) days; provided, however, in the event that any provision of this subparagraph (e) is contrary to any applicable law, such provision shall be of no force or effect, and not affect the validity of the remaining provisions.

(e) The discovery by Lessor that any financial statement given to Lessor by Lessee or any Guarantor of Lessee's obligations hereunder was materially false. (intentionally??)

13.2 Remedies. In the event of a Breach of this Lease by Lessee, Lessor may at its option (but without obligation to do so), perform such duty or obligation on Lessee's behalf, including but not limited to the obtaining of reasonably required bonds, insurance policies, or governmental licenses, permits or approvals. The costs and expenses of any such performance by Lessor shall be due and payable by Lessee to Lessor upon invoice therefor. If any check given to Lessor by Lessee shall not be honored by the bank upon which it is drawn, Lessor, at its option, may require all future payments to be made under this Lease by Lessee to be made only by cashier's check. In the event of a Breach of this Lease by Lessee, as defined in Paragraph 13.1, with or without further notice or demand, and without limiting Lessor in the exercise of any right or remedy which Lessor may have by reason of such Breach, Lessor may:

(a) Terminate Lessee's right to possession of the Premises by any lawful means, in which case this Lease and the term hereof shall terminate and Lessee shall immediately surrender possession of the Premises to Lessor. In such event Lessor shall be entitled to recover from Lessee: (i) the worth at the time of the award of the unpaid rent which had been earned at the time of termination; (ii) the worth at the time of award of the amount by which the unpaid rent which would have been earned after termination until the time of award exceeds

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the amount of such rental loss that the Lessee proves could have been reasonably avoided; (iii) the worth at the time of award of the amount by which the unpaid rent for the balance of the term after the time of award exceeds the amount of such rental loss that the Lessee proves could be reasonably avoided; and (iv) any other amount necessary to compensate Lessor for all the detriment proximately caused by the Lessee's failure to perform it obligations under this Lease or which in the ordinary course of things would be likely to result therefrom, including but not limited to the cost of recovering possession of the Premises, expenses of reletting including necessary renovation and alteration of the Premises, reasonable attorneys' fees, and that portion of the leasing commission paid by Lessor applicable to the unexpired term of this Lease. The worth at the time of award of the amount referred to in provision (iii) of the prior sentence shall be computed by discounting such amount at the discount rate of the Federal Reserve Bank of San Francisco at the item of award plus one percent (1%) Efforts by Lessor to mitigate damages caused by Lessee's Default or Breach of this Lease shall not waive Lessor's right to recover damages under this Paragraph. If termination of this Lease is obtained through the provisional remedy of unlawful detainer, Lessor shall have the right to recover in such proceeding the unpaid rent and damages as are recoverable therein, or Lessor may reserve therein the right to recover all or any part thereof in a separate suit for such rent and/or damages. If a notice and grace period required under subparagraphs 13.1(b), (c) or (d) was not previously given, a notice to pay rent or quit, or to perform or quit, as the case may be, given to Lessee under any statute authorizing the forfeiture of leases for unlawful detainer shall also constitute the applicable notice for grace period purposes required by subparagraphs 13.1(b), (c) or (d). In such case, the applicable grace period under subparagraphs 13.1(b), (c) or (d) and under the unlawful detainer statute shall run concurrently after the one such statutory notice, and the failure of Lessee to cure the Default within the greater of the two such grace periods shall constitute both an unlawful detainer and a Breach of this Lease entitle Lessor to the remedies provided for in this Lease and/or by said statute.

(b) Continue the Lease and Lessee's right to possession in effect (in California under California Civil Code Section 1951.4) after Lessee's Breach and abandonment and recover the rent as it becomes due, provided Lessee has the right to sublet or assign, subject only to reasonable limitations. See Paragraphs 12 and 36 for the limitations on assignment and subletting which limitations Lessee and Lessor agree are reasonable. Acts of maintenance or preservation, efforts to relet the Premises, or the appointment of a receiver to protect the Lessor's interest under the Lease, shall not constitute a termination of the Lessee's right to possession.

(c) Pursue any other remedy now or hereafter available to Lessor under the laws of judicial decisions of the state wherein the Premises are located.

(d) The expiration or termination of this Lease and/or the termination of Lessee's right to possession shall not relieve Lessee from liability under any indemnity provisions of this Lease as to matters occurring or accruing during the term hereof prior to such termination or by reason of Lessee's occupancy of the Premises.

13.3 [deleted]

13.4 Late Charges. Lessee hereby acknowledges that late payment by Lessee to Lessor of rent and other sums due hereunder will cause Lessor to incur costs not contemplated by this Lease, the exact amount of which will be extremely difficult to ascertain. Such costs include, but are not limited to processing and accounting charges, and late charges which may be imposed upon Lessor by the terms of any ground lease, mortgage or trust deed covering the Premises. Accordingly, if any installment of rent or any other sum due from Lessee shall not be received by Lessor or Lessor's designee within 10 (ten) day after receipt by Lessee of written notice from Lessor that such amount shall be due, then Lessee shall pay to Lessor a late charge equal to six percent (6%) of such overdue amount. The parties hereby agree that such late charge represents a fair and reasonable estimate of the costs Lessor will incur by reason of late payment by Lessee. Acceptance of such late charge by Lessor shall in no event constitute a waiver of Lessee's Default or Breach with respect to such overdue amount, nor prevent Lessor from exercising any of the other rights and remedies granted hereunder. In the even that a late charge is payable hereunder, whether or not collected, for three (3) consecutive installments of Base Rent, then notwithstanding Paragraph 4.1 or any of the provision of this Lease to the contrary, Base Rent shall, at Lessor's option, become due and payable quarterly in advance.

13.5 Breach by Lessor. Lessor shall not be deemed in breach of this Lease unless Lessor fails within a reasonable time to perform an obligation required to be performed by Lessor. For purposes of this Paragraph 13.5, a reasonable time shall in no event be less than thirty (30) days after receipt by Lessor, and by the holders of any ground lease, mortgage or deed of trust covering the Premises whose name and address shall have

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been furnished Lessee in writing for such purpose, of written notice specifying wherein such obligation of Lessor has not been performed; provided, however, that if the nature of Lessor's obligation is such that more than thirty (30) days after such notice are reasonably required for its performance, then Lessor shall not be in breach of this Lease if performance is commenced within such thirty (30) day period and thereafter diligently pursued to completion.

14. Condemnation. If the Premises or any portion thereof are taken under the power of eminent domain or sold under the threat of the exercise of said power (all of which are herein called "condemnation"), this Lease shall terminate as to the part so taken as of the date the condemning authority takes title or possession, whichever first occurs. If the portion of the Premises taken by condemnation materially impairs Lessee's use and occupancy of the Premises, Lessee may, at Lessee's option, to be exercised in writing within ten (10) days after Lessor shall have given Lessee written notice of such taking (or in the absence of such notice, within ten (10) days after the condemning authority shall have taken possession) terminate this Lease as of the date the condemning authority takes such possession. If Lessee does not terminate this Lease in accordance with the foregoing, this Lease shall remain in full force and effect as to the portion of the Premises remaining, except that the Base Rent shall be reduced in the same proportion as the rentable floor area of the Premises taken bears to the total rentable floor area of the building located on the Premises and Rent shall be further equitably abated during any restoration of the Premises. No reduction of Base Rent shall occur if the only portion of the Premises taken is land on which there is no building. Any award for the taking of all or any part of the Premises under the power of eminent domain or any payment made under threat of the exercise of such power shall be the property of Lessor, whether such award shall be made as compensation for diminution in value of the leasehold or for the taking of the fee, or as severance damages; provided, however, that Lessee shall be entitled to any compensation separately awarded to Lessee for Lessee's relocation expenses and/or loss of Lessee's Trade Fixtures any tenant improvements constructed by Lessee solely at Lessee's expense and Lessee's personal property. In the event that this Lease is not terminated by reason of such condemnation, Lessor shall to the extent of its net severance damages received, over and above the legal and other expenses incurred by Lessor in the condemnation matter, repair any damage to the Premises caused by such condemnation, except to the extent that Lessee has been reimbursed therefor by the condemning authority. Lessee shall be responsible for the payment of any amount in excess of such net severance damages required to complete such repair to the extent that Lessee has been reimbursed therefor by the condemning authority.

15. Broker's Fee.

15.1 The Brokers named in Paragraph 1.10 are the procuring causes of this Lease.

15.2 Upon execution of this Lease by both Parties, Lessor shall pay to said Brokers jointly, or in such separate shares as they may mutually designate in writing, a fee as set forth in a separate written agreement between Lessor and said Brokers.

15.3 Lessee and Lessor each represent and warrant to the other that it has had no dealings with any person, firm, broker or finder (other than the Brokers, if any named in Paragraph 1.10) in connection with the negotiation of this Lease and/or the consummation of the transaction contemplated hereby, and that no broker or other person, firm or entity other than said named brokers is entitled to any commission or finder's fee in connection with said transaction. Lessee and Lessor do each hereby agree to indemnify, protect, defend and hold the other harmless from and against liability for compensation or charges which may be claimed by any such unnamed broker, finder or other similar party to reason of any dealings or actions of the indemnifying Party, including any costs, expenses, attorneys' fees reasonably incurred with respect thereto.

15.4 Lessor and Lessee hereby consent to and approve all agency relationships, including any dual agencies, indicated in Paragraph 1.10.

16. Tenancy Statement

16.1 Each Party (as "Responding Party") shall within ten (10) business days after written notice from the other Party (the "Requesting Party") execute, certifying: (1) that none of the terms or provisions of this Lease have been changed (or if they have been changed, stating how they have been changed); (2) that this Lease has not been cancelled or terminated; (3) the last date of payment of Base Rent and other charges and the time period

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covered by such payment; and (4) that, to the party's actual current knowledge, the other party is not in default under this Lease (of if the other party is claimed to be in default, stating why).

16.2 If Lessor desires to finance, refinance, or sell the Premises, any part thereof, or the building of which the Premises are a part, Lessee shall deliver to any potential lender or purchaser designated by Lessor such available financial statements of Lessee may be reasonably required by such lender or purchaser, including but not limited to Lessee's financial statements for the past three (3) years if available. All such financial statements shall be received by Lessor and such lender or purchaser in confidence and shall be used only for the purposes herein set forth.

17. Lessor's Liability. The term "Lessor" as used herein shall mean the owner or owners at the time in question of the fee title to the Premises, or, if this is a sublease, of the Lessee's interest in the prior lease. In the event of a transfer of Lessor's title or interest in the Premises or in this Lease, Lessor shall deliver to the transferee or assignee (in cash or by credit) any unused Security Deposit held by Lessor at the time of such transfer or assignment. Except as provided in Paragraph 15, upon such transfer or assignment and delivery of the Security Deposit, as aforesaid, the prior Lessor shall be relieved of all liability with respect to the obligations and/or covenants under this Lease thereafter to be performed by the Lessor. Subject to the foregoing, the obligations and/or covenants in this Lease to be performed by the Lessor shall be binding only upon the Lessor as hereinabove defined.

18. Severability. The invalidity of any provision of this Lease, as determined by a court of competent jurisdiction, shall in no way affect the validity of any of the provision hereof.

19. Interest on Past-Due Obligations. Any monetary payment due Lessor hereunder, other than late charges, not received by Lessor within thirty (30) days following the date on which it was due, shall bear interest from the thirty-first (31st) day after it was due to at the rate of 8% per annum, but not exceeding the maximum rate allowed by law, in addition to the late charge provided for in Paragraph 13.4.

20. Time of Essence. Time is of the essence with respect to the performance of all obligations to be performed or observed by the Parties under this Lease.

21. Rent Defined. All monetary obligations of Lessee to Lessor under the terms of this Lease are deemed to be rent.

22. No Prior or Other Agreements; Broker Disclaimer. This Lease, the Addenda, work letter, and any other exhibits contain all agreements between the Parties with respect to any matter mentioned herein and no other prior or contemporaneous agreement or understanding shall be effective.

23. Notices.

23.1 All notices required or permitted by this Lease shall be in writing and may be delivered in person (by hand or by messenger or courier service) or may be sent by regular, certified or registered mail or U.S. Postal Service Express Mail, with postage prepaid, or by facsimile transmission, and shall be deemed sufficiently given if served in a manner specified in this Paragraph 23. The addresses noted adjacent to a Party's signature on this Lease shall be that Party's address for delivery or mailing of notice purposes. Either Party may by written notice to the other specify a different address for notice purposes, except that upon Lessee's taking possession of the Premises, the Premises shall constitute Lessee's address for the purpose of mailing or delivering notices to Lessee. A copy of all notices required or permitted to be given to Lessor hereunder shall be concurrently transmitted to such party or parties at such addresses as Lessor may from time to time hereafter designate by written notice to Lessee.

23.2 Any notice sent by registered or certified mail, return receipt requested, shall be deemed given on the date of delivery shown on the receipt card, or if no delivery date is shown, the postmark thereon. If sent by regular mail the notice shall be deemed given forty-eight (48) hours after the same is addressed as required herein and mailed with postage prepaid. Notices delivered by United States Express Mail or overnight courier that guarantees next day delivery shall be deemed given twenty-four (24) hours after delivery of the same to the United States Postal Service or courier. If any notice is transmitted by facsimile transmission or similar means, the same shall be deemed served or delivered upon telephone confirmation of receipt of the transmission thereof, provided a

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copy is also delivered via delivery or mail. If notice is received on a Sunday or legal holiday, it shall be deemed received on the next business day.

24. Waivers. No waiver by Lessor or Lessee of the Default or Breach of any term, covenant or condition hereof by Lessee or Lessor shall be deemed a waiver of any other term, covenant or condition hereof, or of any subsequent Default or Breach by Lessee of the same or of any other term, covenant or condition hereof. Lessor's consent to, or approval of, any act shall not be deemed to render unnecessary the obtaining of Lessor's consent to, or approval of, any subsequent or similar act by Lessee, or be construed as the basis of an estoppel to enforce the provision or provisions of this Lease requiring such consent. Regardless of Lessor's knowledge of a Default or Breach at the time of accepting rent, the acceptance of rent by Lessor shall not be a waiver of any preceding Default or Breach by Lessee of any provision hereof, other than the failure of Lessee to pay the particular rent so accepted. Any payment given Lessor by Lessee may be accepted by Lessor on account of moneys or damages due Lessor, notwithstanding any qualifying statements or conditions made by Lessee in connection therewith, which such statements and/or conditions shall be of no force or effect whatsoever unless specifically agreed to in writing by Lessor at or before the time of deposit of such payment.

25. Recording. Either Lessor or Lessee shall, upon request of the other, execute, acknowledge and deliver to the other a short form memorandum of this Lease for recording purposes. The Party requesting recordation shall be responsible of repayment of any fees or taxes applicable thereto.

26. No Right to Holdover. Lessee has no right to retain possession of the Premises or any part thereof beyond the expiration or earlier termination of this Lease.

27. Cumulative Remedies. No remedy or election hereunder shall be deemed exclusive but shall, wherever possible, be cumulative with all of the remedies at law or in equity.

28. Covenants and Conditions. All provisions of this Lease to be observed or performed by Lessee are both covenants and conditions.

29. Binding Effect; Choice of Law. This Lease shall be binding upon the parties, their personal representatives, successors and assigns and be governed by the laws of the State in which the Premises are located. Any litigation between the Parties hereto concerning this Lease shall be initiated in the county in which the Premises are located.

30. Subordination; Attornment; Non-Disturbance.

30.1 Subordination. Provided that the ground lessor, Lender, or other holder of the interest to which this Lease would be subordinated executes a recognition and nondisturbance agreement which provides that this Lease shall not be terminated so long as no Breach by Lessee exists under this Lease, this Lease and any Option granted hereby shall be subject and subordinate to any ground lease, mortgage, deed of trust, or other hypothecation or security device (collectively, "Security Device"), now or hereafter placed by Lessor upon the real property of which the Premises are a part, to any and all advances made on the security thereof, and to all renewals, modifications, consolidations, replacements and extensions thereof, Lessee agrees that the Lenders holding any such Security Device shall have no duty, liability or obligation to perform any of the obligations of Lessor under this Lease, but that in the event of Lessor's default with respect to any subobligation, Lessee will give any Lender whose name and address have been furnished Lessee in writing for such purpose notice of Lessor's default and allow such Lender the same period available for Lessor for the cure of said default before invoking any remedies Lessee may have by reason thereof. If any Lender shall elect to have this Lease and/or any Option granted hereby superior to the lien of its Security Device and shall give written notice thereof to Lessee, this Lease and such Options shall be deemed prior to such Security Device, notwithstanding the relative dates of the documentation or recordation thereof.

30.2 Attornment. Subject to the non-disturbance provisions of Paragraph 30.3 and such recognition and non-disturbance agreement, Lessee agrees to attorn to a Lender of any other party who acquires ownership of the Premises by reason of a foreclosure of a Security Device, and that in the event of such foreclosure, such new owner shall not: (i) be liable for any act or omission of any prior lessor or with respect to events occurring

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prior to acquisition of ownership, unless such Lender had previously consented to the same, (ii) be subject to any offsets or defenses which Lessee might have against any prior lessor, or (iii) be bound by prepayment of more than one (1) month's rent, unless the same was paid to such Lender.

30.3 Non-Disturbance. With respect to Security Devices entered into by Lessor after the execution of this Lease, Lessee's subordination of this Lease shall be subject to receiving assurance (a "non-disturbance agreement") from the Lender that Lessee's possession and this Lease, including any options to extend the term hereof, will not be disturbed so long as Lessee is not in Breach hereof and attorns to the record owner of the Premises.

30.4 Self-Executing. The agreements contained in this Paragraph 30 shall be effective without the execution of any further documents; provided, however, that, upon written request from Lessor or a Lender in connection with a sale, financing or refinancing of the Premises, Lessee and Lessor shall execute such further writings as may be reasonably required to separately document any such subordination or non-subordination, attornment and/or non-disturbance agreement as is provided for herein.

31. Attorney's Fees. If any Party or Broker brings an action or proceeding to enforce the terms hereof or declare rights hereunder, the Prevailing Party (as hereafter defined) or Broker in any such proceeding, action, or appeal thereon, shall be entitled to reasonable attorney's fees. Such fees may be awarded in the same suit or recovered in a separate suit, whether or not such action or proceeding is pursued to decision or judgment. The term, "Prevailing Party" shall include, without limitation, a Party or Broker who substantially obtains or defeats the relief sought, as the case may be, whether by compromise, settlement, judgment, or the abandonment by the other Party or Broker of its claim or defense. The attorney's fees award shall not be computed in accordance with any court fee schedule, but shall be such as to fully reimburse all attorney's fees reasonably incurred. Lessor shall be entitled to attorney's fees, costs and expenses incurred in the preparation and service of notices of Default and consultations in connection therewith, whether or not a legal action is subsequently commenced in connection with such Default or resulting Breach.

32. Lessor's Access; Showing Premises; Repairs. Lessor and Lessor's agents shall have the right to enter the Premises at any time, in the case of an emergency, and otherwise at reasonable times upon one (1) business day's prior notice subject to Lessee's reasonable security measures for the purpose of showing the same to prospective purchasers, lenders, or lessee, an making such alterations, repairs, improvements or additions to the Premises or to the building of which they are a part, as Lessor may reasonably deem necessary. Lessor may at any time place on or about the Premises or building any ordinary "For Sale" signs and Lessor may at any time during the last one hundred twenty
(120) days of the term hereof place on or about the Premises any ordinary "For Lease" signs. All such activities of Lessor shall be without abatement of rent or liability to Lessee. Lessor shall, however, at all times minimize any interference with Lessee's operations at the Premises.

33. Auctions. Lessee shall not conduct, nor permit to be conducted, either voluntarily or involuntarily, any auction upon the Premises without first having obtained Lessor's prior written consent. Notwithstanding anything to the contrary in this Lease, Lessor shall not be obligated to exercise any standard of reasonableness in determining whether to grant such consent.

34. Signage. Lessor grants to Lessee the right to construct a monument sign and a building sign with Lessee's name thereon at Lessee's expense, subject to the prior written approval by Lessor of the size, design, and location of such signage and subject to approval of such signage by the City of Palo Alto. Lessee shall remove all such signage at Lessee's expense promptly upon the expiration or sooner termination of this Lease.

35. Termination; Merger. Unless specifically stated otherwise in writing by Lessor, the voluntary or other surrender of this Lease by Lessee, the mutual termination or cancellation hereof, or a termination hereof by Lessor for Breach by Lessee, shall automatically terminate any sublease or lesser estate in the Premises; provided, however, Lessor shall, in the event of any such surrender, termination or cancellation, have the option to continue any one or all of any existing subtenancies. Lessor's failure within ten (10) days following any such event to make a written election to the contrary by written notice to the holder of any such lesser interest, shall constitute Lessor' selection to have such event constitute the termination of such interest.

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36. Consents.

(a) Accept for Paragraph 33 hereof (Auctions) wherever in this Lease the consent, approval, designation, determination or judgment of a Party is required, such consent, approval, designation, determination or judgment shall not be unreasonable or unreasonably withheld or delayed. Lessor's actual reasonable costs and expenses (including but not limited to architects', attorneys', engineers' or other consultants' fees) incurred in the consideration of, or response to, a request by Lessee for any Lessor consent pertaining to this Lease or the Premises, including but not limited to consents to an assignment, a subletting or the presence or use of a Hazardous Substance, practice or storage tank, shall be paid by Lessee to Lessor upon receipt of an invoice and supporting documentation therefor. Lessor's consent to any act, assignment of this Lease or subletting of the Premises by Lessee shall not constitute an acknowledgement that no Default or Breach by Lessee of this Lease exists, nor shall such consent be deemed a waiver of any then existing Default or Breach, except as may be otherwise specifically stated in writing by Lessor at the time of such consent.

(b) All conditions to Lessor's consent authorized by this Lease are acknowledged by Lessee as being reasonable. The failure to specify herein any particular condition to Lessor's consent shall not preclude the imposition by Lessor at the time of consent of such further or other conditions as are then reasonable with reference to the particular matter for which consent is being given.

37. (Deleted section)

38. Quiet Possession. At all times that no Breach of this Lease by Lessee exists, upon payment by Lessee of the rent for the Premises and the observance and performance of all of the covenants, conditions and provisions on Lessee's part to be observed and performed under this Lease, Lessee shall have quiet possession of the Premises of the entire term hereof subject to all of the provisions of this Lease.

39. Options.

39.1 Definition. As used in this Paragraph 39 the word "Option" has the following meaning: (a) the right to extend the term of this Lease or to renew this Lease or to extend or renew any lease that Lessee has on the property of Lessor.

39.2 Options Personal To Original Lessee. Each Option granted to Lessee in this Lease is personal to the original Lessee named in Paragraph 1.1 hereof, and cannot be voluntarily or involuntarily assigned or exercised by any person or entity other than said original Lessee while the original Lessee is in full and actual possession of the Premises and without the intention of thereafter assigning or subletting. The Options, if any, herein granted to Lessee are not assignable, either as a part of an assignment of this Lease or separately or apart therefrom, and no Option may be separated from this Lease in any manner, by reservation or otherwise, except that Lessee may, without Lessor's prior written consent and without any participation by Lessor in assignment and subletting proceeds, sublet the Premises or assign the Lease to: (i) a subsidiary, affiliate, division or corporation controlling, controlled by or under common control with Lessee; (ii) a successor corporation related to Lessee by merger, consolidation, nonbankruptcy reorganization, or government action;
(iii) a purchaser of substantially all of Lessee's assets located in the Premises. Any such sublease shall expressly state therein that such sublease shall be subject to all of the terms and provisions of this Lease. The assignee in any such assignment shall expressly assume in writing for the benefit of Lessor all of the obligations of the Lessee under this Lease. Executed counterparts of the foregoing sublease or assignment documents shall be delivered to Lessor upon request. For the purposes of this Lease, sale or transfer of Lessee's capital stock through any public exchange, shall not be deemed as assignment, subletting, or any other transfer of the Lease or the Premises.

39.3 Multiple Options. In the event that Lessee has any Multiple Options to extend or renew this Lease, a later Option cannot be exercised unless the prior Options to extend or renew this Lease have been validly exercised.

39.4 Effect of Default on Options.

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(a) Lessee shall have no right to exercise an Option, notwithstanding any provision in the grant of Option to the contrary: (i) during the period commencing with the giving of any notice of Default under Paragraph 13.1 and continuing until the noticed Default is cured.

(a) The period of time within which an Option may be exercised shall not be extended or enlarged by reason of Lessee's inability to exercise an Option because of the provisions of Paragraph 39.4(a).

40. [deleted]

41. Security Measures. Lessee hereby acknowledges that the rental payable to Lessor hereunder does not include the cost of guard service or the security measures, and that Lessor shall have no obligation whatsoever to provide same. Lessee assumes all responsibility for the protection of the Premises, Lessee, its agents and invitees and their property from the acts of third parties.

42. Reservations. Lessor reserves to itself the right, from time to time, to grant, without the consent or joinder of Lessee, such easements, rights and dedications that Lessor deems necessary, and to cause the recordation of parcel maps and restrictions, so long as such easements, rights, dedications, maps and restrictions do not unreasonably interfere with the use of the Premises by Lessee or increase Lessee's cost of such use or occupancy or Lessee's obligations hereunder. Lessee agrees to sign any documents reasonably requested by Lessor to effectuate any such easement rights, dedication, map or restrictions.

43. Performance Under Protest. If at any time a dispute shall arise as to any amount or sum of money to be paid by one Party to the other under the provisions hereof, the Party against whom the obligation to pay the money is asserted shall have the right to make payment "under protest" and such payment shall not be regarded as a voluntary payment and there shall survive the right on the part of said Party to institute suit for recovery of such sum. If it shall be adjudged that there was no legal obligation on the part of said Party to pay such sum or any part thereof, said Party shall be entitled to recover such sum or so much thereof as it was not legally required to pay under the provisions of this Lease.

44. Authority. If either Party hereto is a corporation, trust, or general or limited partnership, each individual executing this Lease on behalf of such entity represents and warrants that he or she is duly authorized to execute and deliver this Lease on its behalf. If Lessee is a corporation, trust or partnership, Lessee shall, within thirty (30) days after request by Lessor, deliver to Lessor evidence satisfactory to Lessor of such authority.

45. Conflict. Any conflict between the printed provisions of this Lease and the typewritten or handwritten provisions shall be controlled by the typewritten or handwritten provisions. Any conflict between this form of this Lease and any Addenda, Work Letter or Exhibits shall be controlled by the later.

46. Offer. Preparation of this Lease by Lessor or Lessor's agent and submission of same to Lessee shall not be deemed an offer to lease to Lessee. This Lease is not intended to be binding until executed by all Parties hereto.

47. Amendments. This Lease may be modified only in writing, signed by the Parties in interest at the time of the modification. The parties shall amend this Lease from time to time to reflect any adjustments that are made to the Base Rent or other rent payable under this Lease. As long as they do not materially change Lessee's obligations hereunder, Lessee agrees to make such reasonable non-monetary modifications to this Lease as may be reasonably required by an institutional, insurance company, or pension plan Lender in connection with the obtaining of normal financing or refinancing of the property of which the Premises are a part.

48. Multiple Parties. Except as otherwise expressly provided herein, if more than one person or entity is named herein as either Lessor or Lessee, the obligations of such Multiple Parties shall be the joint and several responsibility of all persons or entities named herein as such Lessor or Lessee.

49. Reasonable Expenditures. Notwithstanding anything to the contrary in this Lease, any expenditure by a party permitted or required under this Lease, for which such party is entitled to demand and does demand reimbursement from the other party, shall be limited to the fair market value of the goods and services involved, shall be reasonably incurred, and shall be substantiated by documentary evidence available for inspection and review by the other party or its representative during normal business hours.

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50. Addendum. The Inserts 1 through 36 set forth on the Addendum attached hereto are incorporated in the text of this Lease at the places indicated by the numbers in the margins of this Lease, which numbers correspond to the Insert numbers on the Addendum.

LESSOR AND LESSEE HAVE CAREFULLY READ AND REVIEWD THIS LEASE AND EACH TERM AND PROVISION CONTAINED HEREIN, AND BY THE EXECUTION OF THIS LEASE SHOW THEIR IFORMED AND VOLUNTARY CONSENT THERETO. THE PARTIES HEREBY AGREE THAT, AT THE TIME THIS LEASE IS EXECUTED, THE TERMS OF THIS LEASE ARE COMMERCIALLY REASONABLE AND EFFECTUATE THE INTENT AND PURPOSE OF LESSOR AND LESSEE WITH RESPECT TO THE PREMISES.

IF THIS LEASE HAS BEEN FILLED IN, IT HAS BEEN PREPARED FOR SUBMISSION TO YOUR ATTORNEY FOR HIS APPROVAL FURTHER, EXPERTS SHOULD BE CONSULTED TO EVALUATE THE CONDITION OF THE PROPERTY AS TO THE POSSIBLE PRESENCE OF ASBESTOS, STORAGE TANKS OR HAZARDOUS SUBSTANCES. NO REPRESENTATION OR RECOMMENDATION IS MADE BY THE AMERICAN INDUSTURAL REAL EASTATE ASSOCIATION OR BY THE REAL ESTATE BROKER(S) OR THEIR AGENTS OR EMPLOYEES AS TO THE LEGAL SUFFICIENCY, LEGAL EFFECT, OR TAX

CONSEQUENCES OF THIS LEASE OR THE TRANSACTION TO WHICH IT RELATES; THE PARTIES SHALL RELY SOLEY UPON THE ADVICE OF THEIR OWN COUNSEL AS TO THE LEGAL AND TAX CONSEQUENCES OF THIS LEASE. IF THE SUBJECT PROPERTY IS LOCATED IN A STATE OTHER THAN CALIFORNIA, AN ATTORNEY FROM THE STATE WHERE THE PROPERTY IS LOCATED SHOULD BE CONSULTED.

The parties hereto have executed this Lease at the place on the dates specified above to their respective signatures.

Executed at ___________________________________        Executed at ___________________________________
on ____________________________________________        on ____________________________________________
by LESSOR: W. F. BATTON & CO., INC.                    by LESSEE: OMNICELL TECHNOLOGIES, INC.
a California corporation                               a California corporation

By /s/ W. F. Batton                                    By /s/ Randall Lipps
   --------------------------------------------           --------------------------------------------
Name Printed: W. F. Batton                             Name Printed: Randall Lipps
             ----------------------------------                      ---------------------------------
Title: ________________________________________        Title: ________________________________________

By ____________________________________________        By ____________________________________________
Name Printed: _________________________________        Name Printed: _________________________________
Title: ________________________________________        Title: ________________________________________
Address: ______________________________________        Address: ______________________________________
_______________________________________________        _______________________________________________
Tel No. (___) _______ Fax No. (___) ___________        Tel No. (___) ________ Fax No. (___) __________

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WORK LETTER

THIS WORK LETTER is made part of the Lease dated March 25, 1994 (the "Lease"), by and between W. F. BATTON & CO., INC., a California corporation, as Lessor ("Lessor") and OMNICELL TECHNOLOGIES, INC., a California corporation, as Lessee ("Lessee"), pertaining to certain premises consisting of approximately 30,600 rentable square feet of space located on the property commonly known as 1101 East Meadow Drive, Palo Alto, California (the "Premises").

Lessor and Lessee agree as follows:

1. Agreement to Construct: Lessor shall construct the interior improvements ("Lessee Interior Improvements") for the Premises to be occupied by Lessee pursuant to the Lease in accordance with this Work Letter.

2. Plans, Specification, and Working Drawings.

(a) Preliminary Plans. Lessor and Lessee have reviewed preliminary plans and specifications for the Lessee Interior Improvements.

(b) Preparation of Working Drawings. On or before April 8, 1994, Lessor shall cause to be prepared final plans, specifications, and working drawings ("Working Drawings") which shall substantially conform to the preliminary plans and specifications reviewed by Lessor and Lessee. Within five (5) days after receipt thereof, Lessee shall approve such Working Drawings or Lessee shall deliver to Lessor Lessee's specific written changes or objections to such Working Drawings. Lessee shall not unreasonably withhold or delay its approval of the Working Drawings. The parties shall negotiate in good faith to reach agreement on any aspect of the Working Drawings disapproved by Lessee, with each party using its best efforts to complete and to approve the Working Drawings on or before April 15, 1994.

(c) Approval of Working Drawings. Upon approval, Lessor and Lessee shall each initial and date the Working Drawings and Lessor shall submit the Working Drawings to all appropriate governmental agencies for approval. Immediately after all necessary governmental approvals have been obtained, four (4) copies of the Working Drawings shall be initialed and dated by Lessor and Lessee if any changes thereto have been made by the governmental agencies. The Working Drawings as approved, and all change orders permitted pursuant to Paragraph 5 hereof are referred to herein as the "Approved Plans."

3. Prime Contractor.

(a) The prime contractor to be used to construct the Lessee Interior Improvements shall be Jack Dymond Co. (hereafter "Dymond").

(b) Dymond shall have the following obligations during the course of the Construction Contract (as such term is defined in Paragraph 4 below), and, where appropriate, following the completion of the construction of the Lessee Interior Improvements, in addition to all other conditions and obligations set forth in the Construction Contract or otherwise applicable to Dymond:

(1) Dymond shall obtain at least three (3) competitive bids for all subcontractors unless Lessor and Lessee approve in writing a fewer number of competitive bids;

(2) Dymond shall expressly assume responsibility for all work done by all persons working under its supervision and control; and

(3) Dymond shall use its best efforts to ensure that all persons working under its supervision and control are, during the entire course of their duties, properly licensed and qualified to do the particular jobs for which they were hired.

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4. Construction Contract. Lessor and Lessee shall cooperate to cause the Lessee Interior Improvements to be constructed in the following manner:

(a) Dymond to Construct Interior Improvements. The parties agree that the Lessee Interior Improvements shall be constructed by Dymond pursuant to a fixed price construction contract (the "Construction Contract") between Lessor and Dymond. The Construction Contract shall provide that Dymond shall provide a warranty of one year with respect to the Lessee Interior Improvements.

(b) Lessor's Securing of Bids. Lessor shall obtain Dymond's bid to construct the Lessee Interior Improvements, which bid shall be itemized to show the amount to be charged by each subcontractor for its part or the work. Subcontractors shall be chosen on the basis of competitive bids, as set forth in the Paragraph 3(b)(1) above herein. As soon as the bid is obtained from Dymond, Lessor shall submit it to Lessee for Lessee's review and approval.

(c) Lessor's Disapproval of Subcontractor Bids. Lessor shall have the right to disapprove any subcontractor bid for any item of the work, and if Lessor does so, Lessor, Lessee and Dymond shall immediately confer and attempt in good faith to reach agreement upon an alternative subcontractor whose bid is acceptable to Lessor, Lessee and Dymond. If the parties are unable to reach agreement within five (5) business days after Lessor has disapproved a subcontractor, then, at Lessor's option, the part of the work that is the subject of the bid disapproved by Lessor shall be rebid to one subcontractor, and such work shall be awarded to the low bidder if such low bid is lower than the bid disapproved by Lessor. In selecting alternative subcontractors, Lessor and Lessee shall act reasonably and in good faith, acknowledging that a subcontractor's ability to do quality work completed on time is as important as the price charged, and acknowledging further that the approval of Dymond of any subcontractor must be obtained. Any rebidding process undertaken pursuant to this subparagraph shall be completed within ten (10) business days after Lessor first disapproves the subcontractor bid in question.

(d) Lessee's Approval of Improvement Costs.

(1) Submittal of Dymond Bid. Once the bid of Dymond and its subcontractors has been obtained, Lessor shall deliver to Lessee its final estimate of the total "Improvement Costs" (as defined below) that will be incurred to construct the Lessee Interior Improvements shown on the Approved Plans. If the final estimate of the Improvement Costs is $765,000 or less, but not less than $550,000, Lessee shall approve such amount.

(2) Review of Dymond Bid. If the final estimate of the Improvement Costs exceeds $765,000 (30,600 rentable square feet x $25 per square foot), Lessor and Lessee shall review the bid and shall jointly use their best efforts to modify the Plans to reduce the total Improvements Costs to $765,000. Notwithstanding the foregoing, if the final bid of Dymond for the total Improvement Costs exceeds $765,000, Lessor and Lessee have reviewed the bid and the Plans and are unable to agree upon changes to the Plans to reduce the Improvement Costs to $765,000 within ten (10) days after receipt of said bid after attempting in good faith to do so, Lessor shall have the option either (I) to approve the final bid of Dymond, or (ii) to terminate the Lease by written notice to Lessee, in which event Lessor and Lessee shall be relieved of all further obligations thereunder and any prepaid rent and security deposit shall be returned to Lessee.

(3) Redesign of Improvements by Lessee. All actions to modify the Approved Plans and to reduce the bid of Dymond pursuant to this subparagraph
(d) shall be completed within ten (10) business days after the estimated Improvement Costs figure has been submitted to Lessee. In the event of changes in the Plans under the provisions of this subparagraph (d), the date set forth in Paragraph 3.3 of the Lease, entitled "Delay in Possession," and Insert 1 in the Addendum, which grant to Lessee the right to terminate the Lease, shall be delayed on calendar day for each calendar day that the redesign or rebidding actually delays the commencement of construction of the Lessee Interior Improvements.

5. Change Orders. After the Working Drawings have been approved by Lessor and Lessee in final form in writing as provided above, Lessee shall have the right to request change orders. Any change order requested by Lessee shall be subject to the prior written approval of Lessor, which consent shall not be unreasonably withheld

26.


or delayed provided that the change order does not increase the total Improvement Costs. Lessee shall not be entitled to request, and Lessor shall not be obligated to approve, any change order which increases the total Improvement Costs to an amount which exceeds the maximum Lessee Improvement Allowance of $765,000, unless Lessee is willing to pay for said changes.

6. Lessee Improvement Allowance. The Base Monthly Rent set forth in Paragraph 1.5 of the Lease and Insert 2 of the Addendum is predicated upon a base Lessee Improvement Allowance to be provided by Lessor of Twenty Dollars ($20) per square foot, or a total base Lessee Improvement Allowance of $612,000 (30,600 square feet x $20). Lessor has also agreed (1) that no less than $550,800 (30,600 square feet x $18) shall be contributed by Lessor as the minimum Lessee Improvement Allowance and (2) that Lessor shall contribute up to a maximum amount of $765,000 as the maximum Lessee Improvement Allowance (30,600 square feet x $25). The Base Monthly Rent shall be adjusted in accordance with Paragraph 8(d) of this Work Letter if the amount of the Lessee Improvement Allowance actually spent is less than or greater than $612,000. If construction of any Lessee Interior Improvements is deferred, Lessor and Lessee shall mutually agree on the timing of subsequent construction.

To the extent that the total Improvements Costs initially equal less than $765,000, then the unused portion of that amount shall be made available to Lessee for future improvements during the Lease term with adjustments to be made at that time in Base Monthly Rent as provided in Paragraph 8(d) of this Work Letter.

7. Commencement and Construction. As soon as (i) the Working Drawings have been prepared and approved as provided above, (ii) all necessary governmental approvals have been obtained, and (iii) Lessor has entered into the Construction Contract, then Lessor shall thereafter cause construction of the Lessee Interior Improvements to be commenced and diligently prosecuted to completion, so that the Lessee Interior Improvements may be Substantially Completed (as defined below) as soon as practicable.

8. Improvements Costs. "Improvements Costs" for the Lessee Interior Improvements shall mean the following "Included Costs," but not the following "Excluded Costs" for the Lessee Interior Improvements:

(a) Included Costs. "Included Costs" shall mean the following: (i) the total amount due pursuant to the fixed price Construction Contract entered into pursuant to this Work Letter and any change orders approved pursuant to this Work Letter; (ii) the cost paid to governmental authorities of governmental applications, approvals, permits and fees required to construct the Lessee Interior Improvements; (iii) fees of architects, space planners, engineers or other professionals (other than employees of affiliates of Lessor) for services rendered in connection with the design and construction of the Lessee Interior Improvements up to a maximum of Seven Hundred Sixty-five Thousand Dollars ($765,000) or such additional amount as Lessor may approve; (iv) any costs paid to governmental authorities to inspect and obtain approval of the Lessee Interior Improvements; (v) the cost associated with the purchase and installation of a supplemental HVAC unit as per the approved plans; and (vi) any other costs of designing, constructing and obtaining governmental approvals of the work shown on the Working Drawings, other than the "excluded Costs described below.

(b) Excluded Costs. "Excluded Costs" (which will also not be paid by Lessee) shall mean and "Improvements Costs" shall not include: (i) costs incurred as a consequence of a contractor's or subcontractor's default, the negligent act or omission or the willful misconduct of Lessor or its consultants, agents, employees, contractors or subcontractor or Lessor's breach of this Lease, or any contract for construction of the Lessee Interior Improvements; (ii) interest, principal and other charges with respect to any construction or permanent loan or the project; (iii) costs for which Lessor may obtain reimbursement from others; (iv) costs for which Lessor has actually received reimbursement from others; (v) costs associated with investigation, removal, monitoring or remediation of hazardous materials; (vi) premium time and other costs of accelerating the work to meet the scheduled completion date sated in the Lease, unless the acceleration amount is approved by Lessee in wiring;
(vii) costs of management, design and all other services provided by employees or affiliates of Lessor and the cost of any administration, profit and overhead for Lessor or any of its administration, profit and overhead for Lessor or any of its employees and affiliates; (viii) all costs and expenses incurred with respect to work not required by the Approved Plans, as the same may be amended by change orders; (ix) the cost of bringing the Building and surrounding property into compliance with applicable building codes, Hazardous Materials laws or other statutes, laws, rules or regulations; (x) all costs incurred in connection with casualties and Acts of God; and (xi) any parking fees or fines incurred in connection with the parking of vehicles by any contractor.

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(c) Additional Lessor Improvements. In addition to the Lessee Improvement Allowance to be contributed by Lessor as provided for in Paragraph 6 above, Lessor shall pay for the cost of repainting the exterior of the building, restriping and resealing the parking lot, repairing or replacing the walk-in and loading doors, repainting the roof screens, and repair or replace any HVAC units that are not working. In addition to the Lessee Improvement Allowance, Lessor shall also pay for any City or State required building code upgrades and seismic reinforcement requirements in effect as of the date of execution and delivery of this Lease. Any interior ADA or interior Title 24 requirements, other than City/State building code upgrades and seismic reinforcement requirements shall be paid for by Lessee as part of the Lessee Improvement Allowance. Exterior ADA or exterior Title 24 requirements shall be paid for by Lessor unless caused by Lessee's interior improvements.

(d) Rent Adjustment. If the Improvements Costs are less than $612,000, the Base Monthly Rent provided for in Paragraph 1.5 of the Lease and Insert 2 of the Addendum shall be decreased by $0.0208/sq.ft/dollar/per month. If the Improvements Costs are more than $612,000, up to a total of $765,000 ($25 per square foot), the Base Monthly Rent shall be increased by $0.0208/sq.ft/dollar/per month.

9. Final Accounting. When the Lessee Interior Improvements are Substantially Completed (as defined below), Lessor shall submit to Lessee a final and detained accounting of all Improvement Costs paid for the construction of the Lessee Interior Improvements, certified as a true and correct by Lessor. Lessee shall have the right, during normal business hours after giving Lessor at least two (2) business days prior written notice, to audit the books, records, and supporting documents of Lessor to the extent necessary to determine the accuracy of such accounting. Lessee shall bear the cost of such audit. Any such audit must be conducted, if at all, within ninety (90) calendar days after Lessor delivers such accounting to Lessee.

10. Risk of Loss. The risk of loss of the Premises before the Commencement Date of the Lease (as defined in the Lease) shall be borne by Lessor. At all times prior to the Commencement Date, Lessor, at its sole cost and expense, shall maintain contingent liability and broad form "builder's risk" insurance with coverage in an among equal to the replacement cost of the shell of the Premises plus the estimated cost of the Lessee Interior Improvements. If the Premises are damaged or destroyed by a casualty covered by said insurance, then Lessor shall promptly and diligently complete construction of the Premises and the Lessee Interior Improvements in accordance with the Lease and this Work Letter.

11. Substantial Completion. The Lessee Interior Improvements shall be deemed "Substantially Completed" when: (i) Dymond has issued its written certificate stating that such improvements have been Substantially Completed in accordance with the Approved plans; (ii) the Premises substantially conform to the Approved Plans, as amended by any change orders approved pursuant to Paragraph 5 of this Work Letter, and (iii) Lessee may lawfully occupy the Premises in accordance with applicable law.

12. Delay in Completion Caused by Lessee. Lessor and Lessee acknowledge that the date on which Lessee is obligated to commence paying Base Monthly Rent under the Lease would be delayed because of (i) Lessee's failure to review and approve the Working Drawings within the time periods set forth in Paragraph 2 hereof; or (ii) as the result of any change orders requested by Lessee and approved by Lessor pursuant to the terms of this Work Letter. It is the intent of the parties hereto that the commencement of Lessee's obligation to pay Base Monthly Rent not be delayed by any such causes, and if any of the events set forth above causes an actual delay in Substantial Completion, Lessee's obligation to pay Base Monthly Rent shall commence as of the date it would otherwise have commenced absent said delay caused by Lessee.

13. Delivery of Possession.

(a) Walk Through. As soon as the Lessee Interior Improvements are Substantially Completed, Lessor and Lessee shall conduct a joint "walk through" of the Premises and shall inspect the Lessee Interior Improvements so completed using their best efforts to discover all uncompleted or defective construction. After such inspection has been completed, each party shall sign a "punch list" setting forth any such defective items.

(b) Correction of "Punch List" Items. Lessor shall use its best efforts to cause the Dymond to complete and/or repair such "punch list" items within thirty (30) days after the "walk through." After the initial

28.


"punch List" has been prepared, Lessee shall use its reasonable efforts to discover any further defects and shall have the right to submit a further "punch list" to Lessor within sixty (60) days after the Commencement Date. In such case, Lessor shall cause Dymond to remedy such "punch list" items as soon as reasonably practicable. Nothing contained herein shall impair any of Lessee's other right under the Lease.

14. Warranty. Dymond shall warrant for a period of one year from the date of substantial completion of construction that the Lessee Interior Improvements shall be constructed in a good and workmanlike manner, using new materials of good quality, and in accordance with the Approved Plans (as modified by any change orders requested by Lessee and approved by Lessor pursuant to the terms of Paragraph 5 of this Work Letter).

15. Ownership of the Interior Improvements.

(a) Parties' Respective Depreciation of Improvements. All of the Lessee Interior Improvements which are constructed with funds of Lessor shall become the property of Lessor. Any furnishings, trade fixtures, equipment installed in the Premises and paid for by Lessee shall become the property of Lessee upon installation thereof in the Premises and Lessee shall have the right to depreciate and claim and collect investment tax credits on any such property throughout the terms of the Lease.

(b) Allocation of Depreciation. If both Lessor and Lessee contribute to the cost of constructing any of the Lessee Interior Improvements, Lessor and Lessee shall to the extent reasonably practicable agree in writing which of such improvements are to be constructed using Lessor's funds (and therefore are Lessor's property) and which of the improvements are to be installed with Lessee's funds (and therefore are Lessee's property). Such allocation of ownership of the Lessee Interior Improvements shall be made in a reasonable manner so that the benefits of accelerated or component depreciation for tax purposes and any investment tax credit shall be shared by Lessor and Lessee in proportion to the amount contributed by each of them for payment of the cost of the Lessee Interior Improvements. Any Lessee Interior Improvements constructed with Lessee's funds shall become a part of the realty and shall become Lessor's property upon the expiration for sooner termination of the Lease, except for items which Lessor and Lessee agree in writing prior to commencement of construction may be or shall be removed by Lessee.

16. Lessee's Right to Install Trade Fixtures. When the construction of the Lessee Interior Improvements has proceeded to the point where Lessee's work of installing its fixtures and equipment in the Premises can be commenced in accordance with good construction practices, Lessor shall notify Lessee to that effect and shall permit Lessee, and its authorized representatives and contractors, to have access to the Premises for a period of not less than fourteen (14) days prior to the Commencement Date for the purpose of installing Lessee's trade fixtures and equipment. Such entry by Lessee shall not advance the Commencement Date or Lessee's obligation to pay Base Monthly Rent.

17. Headings. The descriptive headings used and inserted in this Work Letter are for convenience only and shall not be deemed to affect the meaning or construction of any of the provisions hereof.

18. Effect of Agreement. In the event of any inconsistency between this Work Letter and the Lease, the terms of the Lease shall prevail.

29.


AMENDMENT NUMBER ONE TO LEASE

1101 East Meadow Drive
Palo Alto, California

THIS AMENDMENT NUMBER ONE TO LEASE ("this Amendment") is made and entered into as of June 17, 1999 by and between W.F. BATTON & CO., INC., a California corporation, Lessor, and OMNICELL TECHNOLOGIES, INC., a California corporation, Lessee.

RECITALS

A. Lessor and Lessee entered into a Standard Industrial/Commercial Single-Tenant Lease - Net and Addendum dated March 25, 1994 (the "Lease") of premises consisting of approximately 30,600 square feet commonly known as 1101 East Meadow Drive, Palo Alto, California (the "Premises"). The Expiration Date of the Original Term of the Lease is June 30, 1999.

B. In lieu of Lessee exercising the option to extend the Original Term of the Lease contained in Insert 6, Paragraph 3.3, Option, in the Addendum to the Lease, Lessor and Lessee have agreed to enter into this Amendment extending the Original Term of the Lease upon the terms and conditions set forth herein.

AGREEMENT

NOW, THEREFORE, Lessor and Lessee agree as follows:

1. DEFINED TERMS. Defined terms in the Lease which are used in this Amendment shall have the same meaning as in the Lease.

2. EXTENDED TERM.

(a) The Original Term of the Lease referred to in Paragraph 1.3 of the Lease is hereby extended for one additional period of five
(5) years commencing on July 1, 1999 and ending on June 30, 2004 (the "Extended Term"). The Extended Term shall be upon all of the terms and provisions of the Lease, as amended by this Amendment.

(b) The option to extend the Original Term of the Lease contained in Insert 6, Paragraph 3.3, of the Addendum to the Lease is hereby deleted and said option to extend shall be of no further force or effect.

(c) Lessee shall have no option to extend upon the expiration of the Extended Term.

3. BASE RENT. Lessee shall pay to Lessor Monthly Base Rent in monthly installments in advance on the first day of each calendar month during the Extended Term, in accordance with Paragraph 4.1 of the Lease, as follows:

1.


                                                    Monthly Base
                                                      Rent Per       Monthly Base
              Period                                Square Foot        Rent NNN
-----------------------------------                 -----------      ------------
July 1, 1999 - December 31, 1999                       $1.85            $56,610

January 1, 2000 - December 31, 2000                    $2.00            $61,200

January 1, 2001 - December 31, 2001                    $2.20            $67,320

January 1, 2002 - December 31, 2002                    $2.30            $70,380

January 1, 2003 - December 31, 2003                    $2.45            $74,970

January 1, 2004 - June 30, 2004                        $2.60            $79,560

4. REIMBURSEMENT OF COST OF TENANT IMPROVEMENTS. In addition to the installments of Monthly Base Rent provided for in Paragraph 3 above, Lessee shall pay to Lessor, together with the installments of Monthly Base Rent, the sum of Four Thousand Two Hundred Forty-Nine and Forty-One Hundredths Dollars ($4,249.41) per month on the first day of each calendar month of the Extended Term, commencing July 1, 1999 and continuing through June 30, 2004, as reimbursement to Lessor of Lessor's contribution to the cost of the Tenant Improvements of Two Hundred Thousand Dollars ($200,000) referred to in Paragraph 6 of this Amendment, plus interest thereon at the rate of ten percent (10%) per annum.

5. OPERATING EXPENSES. In addition to the Monthly Base Rent and the monthly payments to reimburse Lessor for Lessor's contribution to the cost of the Tenant Improvements, Lessee shall during the Extended Term pay the operating expenses of the Premises as Lessee has done during the Original Term, plus any actual increases in said operating expenses which occur during the Extended Term.

6. TENANT IMPROVEMENTS.

(a) Lessee acknowledges that, as of the date of this Amendment, Lessee is occupying the Premises under the Lease. Lessee accepts the Premises in their present condition as of the commencement date of the Extended Term, subject to the construction of the Tenant Improvements pursuant to this Paragraph 6.

(b) Promptly following the execution and delivery of this Amendment, Lessor shall cause to be constructed and completed the Tenant Improvements to the Premises listed on Exhibit "A" attached hereto and incorporated by reference herein. Lessor shall cause the Tenant Improvements to be constructed by Dymond Construction Group (the "Contractor") pursuant to an Agreement between Lessor and the Contractor (the "Construction Contract") which shall

2.


provide for a guaranteed maximum cost in an amount which shall be approved in writing by Lessor and Lessee. Plans for the Tenant Improvement's shall be prepared by LRS & Associates. The cost of the plans shall be paid by Lessor and shall be charged against Lessor's contribution to the cost of the Tenant Improvements. The Construction Contract and the plans for the Tenant Improvements shall be approved in writing by Lessee, which approval shall not be unreasonably withheld. The Construction Contract for the Tenant Improvements shall include a guarantee by the Contractor against defects in workmanship or materials for one (1) year.

(c) The Contractor shall obtain at least three (3) competitive bids for the portion of the work which is to be performed by subcontractors unless Lessor and Lessee approve in writing a fewer number of competitive bids for such portion of the work. The final bid of the Contractor for the construction of the Tenant Improvements shall be approved in writing by Lessor and Lessee. Lessor's contribution to the cost of construction of the Tenant Improvements shall be Two Hundred Thousand Dollars ($200,000) ("Lessor's Contribution"), subject to Lessee's obligation to reimburse Lessor for Lessor's Contribution plus interest thereon pursuant to Paragraph 4. Lessee shall pay to Lessor in a lump sum in cash promptly upon completion of the Tenant Improvements and receipt by Lessee of an invoice therefor from Lessor that portion of the cost of the Tenant Improvements which exceeds Lessor's Contribution of Two Hundred Thousand Dollars ($200,000), plus the added cost of any change orders requested by Lessee pursuant to Paragraph 6(d).

(d) After the working drawings have been approved by Lessor and Lessee in writing as provided above, Lessee shall have the right to request change orders to the Tenant Improvements. Any change order requested by Lessee shall be subject to the prior written approval of Lessor, which approval shall not be unreasonably withheld or delayed, provided that the change order does not increase the total cost of the Tenant Improvements to an amount in excess of the total cost previously approved by Lessor and Lessee, unless Lessee agrees in writing to pay such excess to Lessor in a lump sum in cash promptly upon completion of the Tenant Improvements.

(e) All of the Tenant Improvements, furnishings, trade fixtures, and equipment installed in the Premises which are paid for from Lessor's Contribution to the Tenant Improvements, paid for directly by Lessee, or reimbursed by Lessee to Lessor, shall become the property of Lessee upon installation thereof in the Premises, and Lessee shall have the right to depreciate and claim and collect investment tax credits on any such property throughout the Extended Term. Notwithstanding the foregoing, Tenant Improvements constructed with Lessor's Contribution to the Tenant Improvements or with the Lessee's funds shall become a part of the realty and shall become Lessor's property upon the expiration or sooner termination of the Extended Term, except for items which Lessor and Lessee agree in writing prior to commencement of construction of the Tenant Improvements may be or shall be removed by Lessee.

7. ASPHALTIC CONCRETE REPAIR WORK. Lessor shall cause to be performed by R. Gunn Construction, Inc. ("Gunn Construction") the asphaltic concrete repair work to the Premises at a total cost of Twenty-Nine Thousand Seven Hundred Fifty-Seven Dollars ($29,757) which is described in Gunn Construction's Estimate #99-1069 dated May 18, 1999 to Lessor, a copy of which Lessor has delivered to Lessee. One-half (1/2) of the cost of the work ($14,878.50) shall

3.


be paid by Lessor and charged against Lessor's Contribution to the cost of the Tenant Improvements. The remaining one-half (1/2) of the cost of the work ($14,878.50) shall be paid by Lessor directly and shall not be charged against Lessor's Contribution to the Tenant Improvements.

8. HAZARDOUS MATERIALS MANAGEMENT PLAN. Except as set forth on Exhibit "B" attached hereto and incorporated herein by reference, Lessee shall not bring onto the Premises any hazardous materials. Lessee shall deliver to Lessor (a) a copy of Lessee's current Hazardous Materials Management Plan, and any amendments or supplements thereto, or replacements thereof, from time to time during the Extended Term, and (b) a copy of all Hazardous Materials reports or plans filed by Lessee with the City of Palo Alto, even though Lessee's Hazardous Materials Management Plan and any such reports or plans filed with the City show that Lessee is not currently using any reportable hazardous materials on the Premises.

9. AMENDMENT TO GOVERN. In the event of any inconsistency between the printed provisions of the Lease or the Addendum thereto and this Amendment, the provisions of this Amendment shall govern.

10. CONTINUING EFFECT. Except as extended and amended hereby, the Lease shall remain in full force and effect.

4.


IN WITNESS WHEREOF, the parties have executed this Amendment No. 1 as of the date set forth above.

LESSOR

W.F. BATTON & CO., INC.,
a California corporation

By /s/ Marie A. Batton
       Its President

By
   --------------------------------
     Its

LESSEE

OMNICELL TECHNOLOGIES, INC.
a California corporation

By /s/ Earl E. Fry
       Its VP and CFO

By
   --------------------------------
     Its

5.


EXHIBIT "A"

SCOPE OF WORK FOR TENANT IMPROVEMENTS


EXHIBIT "B"

HAZARDOUS MATERIALS USED BY LESSEE ON THE PREMISES


EXHIBIT 10.5

MASTER ASSIGNMENT AGREEMENT

This Master Assignment Agreement ("Agreement") is dated as of ____________,1994 and is by and between Americorp Financial, Inc., a Michigan corporation, having an address at 20300 West 12 Mile Road, Suite 202, Southfield, Michigan 48076 ("AFI") and OmniCell Technologies, Inc., a California corporation, having an address at 1101 East Meadow Drive, Palo Alto, California 94303, ("Lessor").

WHEREAS, Lessor desires, from time to time to either (a) assign to AFI all of its right, title and interest in and to certain leases and equipment pursuant to the terms of the Bill of Sale and Assignment attached hereto as Exhibit A; or
(b) assign to AFI all its right, title and interest in and to certain leases and grant to AFI a security interest in the equipment subject to such leases pursuant to the terms of the Assignment Agreement attached hereto as Exhibit B (any such leases, the equipment subject thereto and lessees being hereinafter referred to as "Leases", "Equipment" and "Lessees", respectively); and

WHEREAS, AFI may, from time to time, in its sole discretion, accept such assignments and arrangements under the terms and conditions hereinafter set forth;

NOW, THEREFORE, in consideration of the mutual promises and covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, Lessor and AFI agree as follows:

1. SCOPE. This Agreement shall apply to all leases which are entered into by Lessor and are assigned to AFI by Lessor.

2. DOCUMENTATION. All transaction shall be documented pursuant to standards set by AFI on forms provided by or acceptable to AFI. All Lessor-furnished documentation accepted by AFI shall be in conformity with all applicable laws and regulations, including but not limited to applicable laws related to usury. Documentation presently required for all Leases submitted by Lessor to AFI is described in Exhibit C hereto. All documents, materials, and supplies furnished by AFI shall remain the property of AFI and shall be returned at Lessor's expense, immediately upon demand or upon the termination of this Agreement.

3. REPRESENTATION AND WARRANTIES AS TO LEASES AND EQUIPMENT

With respect to each Lease assigned to AFI pursuant to the Agreement, Lessor hereby represents and warrants as follows:

(a) Such Lease resulted from a bona fide lease of the Equipment described therein for business or commercial use; the Lease represents a valid and enforceable obligation for the aggregate gross rentals in accordance with the terms of the Lease; the Lease is the sole and entire understanding and agreement with the Lessee and there are no other agreements with respect to the rental of said Equipment; no term of any Lease violates any material applicable law, including without limitation any usury statures; all signatures on the Lease are genuine; and

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the Lease was duly authorized and properly executed by a Lessee having legal capacity to enter into the Lease.

(b) All of the Equipment described in the Lease has been delivered to the location stated in the Lease, was new at the time of such delivery, and has been accepted by the Lessee in a condition satisfactory to the Lessee.

(c) The Lease and the payments due thereunder are and will continue to be throughout the term of the Lease unconditionally due and payable without set-offs, abatements, counterclaims or defenses of any kind whatsoever, and the Lessee has no right under the Lease or otherwise to terminate the Lease or to return the Equipment prior to the expiration of the initial term of the Lease. There has been no prepayment of rent under the Lease.

(d) The Lessor named in the Lease is the sole owner of the Lease and the Equipment covered thereunder, free from any liens, security interests, rights of third parties, and encumbrances other than those created in favor of AFI and the Lessee under the Lease. Each Lease is the only original of such Lease.

(e) Lessor has done and shall do nothing that might impair the value of any Lease or the rights of AFI therein.

(f) To the best of Lessor's knowledge, the Lessee has not made an assignment for the benefit of creditors, has not ceased to do business as a going concern, nor has filed or has had filed against it a petition under the Bankruptcy Code or for appointment of a receiver.

(g) The Lessee is not in default with respect to any obligation under the Lease, including any event which with the passing of time or the giving of notice or both would constitute an event of default thereunder.

(h) Any right, title, and interest of Lessor or any other party to the Lease and the Equipment covered thereunder is subject and subordinate to the right, title, and interest of AFI.

(i) Lessor has not granted, and will not grant, to any Lessee any allowance, credit, adjustment, or enter into any settlement or amendment of the Lease without the prior written consent of AFI.

(j) Lessor is not in default with respect to any of its obligations, if any, under the Lease or in any transaction which gave rise to the Lease, including any event which with the passing of time or the giving of notice or both would constitute an event of default thereunder and Lessor has no knowledge of any other default under the Lease.

(k) Lessor is acting solely on its own behalf and is not acting as a "super broker" or "co-broker" or receiving compensation for handling any transaction from any

2.


third party, unless such fact is disclosed in writing at the time such transaction is submitted to AFI.

(l) Lessor has duly filed in all appropriated jurisdictions Uniform Commercial Code financing statements, as applicable, against each Lessee with respect to Equipment leased to such Lessee and such financing statements are in full force and effect and are sufficient to create a first perfected security interest in such Equipment in favor of Lessor if such Lease is deemed to be a Lease for security.

4. REPRESENTATIONS AND WARRANTIES AS TO LESSOR

Lessor hereby represents and warrants to AFI as follows:

(a) That it is a corporation, duly organized, validly existing, and in good standing under the laws of the State of California, and has all requisite power and authority to own its property and to carry on its business as now being conducted, to enter into this Agreement and to carry out the provisions and conditions of this Agreement. Lessor is duly qualified to do business in each jurisdiction wherein the character of the goods owned or the nature of the activities conducted therein makes such qualification necessary or will become so qualified prior to the execution by Lessor of a Lease in such jurisdiction. All necessary proceedings have been taken by Lessor in order to authorize the execution, delivery, and performance of this Agreement, each Lease and any other agreement of which Lessor is a party, and no other proceedings on the part of Lessor are required.

(b) That each financial statement of Lessor furnished to AFI in connection with this Agreement is true and correct and has been prepared in accordance with generally accepted accounting principles consistently followed throughout the period involved.

(c) That there is no litigation, at law or in equity, or any proceeding any federal, state, or municipal board or other governmental or administrative agency pending to the knowledge of Lessor which may involve any risk of any judgment or liability not fully covered by insurance or which may otherwise result in any material adverse change in the business or assets or in the condition, financial or otherwise, of Lessor or which questions the validity of any Lease or this Agreement, or of any action taken or to be taken in connection therewith; and no judgment, decree or order of any federal, state, or municipal court, board or other governmental or administrative agency has been issued against Lessor which has, or will have, any material adverse effect on the business or assets or on the condition, financial or otherwise, of Lessor.

(d) That neither the execution and delivery of this Agreement, nor the consummation of any transaction contemplated hereby, nor the fulfillment of the terms hereof, has constituted or resulted in, or will constitute or result in, a breach of the provisions of any agreement or instrument to which Lessor is a party, or is bound, or of the charter or bylaws of Lessor, or the violation of any presently existing

3.


applicable law, judgment, decree, federal or state law or governmental order, rule, or regulation.

Lessor's representations and warranties under Sections 3 and 4 shall be continuing representations and warranties, and shall survive the assignment of any Lease to AFI and shall be deemed to be made as of the date that any Lease is assigned to AFI hereunder, provided, however, the representations and warranties under subparagraphs (f) and (g) Section 3 shall only be made as of the date of the assignment of each Lease.

5. REPRESENTATIONS AND WARRANTIES AS TO AFI

AFI hereby represents and warrants as follows:

(a) That it is a corporation, duly organized, validly existing, and in good standing under the laws of the State of Michigan, and has all requisite power and authority to own its property and to carry on its business as now being conducted, to enter into this Agreement and to carry out the provisions and conditions of this Agreement. AFI is duly qualified to do business in each jurisdiction wherein the character of the goods owned or the nature of the activities conducted therein makes such qualification necessary or will become so qualified prior to the purchase or assignment of a Lease in such jurisdiction. All necessary proceedings have been taken by AFI in order to authorize the execution, delivery, and performance of this Agreement.

(b) That there is no litigation, at law or in equity, or any proceeding any federal, state, or municipal board or other governmental or administrative agency pending to the knowledge of AFI which may involve any risk of any judgment or liability not fully covered by insurance or which may otherwise result in any material adverse change in the business or assets or in the condition, financial or otherwise, of AFI or which questions the validity of any Lease or this Agreement, or of any action taken or to be taken in connection therewith; and no judgment, decree or order of any federal, state, or municipal court, board or other governmental or administrative agency has been issued against AFI which has, or will have, any material adverse effect on the business or assets or on the condition, financial or otherwise, of AFI.

(c) That neither the execution and delivery of this Agreement, nor the consummation of any transaction contemplated hereby, nor the fulfillment of the terms hereof, has constituted or resulted in, or will constitute or result in, a breach of the provisions of any agreement or instrument to which Lessor is a party, or is bound, or of the charter or bylaws of Lessor, or the violation of any presently existing applicable law, judgment, decree, federal or state law or governmental order, rule or regulation.

6. COVENANTS OF LESSOR

Lessor hereby covenants and agrees with AFI as follows:

4.


(a) AFI may for reasonable business causes audit during normal business hours Lessor's books and records relating to all Leases and any other documents assigned to AFI and may endorse Lessor's name on any remittances received from any Lessee.

(b) With respect to all Leases in which AFI has an interest, Lessor hereby assigns to AFI all its rights and privileges under guarantees and agreements and endorsements by third parties relating to the Lease.

(c) Lessor hereby defends, indemnifies, and holds AFI harmless from every claim, loss, demand, liability, and expense of any kind (including reasonable attorneys' fees) that AFI may become subject to arising out of: (i) a breach of any of the warranties and representations herein contained, or (ii) any misrepresentation or nonfulfillment of any covenant on the part of Lessor provided in this Agreement or in any statement or certificate furnished by Lessor to AFI; (iii) conduct of the Lessor in endeavoring to repossess any Equipment or to collect sums due under any Lease; or (iv) any claim or defense the Lessee could now or hereafter assert against the Lessor, whether or not the Lessee ultimately prevails. If the Lessee at anytime attempts to revoke, mollify, or terminate the lease due to any breach or non-performance by Lessor, or sets off any amount owing under the Lease or pays it into escrow, the Lessor upon written notice by AFI shall pay to AFI any monthly amount owing under the Lease until such time as either the breach or non-performance is corrected or in the event 120 days shall pass without Lessee resuming obligations then Lessor shall immediately pay AFI all remaining amounts due or to become due and any residual value due or to become due immediately per
Section 6 whether or not the Lessee's claim or defense has been finally adjudicated. The Lessor agrees to pay all of AFI's legal and other expenses of: (1) seeking to overcome or defending such claims and defenses in the event AFI chooses to do so, and (2) enforcement of its rights under Lessor's indemnity contained herein.

The foregoing indemnity is a continuing indemnity and shall survive termination of this Agreement.

(d) Lessor agrees to execute and deliver any and all papers or documents which AFI may reasonably request from time to time in order to carry out the purpose hereof, or to facilitate the collection of monies due or to become due from any Lessee under any Lease assigned to AFI. In the event Lessor received or receives any monies due under any Lease that have been assigned to AFI, Lessor agrees to immediately forward such monies to AFI.

(e) Lessor shall notify AFI immediately upon obtaining knowledge of any default in the performance of a Lessee's obligations under a Lease, including without limitation the payment of sums due under the Lease.

5.


(f) Lessor will not, without AFI's prior written consent, solicit or accept collection of any rents due under a Lease, repossess or consent to the return of any Equipment, or modify or terminate the Lease or waive any of AFI's rights thereunder.

(g) Lessor shall pay all personal property taxes, including tangible and intangible personal privilege, documentary, sales, transaction and other like tax or taxes in lieu thereof, applicable to any of the transactions contemplated by this Agreement, and which may be imposed or assessed against the Equipment, this Agreement, the Leases or AFI, except for taxes measured or imposed on the net income of AFI. Provided, however, AFI shall collect and remit use and property taxes, if AFI has received title to Equipment (i.e., in transactions where AFI is receiving an assignment of all of Lessor's right, title, and interest in and to Leases and Equipment pursuant to the Bill of Sales and Assignment attached hereto as Exhibit A). In addition, in instances where AFI has merely received a security interest in Equipment pursuant to the Assignment Agreement attached hereto as Exhibit B, AFI may forward collected use taxes to Lessor along with a request that Lessor remit the collected tax to the proper taxing jurisdiction, in which case Lessor shall remit such tax to such jurisdiction.

7. EVENTS OF DEFAULT AND REMEDIES

(a) If any of Lessor's warranties and representations in Sections 3 and 4 hereof shall be untrue, or it Lessor shall breach any covenant in
Section 5 hereof and if such breach shall continue for a period of fifteen (15) days after written notice thereof from AFI or if any guarantor of Lessors' obligations hereunder shall be in default under any guaranty hereof, then Lessor shall, upon demand by AFI, purchase the Lease(s) to which such misrepresentation or breach pertains from AFI for cash in an amount equal to any due but unpaid rentals or other amounts under the lease, plus the net present value of the then unpaid balance of the rentals due under the Lease) for the remainder of their original terms and AFI's booked residual value of the Equipment, both discounted at the rate of 6% per annum or such other rate as the parties hereto shall agree upon in writing from time to time with respect to such Lease(s) and Equipment at the time of original assignment and, in addition, any and all commission or other compensation paid or payable to or for the benefit of Lessor with respect to such Leases(s) shall be forfeited and waived, and AFI shall recover from Lessor any such commission or other compensation previously paid to or for the benefit of Lessor by or on behalf of AFI.

Any Lease reacquired by Lessor in accordance with the provisions of this Agreement shall be reassigned by AFI to Lessor without recourse and without warranty or representation of any kind whatsoever.

(b) Upon the occurrence of any material misrepresentation or breach as provided in subparagraph (a) above, AFI may elect to rescind any pending approvals (whether given to Lessor orally or in writing) with respect to other Leases which have been presented by Lessor to AFI for assignment or direct lease by AFI pursuant to this Agreement.

6.


(c) In the event a Lessee defaults in the payment of rentals or other sums under the Lease or in the performance of the Lessee's other covenants under the Lease, then AFI may exercise all rights and remedies under the Lease and all rights and remedies of a secured party under the Uniform Commercial Code with respect to the Lease and the Equipment.

(d) The above remedies are cumulative and not alternative, and AFI shall also have available all remedies at law or in equity.

8. MISCELLANEOUS

(a) TERMINATION. This Agreement may be terminated by either party hereto at any time upon prior written notice to the other specifying the effective date of such termination; provided, that no such termination shall affect the rights and obligations of the parties to one another with respect to Leases acquired by AFI on or prior to such termination date.

(b) AUTHORITY OF LESSOR. Lessor is, and shall act, as an independent contractor and shall not have any authority to make any commitments, statements, representation, or incur any obligations, on behalf of AFI, or to bind or commit AFI in any manner, to make, alter, or execute any document or agreement on behalf of AFI. Lessor shall not use any name or mark of AFI or any affiliate of AFI in any way unless it has AFI's prior written approval. Lessor shall not accept service of any legal process in any action that may be brought against AFI, or employ attorneys to defend such without AFI's prior written approval.

(c) EXCLUSIVITY OF SUBMISSIONS. Leases offered to AFI will not have been previously offered by Lessor to any other party without disclosure of that fact in writing to AFI. For three (3) working days after receipt by AFI of a complete submission, Lessor will not submit the same Lease to any other party. AFI shall, in its sole discretion, decide whether or not to accept a submitted Lease.

(d) ESTOPPEL. Lessor must notify AFI in writing of any claimed discrepancies in any and all written statements of account sent to Lessor by AFI. Failure to so notify AFI within 30 days of receipt of said statements will estop Lessor from denying the accuracy of the same.

(e) FINANCIAL STATEMENT. As long as this Agreement or any Lease assigned hereunder is in effect, Lessor shall provide AFI with: (A) within 90 days after the end of each of Lessor's fiscal years, a copy of Lessor's audited financial statement for such fiscal year (which may be unaudited if such statements are not otherwise audited), prepared in accordance with generally accepted accounting principles, and (B) within 45 days after the end of each of Lessor's fiscal quarters (except its fiscal year-end), a copy of its unaudited financial statements for such fiscal quarter, prepared in accordance with generally accepted accounting principles. In each case, the statements shall be certified by Lessor's chief financial officer as fairly presenting the financial position and results of operations of Lessor.

7.


(f) REMARKETING. In the event a Lessee under a Lease should default in the payment or performance of any of the terms and conditions thereof, and upon the request of AFI, Lessor shall attempt to repossess the Equipment and store the Equipment after such repossession is completed (at the cost of AFI). In such event, Lessor agrees to use its best efforts to locate a purchaser or lessee for the Equipment on terms satisfactory to AFI. At any time after Lessor takes possession of the Equipment but prior to Lessor's locating a purchaser or lessee satisfactory to AFI, AFI may, but shall not be obligated to, take possession of and sell or re-lease the Equipment upon terms satisfactory to AFI. Any proceeds realized on the sale or re-lease of the Equipment shall be applied first to the costs of repossession, refurbishment and sale of the Equipment (including attorneys' fees and court costs), then to the unpaid balance of the rental payments due under the Lease, together with late charges and any other amounts payable to AFI under the Lease or other damages, including, without limitation, AFI's booked residual value in such Equipment and any damages that are available to AFI, and the balance, if any, shall be paid to Lessor. AFI shall then reassign to Lessor without recourse or warranty, all of AFI's rights in the Lease.

(g) CONFIDENTIALITY. Lessor and AFI hereby agree that they shall not transmit or reveal to any person or entity any information concerning either party's methods of operation or documentation.

(h) ASSIGNMENT. Lessor shall have no right to assign its rights and obligations under this Agreement in whole or in part without the prior written consent of AFI, and any unauthorized purported assignment shall be null and void. AFI may assign its rights and obligations under this Agreement and/or its rights under any Lease, in whole or in part without the consent of Lessor.

(i) CHOICE OF LAW; VENUE; WAIVER; TRIAL BY JURY. This Agreement shall be governed by the internal laws (as opposed to conflicts of law provisions) and decisions of the State of California. The parties hereto consent to the jurisdiction of any local, state, or federal court location within California, and waived any objection relating to improper venue or forum non conveniens to the conduct of any proceeding in any such court. AFI AND LESSOR HEREBY IRREVOCABLY WAIVE ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING, OR COUNTERCLAIM ARISING OUT OF OR RELATED TO THIS AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED THEREBY.

(j) ENTIRE AGREEMENT. This Agreement constitutes the entire agreement between AFI and Lessor as to the subject matter hereof and supersedes all prior or contemporaneous oral or written agreements, negotiations, or understandings. This Agreement may not be amended or altered, except by a written agreement signed by Lessor and an executive officer of AFI. This Agreement shall benefit and bind the parties hereto, and their successors and permitted assigns. Any provision of this Agreement which is prohibited or unenforceable in any applicable jurisdiction shall, as to such jurisdiction, be ineffective to the extent of

8.


such prohibition or unenforceability without invalidating the remaining provisions hereof, or affecting the validity or enforceability of such provision in any other jurisdiction.

(k) NOTICES. All notices hereunder shall be given in writing and shall be effective when deposited in the U.S. mail, postage prepaid or when sent by nationally recognized overnight delivery service to the address set forth in the first paragraph hereof or such other addresses as may be provided by the parties hereto from time to time in accordance with this Agreement.

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

OmniCell Technologies, Inc.             Americorp Financial, Inc.

By: /s/ Chris Gardner                   By:
   ------------------------------          ------------------------------
     Name: Chris Gardner                     Name:
     Title: Corporate Controller             Title:



                                          9.


MASTER RESALE AGREEMENT

Agreement made this 29th day of September, 1994, by and between Americorp Financial, Inc., a Michigan corporation, 20300 West Twelve Mile Road, Suite 202, Southfield, Michigan 48076 ("AFI") and OmniCell Technologies, Inc., a California corporation, 1101 East Meadow Drive, Palo Alto, California 94303 ("OmniCell").

WHEREAS, OmniCell previously sold equipment to AFI pursuant to the Master Assignment Agreement between OmniCell and AFI; and

WHEREAS, AFI agrees to resell to OmniCell certain of such equipment and/or residual rights under leases of such equipment, said equipment being described in the Equipment Schedules to be executed by the parties and attached hereto from time to time (the "Equipment"), all on the terms and conditions contained herein.

NOW THEREFORE, in consideration of the covenants and premises contained herein, the parties, intending to be legally bound, agree as follows:

1. AGREEMENT TO SELL. AFI agrees that it will sell the Equipment to OmniCell at the price indicated on the Equipment Schedule at such time as AFI has been paid in full all amount owing to AFI under any lease covering the Equipment. Such amounts owing to AFI shall include any amounts owing to AFI during any extension of a lease term wherein: (i) the lessee thereunder has not paid AFI all amounts owing under the lease as of the expiration date of the original term of the lease; or (ii) the Equipment is attached to other OmniCell Equipment and the term of the lease of such other Equipment has not expired at the time of expiration of the original term of the lease of the Equipment to be sold to OmniCell hereunder.

1.


2. TERMS OF SALE. The sale of the Equipment to OmniCell shall be AS IS and WHERE IS. OmniCell expressly acknowledges that the Equipment is used, has not been inspected or under the control of AFI, may not be located where indicated in AFI's records, and is being accepted by OmniCell sight unseen. AFI MAKES NO WARRANTIES, EXPRESS OR IMPLIED, AND HEREBY EXPRESSLY DISCLAIMS ALL WARRANTIES REGARDING THE EQUIPMENT, INCLUDING AND WITHOUT LIMITATION, ANY WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, CONDITIONS OF THE EQUIPMENT AND LOCATION OF THE EQUIPMENT. OMNICELL TAKES THE EQUIPMENT WITH ALL FAULTS, SIGHT UNSEEN AND ACCEPTS ALL RISKS OF LOCATING AND OBTAINING POSSESSION OF THE EQUIPMENT.

3. SERVICING. Upon sale of the Equipment to OmniCell, AFI may, at OmniCell's request, continue to collect all payments made by any lessee under any extended lease term of any lease covering the Equipment. OmniCell shall pay AFI 10 percent (%) of all amounts collected as a fee. At its option, AFI may retain its servicing fee out of collections received by it.

4. BINDING EFFECT. This Agreement is binding upon and shall inure to the benefit of the parties hereto, their respective successors and assigns.

5. ENTIRE AGREEMENT. This Agreement contains the entire agreement between the parties and supersedes any conflicting provisions of any other agreement with regard to the subject matter hereof. This Agreement may not be amended or modified except by a writing signed by the authorized officers of the parties hereto.

6. CALIFORNIA LAW. This Agreement shall be construed, governed, interpreted, and enforced in accordance with the laws of the State of California and will be deemed to be fully

2.


performed within the State of California. The parties hereto consent to the jurisdiction of any local, state or federal court located within the State of California and hereby waive any objection relating to improper venue or forum non conviens to the conduct of any proceeding in any such court. AFI and OmniCell hereby irrevocably waive all right to a trial by jury in any action, proceeding or counterclaim arising out of or relating to this Agreement or any of the terms or actions contemplated hereby.

7. ASSIGNMENT. OmniCell shall have no right to assign its rights under this Agreement in whole or in part without the prior written consent of AFI.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the day and year first above written.

WITNESSES:                              AMERICORP FINANCIAL, INC.


                                        By: /s/ Thomas Dunigan
-------------------------------            ------------------------------

                                             Its: President
                                                 ------------------------


                                        OMNICELL TECHNOLOGIES, INC.


                                        By: /s/ Chris Gardner
-------------------------------            ------------------------------

                                             Its: Corporate Controller
                                                 ------------------------

3.


COLLECTION OF SERVICE AGREEMENT

Agreement made this 29th day of September, 1994 by and between Americorp Financial, Inc., a Michigan corporation at 20300 West Twelve Mile Road, Suite 202, Southfield, Michigan 48076, ("AFI") and OmniCell Technologies, Inc., a California corporation at 1101 East Meadow Drive, Palo Alto, California 94303, ("OmniCell").

Whereas OmniCell has or will sell or assign to AFI on an on going basis Rental Agreements pursuant to the Master Assignment Agreement by and between OmniCell and AFI,

Whereas, AFI agrees upon OmniCell's request to act as OmniCell's billing and collecting agent for the Rental Service Contracts which are not part of the Master Assignment Agreement.

AFI shall use its best efforts to collect all service payments due on a non-recourse basis and agrees to turn over such collected amounts on a timely basis.

OmniCell agrees to pay AFI for its collection services, of which shall be $2.50 per month, per account. OmniCell agrees to allow AFI to deduct the fee out of the money collected each month.

In witness whereof, the parties hereof have executed this Agreement on the day and year first above indicated.

Americorp Financial, Inc.

By: /s/ Thomas Dunigan
   -------------------------------

Its: President
    ------------------------------

OmniCell Technologies, Inc.

By: /s/ Chris Gardner
   -------------------------------

Its: Corporate Controller
    ------------------------------

1.


AMENDMENT TO MASTER RESALE AGREEMENT

This Amendment, made this 27th day of March, 1996, by and between Americorp Financial, Inc., a Michigan corporation, 20500 West Twelve Mile Road, Suite 202, Southfield, Michigan 48076 ("AFI") and OmniCell Technologies, Inc., a California corporation, 1101 East Meadow Drive, Palo Alto, California 94303 ("OmniCell").

WHEREAS, OmniCell has previously sold certain equipment and assigned certain equipment leases to AFI pursuant to a Master Assignment Agreement dated September 28, 1994, and

WHEREAS, AFI has agreed to resell to OmniCell certain of such equipment and/or AFI's residual rights under the assigned leases pursuant to a Master Resale Agreement dated September 29, 1994; and

WHEREAS, the parties hereto desire to amend and clarify their rights and obligations under said Master Resale Agreement.

NOW THEREFORE, in consideration of the covenants and premises contained herein, the parties, intending to be legally bound, agree as follows:

1. REVOCATION OF AGREEMENT TO SELL. Notwithstanding any provision of the Master Resale Agreement to the contrary, the parties agree that AFI shall retain all equipment and/or residual rights to equipment assigned to AFI by OmniCell pursuant to the Master Assignment Agreement, said equipment/rights being described on Schedule A hereto. As consideration for this right to retain said equipment/residual rights, AFI shall pay OmniCell the sums set forth on Schedule
A.

2. WARRANTY OF OMNICELL. OmniCell hereby represents and warrants that, with respect to the equipment/residual rights listed on Schedule A attached hereto, neither OmniCell

1.


nor its officers, agents, employees or representatives of any kind has granted to the lessee of such equipment, either in writing or orally, any rights in or to said equipment, including, but not limited to, the right to own or purchase the leased equipment at the termination of such lease for any sum or other consideration. Any such right to purchase contained in an original lease between a lessee and OmniCell, which was disclosed to AFI at the time such lease was assigned by OmniCell to AFI pursuant to the Master Assignment Agreement, shall be exempted from this paragraph and shall not be considered a breach of this Agreement. Any other right to purchase or retain the leased equipment which has been granted to a lessee subsequent to the assignment of said lease to AFI, whether by amendment or otherwise, shall be considered a breach of this warranty unless AFI has consented or consents to such action.

3. BREACH OF WARRANTY. In the event that OmniCell breaches its warranty to AFI described in Paragraph 2 above, the parties agree that the consideration paid by AFI to OmniCell for the right to retain said equipment/residual rights as listed on Schedule A hereto shall immediately be repaid to AFI, together with interest at the rate of nine and one-half percent (9.5%) from the date of this Amendment to the date that such breach occurs and such payment is made.

4. APPLICABILITY OF AMENDMENT. This Amendment shall alter the rights of the parties only with respect to the equipment/residual rights listed on Schedule A hereto. With regard to all other equipment/residual rights, the parties hereby reconfirm and ratify their rights and obligations as set forth in the Master Resale Agreement as executed on September 29, 1994.

2.


IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the day and year first above written.

WITNESSES:                              AMERICORP FINANCIAL, INC.


                                        By: /s/ Thomas Dunigan
------------------------------             -------------------------------
                                             Thomas X. Dunigan

                                             Its:  President


                                        OMNICELL TECHNOLOGIES, INC.

/s/ Sheldon Asher                       By: /s/ Earl E. Fry
------------------------------             -------------------------------
                                             Earl E. Fry

                                             Its: VP & CFO
                                                 -------------------------

3.


SECOND AMENDMENT TO MASTER RESALE AGREEMENT

This Amendment, made this 4th day of April, 1996, by and between Americorp Financial, Inc., a Michigan corporation, 20300 West Twelve Mile Road, Suite 202, Southfield, Michigan 48076 ("AFI") and OmniCell Technologies, Inc., a California corporation, 1101 East Meadow Drive, Palo Alto, California 94303 ("OmniCell").

WHEREAS, OmniCell, on an on-going basis, will sell equipment and assign certain equipment leases to AFI pursuant to a Master Assignment Agreement dated September 29, 1994, and

WHEREAS, AFI has agreed to resell to OmniCell certain of such equipment and/or AFI's residual rights under the assigned leases pursuant to a Master Resale Agreement dated September 29, 1994, and

WHEREAS, the parties hereto desire to amend and clarify their rights and obligations under said Master Resale Agreement.

NOW THEREFORE, in consideration of the covenants and premises contained herein, the parties, intending to be legally bound, agree as follows:

1. REVOCATION OF AGREEMENT TO SELL. Notwithstanding any provision of the Master Resale Agreement to the contrary, the parties agree that AFI shall retain on an on-going basis, all equipment and/or residual rights to equipment assigned to AFI by OmniCell pursuant to the Master Assignment Agreement, for all transactions purchased by AFI after April 1, 1996. As consideration for this right to retain said equipment/residual rights, AFI shall pay to OmniCell a greater equipment cost, which shall be agreed upon and paid at the time of the assignment and purchase by AFI.

2. WARRANTY OF OMNICELL. OmniCell hereby represents and warrants that, with respect to the equipment/residual rights, neither OmniCell nor its officers, agents, employees or

1.


representatives of any kind has granted to the lessee of such equipment, either in writing or orally, any rights in or to said equipment, including, but not limited to, the right to own or purchase the leased equipment at the termination of such lease for any sum or other consideration. Any such right to purchase contained in an original lease between a lessee and OmniCell, which was disclosed to AFI at the time such lease was assigned by OmniCell to AFI pursuant to the Master Assignment Agreement, shall be exempted from this paragraph and shall not be considered a breach of this Agreement. Any other right to purchase or retain the leased equipment which has been granted to a lessee subsequent to the assignment of said lease to AFI, whether by amendment or otherwise, shall be considered a breach of this warranty unless AFI has consented or consents to such action.

3. BREACH OF WARRANTY. In the event that OmniCell breaches its warranty to AFI described in Paragraph 2 above, the parties agree that the consideration paid by AFI to OmniCell for the right to retain said equipment/residual rights shall immediately be repaid to AFI, together with interest at the rate of nine and one-half percent (9.5%) from the date of this Amendment to the date that such breach occurs and such payment is made.

4. APPLICABILITY OF AMENDMENT. This Amendment shall alter the rights of the parties only with respect to the equipment/residual rights for transactions purchased after April 1, 1996. With regard to all other equipment/residual rights, the parties hereby reconfirm and ratify their rights and obligations as set forth in the Master Resale Agreement as executed on September 29, 1994, and its Amendment dated March 27, 1996.

2.


IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the day and year first above written.

WITNESSES:                              AMERICORP FINANCIAL, INC.


                                        By: /s/ Thomas X. Dunigan
------------------------------             -------------------------------
                                             Thomas X. Dunigan

                                             Its:  President


                                        OMNICELL TECHNOLOGIES, INC.

/s/ Randall Lipps                       By: /s/ Earl E. Fry
------------------------------             -------------------------------

                                             Its: VP & CFO
                                                 -------------------------

3.


EXHIBIT 10.6

PREMIER PURCHASING PARTNERS, L.P.

GROUP PURCHASING AGREEMENT

TYPE OF EQUIPMENT: Automated Distribution Systems

                                 & Accessories

                         EFFECTIVE DATE: June 1, 1997

Between                                 And

Premier Purchasing Partners, L.P.       OmniCell Technologies
Three Westbrook Corporate Center        1101 East Meadow Drive
Westchester, IL 60154                   Palo Alto, CA 94303

Tel. No.: 708-409-4539                  Tel. No.: 800-850-6664
Fax No.: 708-409-3499                   Fax No.: 415-843-6294
Attn: Janet Roach                       Attn: Jeff Arbuckle
                                              Central Vice President
                                              800-474-2355x5102

Referred to as "Purchasing Partners"    Referred to as "Seller"

INTRODUCTION

This is an agreement (the "Agreement") for Automated Distribution Systems and Accessories as listed in Exhibit A and as subsequently added to this Agreement by the mutual written agreement of the parties (collectively referred to herein as the "Products" or individually as the "Product"). Seller agrees to provide the Products to Premier Members (as that term is defined in Section 3.1 below) according to the terms, conditions and prices contained herein. Seller will provide Purchasing Partners and Premier Members with all clinical and in-service support and expertise necessary to aid with conversions of Premier Members to the Products and, if applicable, with all continuing support to maintain the Product(s).

Purchasing Partners, as it deems necessary, will provide information regarding this Agreement to the participants in the Premier Group Purchasing Program, will actively support conversion and commitment to this Agreement and will aid in communicating with Premier Members.


1. AGREEMENT PERIOD

This Agreement will remain in effect for a period of thirty-six (36) months commencing on the Effective Date set forth above, unless earlier terminated pursuant to the terms of this Agreement. This Agreement may be extended, for an additional two (2) years upon mutual agreement of the parties.

2. PRODUCTS COVERED

This Agreement covers Seller's full line of Products as listed in Exhibit A and as subsequently added to this Agreement by the mutual written agreement of the parties.

3. PARTICIPATING PREMIER MEMBERS

3.1 Option to Participate.

For purposes of this Agreement, a "Premier Member" is each current and future (i) limited partner of Purchasing Partners ("Limited Partner");
(ii) any entity that is owned by or under common control of a Limited Partner; (iii) individual participants or members of a group affiliate of Purchasing Partner's corporate affiliate, Premier, Inc. or a direct affiliate thereof; (iv) affiliate of a shareholder of Premier, Inc.;
(v) any entity that is owned or under common control of an affiliate of a shareholder of Premier, Inc.; or (vi) any entity that is owned or under common control of a direct affiliate or a participant or member of a group affiliate of Premier, Inc., whether for-profit or not-for- profit, including, without limitation, physicians, home care providers, home infusion therapy providers, ambulatory care facilities, outpatient surgery centers, outpatient diagnostic centers, imaging centers, urgent care facilities, nursing homes, and hospices. Seller agrees to offer to each Premier Member the Products pursuant to the terms of this Agreement. A roster of Premier Members current at the time of the signing of this Agreement is attached hereto as Exhibit B. Seller shall receive a hard copy roster on a monthly basis unless the Seller requests the roster on a diskette or via electronic mail.

3.2 Commitment Requirements

Only Premier Members that execute the Commitment Document set forth in Exhibit C will have access to the pricing and discounts covered in this Agreement. A Premier Member which executes the Commitment Document agrees to purchase from Seller a minimum of eighty percent (80%) of such member's annual requirement for the Product(s) (in dollars) specified in such letter. A Premier Member which signs the Commitment Document shall be deemed a "Participating Premier Member." The parties agree that any failure by a Participating Premier Member to adhere to any of the terms and conditions of its Commitment Document with Seller shall not constitute a breach by Purchasing Partners hereunder.

1.


3.3 Termination of Existing Contracts

Any Premier Member desiring to avail itself of the contractual options, terms and conditions described herein may, at its option and without liability, terminate any existing contract(s) or other arrangement(s) by extending the current rental agreement between the Premier Member and Seller for the sole purpose of participating in the group purchasing arrangement set forth in this Agreement.

As an example; if the customer had already completed twenty-four
(24) months on an existing sixty (60) month rental agreement, pricing per the terms of this Agreement would be used when the customer extends and enters into a new sixty (60) month agreement for the existing equipment.

4. TERMS AND CONDITIONS

4.1 Authorized Distributors

Except as provided herein, all Products purchased pursuant to this Agreement by Participating Premier Members must be purchased directly from Seller.

Participating Premier Members may purchase Supply Products through Baxter Healthcare Corporation listed as "Baxter Distributed OmniCell Supply Products" included under Exhibit A, provided that Participating Premier Members participate in the group purchasing agreement entered into by and between Baxter Healthcare Corporation and Purchasing Partners for Automated Medication Distribution and Accessories effective June 1, 1997 ("Baxter Group Purchasing Agreement"). Seller represents and warrants that it has authorized Baxter Healthcare Corporation to distribute the Products pursuant to the terms of this Agreement. Seller further represents and warrants that Baxter Healthcare Corporation shall be responsible for the administration of such distribution pursuant to this Agreement and that Purchasing Partners shall receive a report on a quarterly basis which includes all information concerning such distribution, including but not limited to, the name of the Participating Premier Member purchasing Seller's products through Baxter Healthcare Corporation, the specific products being purchased, the date of purchase, the date of order and delivery, and the date of payment to Baxter Healthcare Corporation by Participating Premier Member.

4.2 Payment Terms.

Payment of the first rental payment or purchase price in full is due within forty-five (45) days following the delivery and acceptance of Product(s) to Participating Premier Member. All monthly payments after the first rental payment are due within thirty (30) days of receipt of the monthly invoice. Service pricing for Products covered under Rental/Lease Agreements are included in the Rental/lease monthly rates in Exhibit A.

2.


Payment terms for Products purchased through Baxter Healthcare Corporation pursuant to Section 4.1 shall be as provided in this
Section 4.2.

4.3 Shipping Terms

All shipments are Free On Board (F.O.B.) Destination. Freight will be prepaid and added to the Participating Premier Member's invoice.

Estimated shipping costs to Participating Premier Members in different locations throughout the country are listed below. Shipping costs for units shipped individually and in truckloads are listed.

---------------------------------------------------------------------
                           Approximate Cost       Approximate Cost
                          Per Cell if Shipped    Per Cell if Shipped
Area            Miles       in Single Units         by Truck Load
---------------------------------------------------------------------
Los Angeles       400            $ 75                   $ 50
---------------------------------------------------------------------
Denver           1226            $115                   $ 80
---------------------------------------------------------------------
Chicago          2155            $125                   $105
---------------------------------------------------------------------
New York         2944            $165                   $145
---------------------------------------------------------------------

Participating Premier Member shall have ten (10) business days from the date of delivery in which to inspect the Product(s) and to accept or reject such Product(s). In the event the Participating Premier Member, after such inspection, rejects the Product(s) due to discovery of broken or damaged items of Product(s) or the packages containing Products, the Participating Premier Member shall have the right to return the damaged Products at the expense of Seller and Seller shall replace such Product(s) within a mutually agreed upon time frame and not to exceed thirty (30) days. Payment terms for Products purchased through Baxter Healthcare Corporation pursuant to Section 4.1 of this Agreement shall be as set forth in this Section 4.3.

4.4 Minimum Order

Not Applicable

4.5 Ordering

All purchase orders for Products may be placed by telephone, telecopier, or through electronic order entry directly through Seller at the following address and telephone number:

----------------------------------------------------------------------
Suzy Carr, Contracts Administrator           Phone: (415) 843-6151
OmniCell Technologies, Inc.                  Fax: (415) 843-6294
1101 East Meadow Drive
Palo Alto, CA 94303
----------------------------------------------------------------------

3.


Orders for Products purchased through Baxter Healthcare Corporation pursuant to Section 4.1 of this Agreement may be purchased through Baxter Healthcare Corporation at the following address and telephone numbers:

     ----------------------------------------------------------------------
     Baxter Healthcare Corporation            Phone: (800) 323-4315
     Productivity Systems                     Fax: (847) 270-5273
     Customer Operations
     RTE 120 & Wilson Rd.
     Round Lake, IL 60073
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4.6  Guarantee of Delivery

Seller guarantees that all Products ordered by any Participating Premier Member shall be delivered to member up to and should not exceed more than ninety (90) days of Seller's receipt of such member's order for the Product(s). Seller and Participating Premier Member shall agree upon a specific date of delivery of the Product(s). Participating Premier Member may delay any scheduled delivery of the Product(s) for up to ninety (90) days after the execution of the purchase order by providing written notice of such delay to the Seller at least thirty (30) days prior to such scheduled date of delivery without any increase in the price of the Product(s). If Seller fails to deliver any Product(s) within the above-mentioned time period, the Participating Premier Member, at its sole discretion, may exercise any of the following options: (A) to purchase any substitute product(s) from another source(s), and subsequently be reimbursed by Seller for the difference between such member's actual acquisition cost for such product(s) and the price(s) such member would have paid for Seller's Product(s) under this Agreement; provided that the difference will not exceed Seller's list prices; (B) to terminate the purchase order for the Product(s) without penalty, and immediately refund to Participating Premier Member all funds paid for the Product(s) and any related materials pursuant to such purchase order, or (C) for those Product(s) purchased, to extend the warranty period referred to in
Section 10.2, at no charge, by two (2) business days for each calendar day, or portion thereof that delivery is delayed after the scheduled date of delivery as agreed upon by the Seller and Participating Premier Member. Any such warranty extension days described in (C) will be provided on the days of the week covered under such warranty. Upon the request of any Participating Premier Member, Seller will assist any such Participating Premier Member in finding alternative acceptable sources for any Product(s) which Seller cannot deliver according to the guaranteed delivery time specified above.

For orders placed with an Authorized Seller's Distributor, guarantee of delivery provisions will be negotiated between each Participating Premier Member and the Authorized Seller's Distributor. If the Authorized Seller's Distributor fails to deliver any Product(s) within the foregoing negotiated time period because Seller has failed to provide the Product(s) to the Authorized Seller's Distributor, the Participating Premier Member may exercise any of the options (A) through (C)

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described above. Upon the request of any Participating Premier Member, Seller will assist any such Participating Premier Member in finding alternative acceptable sources for any Product(s) which an Authorized Seller's Distributor cannot deliver according to the guaranteed delivery time specified above.

4.7 Guarantee of Delivery Under Emergency Conditions

In the event of a natural disaster or industry wide shortage of Products ("Emergency Condition"), Seller agrees to give priority to orders placed by Participating Premier Members for Products during the duration of the Emergency Condition. If possible, the Seller will sequester a specific quantity of Products for the exclusive purchase by Participating Premier Members for the duration of the Emergency Condition.

4.8 Quality Standards and Specifications

In the event any Participating Premier Member determines within the first thirty (30) days of use that any Product(s) purchased from Seller hereunder does not satisfy the Seller's representations relative to performance, accuracy, and service history, and is not performing in accordance with such Product's(s') performance specifications as set forth on Exhibit G ("Product Specifications"), such member may return such Product(s) to Seller and receive a replacement for or full repair of such Product(s). In the event Participating Premier Member returns the Product(s) pursuant to this Section. Seller shall bear all shipping expenses. This Section 4.8 shall in no way limit the remedies available for exchange of damaged Product(s) provided in Section 4.3 above.

4.9 Special Handling/Services

Not Applicable

4.10 Clinical Site Preparation.

Subject to the terms of this Agreement, Participating Premier Member, at its expense, will prepare the clinical site(s) where a Product will be installed ("Clinical Site") for each such Product according to the site preparation recommendations which are required to be provided by Seller. In no event shall Seller be responsible for the quality or adequacy of the work not performed by, or under the authority of, Seller.

Notwithstanding any other provision of this Agreement, if any Product or related equipment fails to perform to its Product Specifications prior to acceptance by Participating Premier Member due to a particular condition (or conditions) of such Product's or related equipment's Clinical Site and that condition (or conditions) fully meets Seller's site preparation recommendations described above or modifications thereto agreed to by the parties in writing, Seller will bear the expense of modifying such Clinical Site to correct such failure of the Product(s) or related equipment to perform.

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4.11 Installation.

After Delivering the Product(s) in accordance with Section 4.6 (Guarantee of Delivery), included in the price of the Product(s), Seller will be fully responsible for performing all tasks necessary to install the Product(s), including without limitation, uncrating, unpacking, removal of packing material, field assembly, interconnection, calibration and testing to ensure that the Product(s) conform(s) to its Product Specifications and is completely ready to perform all procedures for which it is designed and marketed by Seller.

4.12 Acceptance.

Participating Premier Member will accept the Product(s) at the time of delivery by signing a Certificate of Acceptance; provided, however, that Seller offers a sixty (60) day free use period or Conditional Period as described in Section 4.13 on the initial order only.

The Participating Premier Member shall have the option during the sixty (60) day period to test the Product(s) to confirm the safety, reliability and performance of the Product(s) and to perform corollary or parallel testing to verify the accuracy of the Product's(s)' performance.

4.13 Conditional Period of Acceptance

Seller will allow a sixty (60) day validation period, (which shall be known as a "Conditional Period") to Participating Premier Members who are interested in evaluating Seller's Product(s) prior to purchasing or renting the equipment on the initial order only. Product(s) evaluated during the Conditional Period will be capped at a maximum of two (2) nursing locations with no more than two (2) frames per nursing location. No charges will be invoiced to Participating Members during the Conditional Period.

Due to the breadth of this offer, Seller requests a conditional purchase order from the Premier Member and a signed validation agreement for the equipment to be validated in order to build and ship the equipment.

A sixty (60) month rental agreement or a purchase agreement, an annual coterminous service agreement and acceptance documents for the delivered equipment must be executed for the equipment to remain for longer than the 60-day Conditional Period. The Conditional Period may be extended beyond 60 days at Seller's option.

If the Participating Premier Member does not accept Product(s) in accordance with this section within the initial sixty (60) days acceptance period, Seller will, upon written notice from Participating Premier Member, remove the Product(s) at no charge, immediately refund to Participating Premier Member all funds paid for the Product(s) and may, without penalty, and in addition to pursuing any and all other rights and remedies such member may have, upon written notice to Seller

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and Purchasing Partners immediately terminate its Commitment Document with Seller in connection with this Agreement.

All expenses related to the removal of the Product(s) and its related equipment shall be borne by Seller and Seller shall reimburse Participating Premier Member for such member's costs associated with any modifications of the Clinical Site for use of other products.

4.14 Controlling Terms.

In the event of a conflict of terms between the Seller's invoice or Seller's Service Agreement in Exhibit K, Seller's Rental Agreement in Exhibit I, Seller's Purchase Agreement in Exhibit J, and this Agreement or the Commitment Document, the terms of this Agreement or the Commitment Document shall control.

4.15 Return Goods Policy.

Seller's warranty is to repair or replace, at Seller's option, the defective part, parts, software, or equipment.

Notwithstanding anything contained herein or covered under Seller's Service Agreement in Exhibit K to the contrary, Product(s) may be exchanged or returned either (i) if Participating Premier Member returns goods in accordance with Section 4.8, or (ii) if Participating Premier Member does not accept equipment in accordance with Section 4.13, or if (iii) the Participating Premier Member returns Product(s) at the end of their rental/lease agreement per the terms of the Seller's Rental Agreement included herein under Exhibit I. Participating Premier Member shall prepay shipping charges, including crating and shipping by means mutually agreed to between Participating Premier Member and Seller (and shall pay all duties and taxes) for such Product(s) exchanged or returned to Seller if returned pursuant to (ii) and (iii) above, unless return is due to fault of Seller. Seller shall prepay shipping charges (and shall pay all duties and taxes) for such Product(s) returned to Seller if returned pursuant to (i) above.

5. PRICING

5.1 Best Pricing.

Given the size of Purchasing Partners and committed nature of Purchasing Partners purchasing program, Seller warrants that the prices, terms and conditions offered through this Agreement shall, at all times, be equal to or better than those offered to any other comparable customer (excluding the Federal Government) except to the extent that Purchasing Partners has a lesser volume of purchases.

Purchasing Partners and Seller agree to meet at least on a quarterly basis to review prices, terms and conditions to ensure that Seller is in compliance with the provisions outlined above. If it is determined that Seller is not in compliance,

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Purchasing Partners and Seller shall amend this Agreement and Exhibits to provide Purchasing Partners with more favorable terms.

5.2 Pricing.

Exhibit A sets forth the net member delivered price (excluding shipping) to be offered to Participating Premier Members for each of the Products. Prices in this Agreement will increase _____ percent ______ at the beginning of the second year of this Agreement, and _____ percent _____ at the beginning of the third year. Pricing for any extension of this Agreement will be negotiated by the parties.

In the event of any industry-wide price decrease for any Product during the term of this Agreement, Seller will reduce the price of that Product as set forth in Exhibit A by the same percentage reduction as such industry-wide price decrease.

Guaranteed Base Discounts:

Participating Premier Members are guaranteed volume discounts based on a simplified three tiered discount structure. The three tiered discount structure is listed below. The discount is provided at the time of purchase and is based on the aggregate dollar volume of products listed on the purchase order.

----------------------------------------------------------------------
Purchasing Volume                Discount off List Prices
-----------------                ------------------------
----------------------------------------------------------------------
$0 to $200,000                   ____ discount
----------------------------------------------------------------------
$200,001 to $1,000,000           ____ discount
----------------------------------------------------------------------
Over $1,000,000                  Additional discounts negotiated case
----------------------------------------------------------------------

Seller offers an additional ______ percent _____ net discount if the Participating Premier Member elects not to evaluate Product(s) or utilize a Conditional Period (free use) described in Section 4.13 herein.

5.3 Large Orders

Any Participating Premier Member who purchases single orders totaling $1,000,000 or more using the net prices in Exhibit A will be offered special pricing that is negotiated between an individual Participating Premier Member and Seller. All such negotiations must be coordinated through Purchasing Partners.

5.4 Competitive Conversion Incentive

Seller will place aside $2,000,000 of Seller equipment to swap out against any competitive equipment in Participating Premier Member facilities. Such equipment swap shall be mutually agreed to by the parties and must be utilized within the first twelve (12) months of this Agreement. Each competitive equipment swap request by Participating Premier Members will be up to and not

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to exceed $500,000 per request. The net purchase prices listed in Exhibit A and related shipping charges will be used to credit against this swap fund. Rebates do not apply to swap equipment. As a general guideline, Seller will agree to swap competitive systems for new Seller systems on a 1:4 basis.

(a) Single Hospital Example:

A Participating Premier Member hospital has 4 competitive systems that they would like to swap for Seller's equipment. The hospital would need to have at least 16 Seller's systems installed within the single location to be applicable for the competitive swap. In this example four of the sixteen units are the swap units.

(b) Small Group of Hospitals Example:

For a small group of hospitals, the competitive swap would be calculated based upon the total number of Seller's frames to be installed throughout the Group. In the following example, the 30 competitive systems would be swapped on a competitive basis for a minimum of 120 Seller's frames throughout the hospital group.

----------------------------------------------------------------
Hospitals within       Competitive       Minimum OmniCell Frames
     Group          Systems Installed        to be Installed
----------------------------------------------------------------
South Regional              8                      48
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North Regional             20                      20
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East Regional               0                      22
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West Regional               2                      30
----------------------------------------------------------------

----------------------------------------------------------------
Total                      30                     120
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(c) Competitive Agreements Expiring less than One Year:

In addition, any competitive system which has less than one (1) year remaining on its existing rental/lease agreement will be reviewed for replacement on an account by account basis. Seller will credit the Participating Premier Member for the time remaining on the contract by giving a discount equivalent to the amount of the time left to be paid on the replacement unit's contract.

For example;

If a Participating Premier Member has competitive systems with 6 months remaining on the rental commitment, and they wish to convert to Seller's equipment on a 60 month rental agreement, Seller may negotiate with the Participating Premier Member to allow for a 66 month rental agreement, in which the first six months are discounted and prorated over the term of the rental agreement.

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5.5 Special Promotions

Seller may, on occasion, offer special promotions for Product(s) including feature options. Any such promotion will be offered to all Participating Premier Members and will be limited to the terms and conditions of the specific promotion. All promotions must be coordinated by Seller through Purchasing Partners.

5.6 Targeted Group Purchases

From time to time, Purchasing Partners may identify group purchase opportunities with Seller, whereby several Participating Premier Members agree to purchase Seller's Product(s) during a specified time period. Seller agrees to assist and participate in this Group purchase and offer additional incentives to such Participating Premier Members in the event of such a program.

5.7 Pricing for Updates/Upgrades

Updates/Upgrades/Enhancements will be provided for Product(s) at no charge for Participating Premier Members with active service/maintenance agreements. Feature options for Product(s) will be chargeable, to Participating Premier Members and will vary depending on the option. Examples of Updates/upgrades are under Exhibit M.

5.8 Coterminous Agreements

Seller will accommodate coterminous agreements by adjusting the price of new orders to allow for coterminous coordination with current rentals/leases or extending the term of current rentals/leases to go coterminous with new orders per Section 3.3

5.9 Supply Station/Pharmacy Automated Distribution System Ordering Incentives

Seller shall provide an additional percent net discount to Participating Premier Members who purchase both Seller's supply and pharmacy stations under this Agreement. Seller shall also provide an additional percent net discount on the purchase under this Agreement of Seller's supply stations by Participating Premier Members who have committed to the Baxter Group Purchasing Agreement and who purchase a combination of Seller's supply stations and Baxter Healthcare Corporation's automated medication distribution systems.

5.10 Exclusive Group Discounts

For any Participating Premier Members with a minimum of three (3) acute care hospitals who sign up to utilize Seller as its exclusive automation vendor, Seller will provide a Member Exclusivity discount of an additional ______ percent

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_____net discount. This discount is applied on a moving forward basis and is not retroactive.

5.11 Pricing of New Products

Pricing for any additional and/or new products of Seller will be negotiated at net prices consistent with the net prices of Products already covered by this Agreement.

5.12 Electronic Transfer of Funds/Electronic Data Interchange

Seller and Purchasing Partner agree that in the event any Participating Premier Member with the capability for electronic transfer of funds or other form of electronic data interchange compatible with that of Seller chooses to use such payment or ordering method, the pricing set forth in this Agreement may be reduced by a discount to be mutually agreed upon by such Participating Premier Member and Seller.

5.13 Product Pricing Information (Sales Catalogs)

Seller will provide to Purchasing Partner product pricing information in the ANSI X.12-832 format as detailed in Exhibit D. The timeframe for product information to be available in this format is one (1) year from the date of the Agreement. In the meantime, Seller may utilize one of the alternative formats detailed in Exhibit D. If after twelve (12) months, Seller shall be subject to assessment by Purchasing Partners only for the additional costs associated with processing product pricing information provided in a non-standard format.

5.14 Taxes

No party shall be responsible for taxes imposed on any other party as a result of or arising from the transactions contemplated by this Agreement. Property and user taxes will be prepaid and added for those customers in the states affected.

6. MARKETING/SALES SUPPORT/MAINTENANCE

6.1 Seller Representatives

Seller will provide representatives to call upon Participating Premier Members on a periodic basis mutually agreed to by Seller and each individual Participating Premier Member.

6.2 In-Service/Clinical Training

Included in the price of the Product(s), Seller will provide to each Participating Premier Member In-service and Clinical Training, as described herein under Exhibit L related to the Product(s) as required or requested by each Participating Premier Member ("Train the Trainer"). Seller will maintain a properly qualified

11.


training staff to provide such In-service and Clinical Training, and it shall be the responsibility of each Participating Premier Member to ensure that its appropriate personnel attend and complete such training. Specifically, Seller shall perform, at the convenience of each Participating Premier Member, in-service training sessions at Seller's facility for medical, clinical and technical personnel in the use and operation of the Product(s). The scheduling of applications training shall be made directly with the director of the Participating Premier Member's applicable department and shall accommodate all shifts that require training.

Also included in the price of the Product(s), Participating Premier Members are required to participate in a week of training prior to the clinical use of the system, The "System Administrator Training Course" is held at Seller's headquarters in Palo Alto, California. The course fee will be waived by Seller, while all travel and related expenses will be the responsibility of the Participating Premier Member. The Participating Premier Member must complete training prior to the clinical use of the system in order to enforce the warranty and indemnification provisions of this Agreement with respect to such Participating Premier Member.

Also included in the price of the Product(s), Seller will provide a written training guide and/or set of training video tapes to the Participating Premier Member to be used for future in-service training by Staff.

Also included in the price of the Product(s), Seller shall supply the Participating Premier Members with the following items prior to or at the time of delivery of the Product(s): (A) one (1) copy of operator manuals covering all equipment and accessories; and (B) one (1) copy of complete service manuals detailing all equipment and accessories including, without limitation, parts lists and schematic diagrams. All updates to manuals and final versions (where applicable) of manuals are to be provided for the life of the equipment.

Participating Premier Members shall be entitled to make necessary copies, for internal purposes only, of any training materials to be used.

6.3 Biomedical/Technical Programs

Within the warranty period described in Section 10.2, Seller will make available factory service school training including travel, room and board, for the Participating Premier Member's clinical engineering representative for $3,500.00 per course, plus travel and expenses. This privilege shall extend for no more than five (5) years from the acceptance of the Product(s) by Participating Premier Member and shall not be utilized more than one time per year after the first year of system operation. If possible, training shall be provided at regional locations to accommodate multiple Participating Premier Members.

6.4 Remote Diagnostic Systems

Not Applicable

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6.5 Product Developments/New Product Opportunities

At Purchasing Partners' request, Seller will meet with Purchasing Partners at least two (2) times during each year of this Agreement to share new product information and technology and to discuss opportunities of mutual interest. All expenses associated with such meetings during each year of this Agreement will be paid in a mutually agreed upon arrangement. Seller will work with Purchasing Partners and Participating Premier Members in developing new products and exploring opportunities for market research, clinical trials and technology transfer.

Contemporaneous with Seller's announcement to any other customer of any new commercially available product, Seller will notify Purchasing Partners in writing of the nature, potential uses and performance specifications of such product.

6.6 Service and Related Agreements

Seller's Service Agreement, included herein under Exhibit K, is required for Participating Premier Members on all rented/leased or purchased Product(s).

6.7 Service and Maintenance

Seller offers basic and extended service to Participating Premier Members. The price for the sixty (60) month rental of Product(s) with Basic Service included under Exhibit A will be firm for the term of the Agreement. The price for the twelve (12) month Basic Service listed herein under Exhibit A will increase pursuant to Section 5.2.

Seller's basic or extended service prices will be discounted by ____ percent ____ (rounded to nearest $5) if a Participating Premier Member facility agrees to the following:

1. Participating Premier Member(s) send a minimum of two Bio-Med personnel to Seller's headquarters for system administrator training as referenced in Section 6.3.

2. Once certified, Participating Premier Member trained personnel must be available to perform on-site maintenance services normally performed by Seller. This will include all services that Seller is able to train Participating Premier Member Bio-med personnel to perform.

3. The first call follow-up from Seller's help desk will go to the Participating Premier Member's Bio-med service personnel.

Seller shall provide the Participating Premier Member participant a list of parts, servicing and planned maintenance kits, and specialized test and servicing equipment to be provided. This list shall include pricing and available discounting.

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6.8 Accessories and Replacement Parts

Included in the price of the Product(s) and for the life of the Product(s), Seller will offer to Participating Premier Member each item, including, without limitation, hardware, firmware, and software ("Accessory Item") which may be used with any Product(s) at a zero percent (0%) discount off Seller's then-current list price for such Accessory Item, or the lowest price which Seller offers such Accessory Item to any of its other customers, whichever is lower. For any Accessory Item ordered by Participating Premier Member, Seller will install the Accessory Item at no charge when the Product(s) is not in use according to a schedule approved by Participating Premier Member, and will provide, at no charge, training to Participating Premier Member designees regarding use of such Accessory Item, except in cases of misuse (e.g. physical abuse, not providing voltage surge protection, not providing preventative maintenance as described in the operator's manual) by a Participating Premier Member, in which case parts and labor will be charged at current rates.

Also included in the price of the Product(s), Seller will provide all replacement parts for the Product(s) within twenty-four (24) hours of Participating Premier Member's request. All replacement parts for the Product(s) will be available for not less than ten (10) years following the earlier of either (i) the date when Seller ceases to sell the Product(s) or a reasonable substitute of the Product(s) or
(ii) the expiration of the warranty period described in Section 10.2, including all extensions thereto, if applicable. Included in the price of the Product(s), Seller shall provide all software and hardware modifications necessary to meet regulatory requirements.

6.9 Downtime Protection

Seller is not able to track downtime for Product(s) as requested. Seller will guarantee a 95% cumulative up-time for all equipment in each Participating Premier Member facility. For each month that passes where the 95% up-time is not maintained, Seller agrees to waive the service fees for one month.

For example;

If a Participating Premier Member has 10 units installed, they would have 7,200 hours of operation in a thirty day month. If the Member has more that 360 hours (5%) of downtime (as calculated by the Member), the service fees for the entire installation would be waived for one month. If during the warranty period for any Product, such product experiences twenty (20) or more continuous days of any Downtime, or forty (40) or more days of any Downtime, Participating Premier Member shall notify Seller in writing of such circumstances, including a description of the problems or defects. Seller agrees to provide at its expense and within twenty-four hours (24) of receiving such notice, the technical personnel and assistance necessary to remedy the failed Product and to prevent the problems or defects from reoccurring, unless the problems are caused by the Participating

14.


Premier Member's own interfaces to the Product(s). In the event that Seller is unable to remedy the problems or defects in the Product(s) within a time period reasonably determined by Participating Premier Member, Seller shall remove such Product at no charge, immediately refund to Participating Premier Member a prorated amount based on the depreciation schedule of Product(s) all funds paid for such Product if purchased and forgiveness of future rental charges for leased Product(s) for such Product(s) that experienced Downtime. For purposes of this Agreement, "forgiveness of future rental charges" shall mean the Participating Premier Member shall not be considered in default of their current rental agreement.

6.10 Response Time

Included in the price of the Product(s), Seller shall make available to Participating Premier Members, a service engineer familiar with the Product(s) to respond by telephone within a reasonable time not to exceed four (4) hours of Participating Premier Member's placing a telephone call to Seller requesting service regarding any problem with the Product(s), or failure of the Product(s) to perform in accordance with the Product Specifications. If Seller's response time is later than four (4) hours on two or more occasions within a thirty
(30) day period, Seller will waive the service fees for that Participating Premier Member for one month for those units affected.

If either the Participating Premier Member or Seller reasonably determines that a service visit is necessary to correct the problem, Seller shall have a service engineer at the Clinical Site as per the terms of the applicable service agreement (basic or extended).

7. SALES DOCUMENTATION

Seller will provide Purchasing Partners with reports of all Products purchased by each Participating Premier Member no later than thirty (30) days after the last day of the quarter. Reports will include, reporting period start and end dates, member name, city, state, monthly sales volume per Product (totaled per member), and the administrative fee amount by member. Participating Premier Members will be identified by HIN or DEA number.

Seller will provide to Purchasing Partners sales documentation in the ANSI X. 12-867 format as detailed in Exhibit E. The timeframe for sales information to be available in this format is one (1) year from the date of the Agreement. In the meantime, Seller may utilize one of the alternative formats detailed in Exhibit E. However, if Seller deviates from the ANSI X. 12-867 standard after twelve (12) months, an additional fee (as set forth in Section 8.3) will be assessed against Seller to compensate Purchasing Partners for the additional costs associated with processing Product sales data provided in a non-standard format.

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Seller will identify to Purchasing Partners a contact person within Seller's organization who will be responsible for the development and distribution of the sales reports set forth in Section 7.0.

8. FEES

8.1 Administrative Fee

Seller will remit to Purchasing Partners monthly an administrative fee (the "Administrative Fee") equal to ____ percent _____ of the total dollar volume of Products purchased by Participating Premier Members through Seller or through any Authorized Seller's Distributors during such period. Seller will pay to Purchasing Partners the Administrative Fee by a check payable to "Premier Purchasing Partners, L.P." sent to the attention of "Controller" which shall be received at Purchasing Partners' address as set forth above no later than thirty
(30) days after the last day of the quarter.

The administrative fee will be paid as a percent of the total cash (including service and ancillary costs but excluding costs associated with shipping) collected from Participating Premier Members.

Seller may make payment of the Administrative Fee electronically to the designated Purchasing Partners' account. The current electronic funds transfer instructions are as follows:

Seller shall pay to Purchasing Partners interest on any past due amount owing Purchasing Partners hereunder at the lesser of (i) one and one-half percent (1-1/2%) per month or (ii) the maximum interest rate legally permitted.

8.2 Electronic Submission of Administrative Fee Sales Documentation

Seller will provide sales data in the electronic format specified in
Section 7.0 of this Agreement. The timeframe for product information to be available in this format is one (1) year from the date of the Agreement. If Seller does not provide data in the specified format within that time period, Seller agrees to provide payment of the charges resulting from the increased costs to Purchasing Partners in addition to the Administrative Fee provided for in Section 8.1 of this Agreement.

8.3 Electronic Submission of Product Pricing Information

Seller will provide product pricing information in the electronic format specified in Section 5.10 of this Agreement. The time frame for product information to be available in this format is one (1) year from the date of the Agreement. If Seller does not provide pricing information in the specified format within that period of time, Seller agrees to provide payment of the charges resulting from the increased costs to Purchasing Partners in addition to the Administrative Fee provided for in Section 8.1 of this Agreement.

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9. COMPLIANCE WITH LAWS AND REGULATIONS

Purchasing Partners and Seller represent and warrants that throughout the term of this Agreement and any extension hereof, Purchasing Partners, Seller and the Products shall be and shall remain in compliance with all mandatory applicable federal, state and local laws and regulations.

The dollar value of the goods and services provided pursuant to Section 6.0, and any other products and services not specifically paid for by Participating Premier Members and received by Participating Premier Members from Seller under this Agreement are "discounts or other reductions in price" to Participating Premier Members under Section 1128B(b)(3)(A) of the Social Security Act, 42 U.S.C. 1320a-7b(b)(3)(A). Upon request of any Participating Premier Member, Seller shall disclose to the Participating Premier Member, per the applicable regulations, the specified dollar value of discounts or reductions in price. The Participating Premier Member shall disclose the specified dollar value of discounts or reductions in price under any state or federal program which provides cost or charge based on reimbursement to Participating Premier Member for the Products and services covered by this Agreement in accordance with applicable regulations.

Seller agrees that, until the expiration of four (4) years after the furnishing of any goods and services pursuant to this Agreement, it will make available, upon written request of the Secretary of Health and Human Services or the Comptroller General of the United States or any of their duly authorized representatives, copies of this Agreement and any books, documents, records and other data of Seller that are necessary to certify the nature and extent of the costs incurred and other data of Seller that are necessary to certify the nature and extent of the costs incurred by Participating Premier Member in purchasing such goods and services. If Seller carries out any of its duties under this Agreement through a subcontract with a related organization involving a value or cost of ten thousand dollars ($10,000) or more over a twelve-month period, Seller will cause such subcontract to contain a clause to the effect that, until the expiration of four (4) years after the furnishing of any good or service pursuant to said contract, the related organization will make available upon written request of the Secretary of Health and Human Services or the Comptroller General of the United States or any of their duly authorized representatives, copies of this Agreement and any books, documents, records and other data of said related organization that are necessary to certify the nature and extent of costs incurred by Seller for such goods or services. Seller shall give Purchasing Partners notice immediately upon receipt of any request from the Secretary of Health and Human Services or the Comptroller General of the United States or any of their duly authorized representatives for disclosure of such information.

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10. INDEMNIFICATION, WARRANTIES, SPECIFICATIONS AND NOTICES

10.1 Indemnification

(a) Damage from Use of Products

Subject to Section 10.2 below, Seller hereby agrees to indemnify, defend (pursuant to Section 10.3 below) and hold harmless Purchasing Partners, each Participating Premier Member, and their respective directors, officers, employees and agents (each an "Indemnitee") from and against any and all losses, expenses, damages, liabilities and costs (including, without limitation, interest, penalties and reasonable attorneys' fees) arising from any bodily injury or property damage caused by use of any of the Products except Seller shall not be financially responsible for that portion of any loss, expense, damage, liability or cost which results from the negligence of an Indemnitee.

(b) Infringement Claims

Subject to Section 10.2 below, Seller hereby agrees to indemnify and hold harmless the Indemnitees from and against any and all losses, expenses, damages, liabilities and costs (including, without limitation, interest, penalties and reasonable attorneys' fees) arising from an infringement of any U.S. copyright, U.S. patent, or registered U.S. trademark or trade name of third parties. If any Product is the subject of or, in Seller's opinion, is likely to become, the subject of any such infringement claim, Seller may, at its option and expense, either (i) procure for Participating Premier Members that use the Product the right to continue using the Product;
(ii) replace or modify the Product so that it becomes non-infringing while remaining functionally equivalent; or (iii), if neither (i) nor
(ii) is, in Seller's reasonable opinion, a viable option, remove the affected Product, reimburse each Participating Premier Member that uses the Product for its direct, documented, reasonable, out-of- pocket costs in modifying its Clinical Site for use with substitute products, and refund the purchase price actually paid for the removed Products less depreciation calculated at _____ percent ____ per year from the date of delivery. This paragraph 10.1 (b) states Seller's entire liability for infringement claims and actions.

(c) Purchasing Partners Indemnification

Purchasing Partners agrees to indemnify, defend, and hold harmless Seller and its respective directors, officers, employees and agents (each an "Indemnitee") from and against any and all losses, expenses, damages, liabilities and costs (including, without limitation, interest, penalties and reasonable attorney's fees) arising from a claim asserted by a third party regarding (i) Purchasing Partner's obligation to provide information regarding this Agreement to the participants in the Premier Group Purchasing Program, to actively support conversions and commitment to this Agreement and to aid in communicating with Premier Members; (ii) Purchasing Partners representations concerning the Products that differ from those

18.


made by Seller in Seller's documentation for the Product; and (iii) Purchasing Partners failure to comply with the Medicare and Medicaid anti-kickback provision of the Social Security Act, 42 U.S.C. 1320a- 7b, except Purchasing Partners shall not be financially responsible for that portion of any loss, expense, damage, liability or cost which results from the negligence of Indemnitee.

10.2 Exclusion

Seller will have no obligations to any Indemnitee under Section 10.1 for any claim based upon or any damages attributable to (a) use of any version of a Product other than the unaltered release of the most current version of such Product issued to the Participating Premier Member (unless specifically approved by Seller in writing). To the extent such claim or damage would have been avoided by use of the unaltered current release of such Product; (b) use of any product not in accordance with Seller's written instructions or for any purpose other than its intended purposes; (c) any modification, alteration, or repair to a Product not made by Seller or specifically authorized by Seller in writing; or (d) combination, operation or use of Product with equipment, programs or data not supplied or specifically approved in writing by Seller to the extent such claim or damage would have been avoided by use of the Product without such non-Seller supplied or approved pursuant to Section 4.1 of this Agreement.

10.3 Defense of Third Party Claims

If any third party asserts a claim against Indemnitee for which Indemnitee is entitled to indemnification by Purchasing Partners or Seller under Section 10.1 ("Indemnitor") (subject to the exclusions in Section 10.2), Indemnitor will defend such claim at its own expense and pay any damages and costs finally awarded by a court of competent jurisdiction, or any amount agreed to in a monetary settlement, specifically attributable to such claim, provided that Indemnitee (a) promptly notifies Indemnitor in writing of such claim
(b) gives Indemnitor sole control of the defense of such claim and settlement negotiations related thereto, and (c) cooperates with and, at Indemnitor's request and expense, assists Indemnitor in the defense or settlement of such claim. Subject to the foregoing, Indemnitee will have the right, at its own expense, to participate in and be represented by its own counsel in the defense of any such claim. Pursuant to Section 10.1, Indemnitor shall only be responsible for that portion of any defense costs which correspond to Indemnitor's percent of total liability as determined by a court of competent jurisdiction.

10.4 Warranties and Published Specifications

Product(s) are covered under the warranty or warranties set forth in Seller's Purchase, Rental, and Service Agreements, as applicable, attached hereto as Exhibits J, I, and K respectively. Seller will make a limited warranty directly to each Participating Premier Member that acquires any of the Products under this Agreement. It is understood and agreed that SELLER MAKES NO

19.


WARRANTIES, EXPRESS OR IMPLIED, TO PURCHASING PARTNERS REGARDING ANY OF THE PRODUCTS AND EXPRESSLY DISCLAIMS THE IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, AND NON- INFRINGEMENT.

10.5 Product Notices

Seller agrees to send all Product notices, as well as notices of any other changes affecting the Product(s) and notices of new products, to each Premier Member with copies to Purchasing Partners.

10.6 Insurance

Seller shall maintain adequate product liability, general public liability and property damage insurance against any claim or claims which might or could arise regarding products purchased by Participating Premier Members from it under the Agreement. When requested by Purchasing Partners, an insurance certificate indicating the foregoing coverage, issued by an insurance company licensed to do business in the relevant state or states and signed by an authorized agent, shall be furnished to Purchasing Partners.

10.7 Limitation on Liabilities

In no event shall Seller be liable for any special, incidental, indirect or consequential damages of Purchasing Partners arising out of this Agreement; provided, however, that no limitation of liability, under this Section 10.7 shall in any way act to limit Seller's liability under the Indemnification provisions of Sections 10.1 and 10.2 of this Agreement.

11. TERMINATION

11.1 Termination for Breach

In the event of breach of any provision of this Agreement, the non- breaching party shall notify, the breaching party in writing, of the specific nature of the breach and shall request that it be cured. If the breaching party does not cure the breach within thirty (30) days of such notice, the non-breaching party may immediately terminate this Agreement on written notice to the breaching party, and such termination shall not preclude the non-breaching party from pursuing any and all remedies available to it at law or at equity.

11.2 Orders Placed Prior to Termination

Seller shall fulfill, in accordance with the terms of this Agreement, all orders for Products submitted by a Participating Premier Member and accepted by Seller prior to termination or expiration of this Agreement.

20.


11.3 Termination Without Cause

Purchasing Partners or Seller may terminate this Agreement for any or no reason upon ninety (90) days written notice.

11.4 Survival

The following paragraphs of this Agreement shall survive expiration or termination of this Agreement: (i) the payment of Administrative Fees pursuant to Section 8.1 including, but not limited to, fees relating to Products ordered prior to the effective date of expiration or termination and delivered after expiration or termination; (ii) the audit undertakings set forth in Section 13.12;
(iii) the representations, warranties and covenants set forth in
Section 10.3; (iv) the indemnification undertaking contained in
Section 10.1; (v) the designation of Premier Members as third party beneficiaries pursuant to Section 13.7; (vi) the undertaking to fill orders submitted to and accepted by Seller prior to the date of expiration or termination set forth in Section 11.2; (vii) the confidentiality undertakings contained in Article 12; (viii) the inurement rights and limitations on assignment contained in Sections 13.4 and 13.10; (ix) the governing law provisions contained in
Section 13.1; (x) reasonable attorney's fees provided for in Section 13.9.

12. CONFIDENTIALITY

12.1 Confidential Information

For the purposes of this Agreement, confidential information ("Confidential Information") shall mean all proprietary, secret or confidential information or data relating to Purchasing Partners or Premier Members, or Seller and their respective operations, employees, services, patients or customers. Such Confidential Information may include oral statements or written material, whether tangible or intangible, designated either orally or in writing, to be confidential at the time of disclosure. Oral statements designated as Confidential Information shall be reduced to writing within thirty
(30) days of such statements.

12.2 Protection of Confidential Information

The parties acknowledge that they may disclose Confidential Information to each other in connection with this Agreement. If a party receives Confidential Information it shall: (a) maintain the Confidential Information in strict confidence; (b) use at least the same degree of care in maintaining the secrecy of the Confidential Information as the disclosing party uses in maintaining the secrecy of its own proprietary, secret or confidential information, but in no event less than a reasonable degree of care; (c) use Confidential Information only to fulfill its obligations under this Agreement; and
(d) return or destroy all documents, copies, notes or other materials containing any portion of the Confidential Information upon request by the disclosing party.

21.


12.3 Agreement Confidential

Neither party hereto shall disclose the terms of this Agreement to any other person or entity other than a Premier Member or as required by law, except that either party may disclose the terms of this Agreement as is necessary for distribution of Seller's Products pursuant to Section 4.1 of this Agreement and to its attorney and accountant having a need to know in order to accomplish the purposes contemplated by this Agreement. Neither party shall make any public announcement concerning the existence of this Agreement or its terms unless such party receives prior written approval by the other party, except as required under Section 9.0 of this Agreement.

12.4 Limitation on Obligation

The parties shall have no obligation concerning any portion of the Confidential Information which: (a) was known before receipt, directly or indirectly, from the disclosing party; (b) is lawfully obtained, directly or indirectly, from other than the disclosing party; under no obligation of confidentiality; (c) is or becomes publicly available other than as a result of an act or failure to act by the disclosing party; or (d) is required to be disclosed by applicable law or legal process. The parties shall not disclose any portion of the Confidential Information to any person except those of its employees, agents, or independent contractors having a need to know such portion to accomplish the purposes contemplated by this Agreement.

13. MISCELLANEOUS

13.1 Governing Law and Venue

This Agreement is being delivered and executed in the State of Illinois. In any action arising under this Agreement, whether at law or at equity, the validity, construction and enforcement of this Agreement shall be governed in all respects by the laws of the State of Illinois. Venue shall be proper only in a court of competent jurisdiction located in the county and state in which the complaining party is located. The parties agree to be subject to personal jurisdiction in and consent to service of process issued by a court in which venue is proper as defined in this Section 13.1.

13.2 Modification and Waiver

No modification of this Agreement shall be deemed effective unless in writing and signed by each of the parties hereto. Any waiver of a breach of any provision(s) of this Agreement shall not be deemed effective unless in writing and signed by the party against whom enforcement of the waiver is sought.

22.


13.3 Headings

The descriptive headings of the sections of this Agreement are inserted for convenience only and shall not control or affect the meaning or construction of any provision hereof.

13.4 Assignment

Neither party may assign, subcontract, delegate or otherwise transfer this Agreement or any of its rights or obligations hereunder, nor may it contract with third parties to perform any of its obligations without the other party's prior written consent; provided, however, that this Section 13.4 shall not limit Seller's ability to assign, subcontract, delegate or otherwise transfer its rights or obligations hereunder to a successor corporation, if necessary, in the event Seller becomes a publicly traded company through an initial public offering of stock in accordance with the Securities and Exchange Commission Act of 1934, as amended, or (ii) Purchasing Partners ability to assign, subcontract, delegate or otherwise transfer its rights or obligations hereunder to a subsidiary or affiliated entity of Purchasing Partners or Premier, Inc. Neither party's consent shall be unreasonably withheld or delayed. For purposes of this provision it is not unreasonable for Purchasing Partners to reject an assignment, subcontract, delegation or transfer based on its own business judgement as to the assignees ability to perform the requirements of this Agreement or if Purchasing Partners determines that it is not otherwise in Premier Members' best interest.

13.5 Severability

If any part of this Agreement shall be determined to be invalid, illegal or unenforceable by any valid Act of Congress or act of any legislature or by any regulation duly promulgated by the United States or a state acting in accordance with the law, or declared null and void by any court of competent jurisdiction, then such part shall be reformed, if possible, to conform to the law and, in any event, the remaining parts of this Agreement shall be fully effective and operative insofar as reasonably possible.

13.6 Notices

Any notice required to be given pursuant to the terms and provisions hereof shall be in writing, postage and delivery charges pre-paid, and shall be sent by telecopier, hand delivery, overnight mail service, first-class mail or certified mail, return receipt requested, to Purchasing Partners or Seller at the addresses and/or facsimile numbers set forth above. Any party may change the address to which notices are to be sent by notice given in accordance with the provisions of this section. Notices hereunder shall be deemed to have been given, and shall be effective upon actual receipt by the other party, or, if mailed, upon the earlier of the fifth (5th) day after mailing or actual receipt by the other party.

23.


13.7   Enforceability

       The parties hereto acknowledge and agree that (i) this Agreement is
       entered into by Purchasing Partners for the express, intended
       benefit of the Premier Members, (ii) each of the Premier Members
       shall be and constitute an intended third party beneficiary of the
       representations, warranties, covenants and agreements of the Seller
       contained herein, and (iii) each of the Premier Members shall be
       entitled to enforce the terms and provisions of this Agreement to
       the same extent as Purchasing Partners.

13.8   Independent Contractors

       The parties' relationship hereunder is that of independent
       contractors. This Agreement does not create any employment, agency,
       franchise, joint venture, partnership or other similar legal
       relationship between Purchasing Partners and Seller. Neither party
       has the authority to bind or act on behalf of the other party except
       as otherwise specifically stated herein.

13.9   Attorneys' Fees

       Should any party employ an attorney for the purpose of enforcing
       this Agreement or any judgment based hereon in any court, including
       bankruptcy court, courts of appeal or arbitration proceedings, the
       prevailing party shall be entitled to receive its reasonable
       attorneys' fees and costs, whether taxable or not.

13.10  Binding Effect

       This Agreement shall be binding upon and shall inure to the benefit
       of the parties hereto and their respective successors and permitted
       assigns.

13.11  Force Majeure

       The obligations of either party to perform under this Agreement will
       be excused during each period of delay caused by acts of God or by
       shortages of power or materials or government orders which are
       beyond the reasonable control of the party obligated to perform
       ("Force Majeure Event"). In the event that either party ceases to
       perform its obligations under this Agreement due to the occurrence
       of a Force Majeure Event, such party shall: (1) immediately notify
       the other party and, in the case of Seller, the Participating
       Premier Member affected in writing of such Force Majeure Event and
       its expected duration; (2) take all reasonable steps to recommence
       performance of its obligations under this Agreement as soon as
       possible. In the event that any Force Majeure Event delays a party's
       performance for more than ninety (90) days following notice by such
       party pursuant to this Agreement, the other party may terminate this
       agreement immediately upon written notice to such party.

                                 24.

13.12  Audit of Costs

       Seller shall permit Purchasing Partners or its agent to conduct
       annual audits of records relating to Seller's performance under this
       Agreement including without limitation orders, invoices, volume
       reports and administrative fees, subject to Seller's obligations
       under any confidentiality agreement entered into by Seller and third
       party. The audits shall be conducted upon reasonable advance notice
       during regular business hours at Seller's principal office and in
       such a manner as not to unduly interfere with Seller's operations.
       Such audits shall be subject to the confidentiality provisions of
       this Agreement set forth in Article 12 above.

13.13  Minority and Female Owned Businesses

       Seller represents and warrants that it is an "equal opportunity
       employer". Seller shall also use its reasonable efforts to support
       Purchasing Partners' Minority, and Female Owned Businesses Policy as
       set forth in Exhibit F.

13.14  Entire Agreement

       This Agreement, including all Exhibits referenced herein,
       constitutes the entire understanding and agreement between the
       parties concerning the subject matter hereof, and supersedes all
       prior negotiations, agreements and understandings between the
       parties, whether oral or in writing, concerning the subject matter
       hereof.

In Witness Whereof, the undersigned duly authorized representatives of the parties have executed this Agreement as of the date below written.

Premier Purchasing Partners, L.P.           OmniCell Technologies, Inc.

/s/ Lynn Detlor                             /s/ Earl Fry
-----------------------------------         ------------------------------------
Lynn Detlor                                 Earl Fry
President, Purchasing Partners              CFO

May 28, 1997                                May 15, 1997
-----------------------------------         ------------------------------------
Date Signed                                 Date Signed

                                      25.

                                                                       Exhibit A

Baxter Distributed OmniCell Supply Products

   Products                 Description                Model #
   --------                 -----------                -------

Cabinets              1 Cell OmniSupplier              OS 104
                      1 Cell Auxiliary                 OX104
                      2 Cell OmniSupplier              OS224
                      2 Cell Auxiliary                 OX224
                      3 Cell OmniSupplier              OS344
                      3 Cell Auxiliary                 OX344
                      4 Cell OmniSupplier              OS448
                      5 Cell OmniSupplier              OS568
                      6 Cell OmniSupplier              OS688
                      2 LOW Cell                       OS176
                      OmniExpress                      OS56

OmniCenter            OmniCenter XPC                   XPC100
                      OmniCenter Supply                XPC-SP
                      Transaction Processor            TPC100
                      Network Processor                NPC100
                      Partner Processor                PPC100
                      OmniCenter XPC-CL                XPC-CL

Modules               Supply Drawer                    OSD24
                      Cath Rack                        OCR48
                      Suture Rack                      OSR24
                      Magnetic Card Reader             MCR100

Upgrades              OmniSupplier                     OS2
                      Upgrade                          OS2U
                      OmniSupplier PC Box              OSPC
                      OmniSupplier Aux. Box            OSAX
                      OmniSupplier Printer             OSO

I.


FIRST AMENDMENT

This First Amendment ("First Amendment") by and between Premier Purchasing Partners, L.P., a Delaware corporation, ("Purchasing Partners") and OmniCell Technologies Inc. hereby amends the Agreement effective July 1, 1997 by Purchasing Partners and OmniCell Technologies (the "Agreement").

RECITALS

Whereas, Purchasing Partners have entered into an Agreement for the purpose of selling OmniCell Technologies Inc. products to Premier facilities;

Whereas, OmniCell Technologies Inc. and Purchasing Partners desire to amend the Agreement as set forth in this First Amendment.

Now, Therefore, in consideration of the mutual promises contained herein and other good and valuable consideration, the receipt of which is hereby acknowledged, the parties hereto promise and agree as follows:

1. Seller will remit to Purchasing Partners quarterly, an administrative fee (the "Administrative Fee") equal to ___ percent __ of the total dollar volume of Products purchased by Participating Premier Members through Seller or through any Authorized Seller's Distributors during such period. Seller will pay to Purchasing Partners the Administrative Fee by a check payable to "Premier Purchasing Partners, L.P." sent to the attention of "Controller" which shall be received at Purchasing Partners' address as set forth above no later than thirty
(30) days after the last day of the quarter.

In Witness Whereof, the undersigned duly authorized representatives of the parties have executed this First Amendment as of the date below written.

Premier Purchasing Partners, L.P.            OmniCell Technologies Inc.

/s/ Lynn R. Detlor                           /s/ Jeff Arbuckle
-----------------------------------          -----------------------------------
Lynn R. Detlor                               Jeff Arbuckle
President                                    Central Vice President

November 18, 1997                            November 18, 1997
-----------------------------------          -----------------------------------
Date Signed                                  Date Signed

1.


PREMIER PURCHASING PARTNERS, L.P.


AMENDMENT NUMBER 2 TO GROUP PURCHASING AGREEMENT
CONTRACT #: PP-CE-047A

Product/Services Category: Automated Supply Stems and Accessories

(Year 2000 Compliance)

This Amendment Number 2 ("Amendment"), is entered into effective December 1, 1997 (the "Effective Date"), and shall amend and modify the Group Purchasing Agreement (Contract #: PP-CE-047A) by and between Premier Purchasing Partners, L.P. ("Purchasing Partners"), and OmniCell Technologies ("Seller"), dated effective June 1, 1997 (the "Agreement"), as follows:

1. Year 2000 Compliance. The Agreement is hereby amended to add the following provision to the Agreement:

"Year 2000 Compliance. Seller warrants that any software and hardware included in the Products and any software and hardware used in information systems by Seller to process transactions related to providing the Products hereunder, including without limitation, sales order processing, sales order acknowledgment processing, advanced shipping notice processing, invoicing, purchase order processing, purchase order acknowledgments, accounts receivable and accounts payable processes, and sales and compliance reporting processes, shall operate properly prior to, during and after the year 2000 and shall not cause any business interruptions or response time delays (i.e., such software and hardware is "Year 2000 Compliant"). In this regard, Seller agrees that such software and hardware shall contain, at a minimum:

a. date formats that have century recognition;

b. calculations that accommodate same-century and multi-century formulas and date values;

c. date interface values that reflect the century; and

d. calculations that accommodate the occurrence of leap years.

Upon Purchasing Partners' request, Seller agrees to provide Purchasing Partners with documentation demonstrating that the Products and Seller's transaction processing systems are Year 2000 Compliant. If at any time during the term hereof it is reasonably determined by Purchasing Partners that any Products and/or Seller's transaction processing systems are not Year 2000 Compliant, Seller agrees to correct the problem at no additional charge within fifteen (15) days of receiving written notice of such problem from Purchasing Partners (the "Problem Notice"). In the event Seller is unable within such time period to correct any such problem with respect to certain Products, Seller shall provide Participating Members with a full refund of all monies paid for the applicable Product(s) within thirty (30) days of its receipt of the Problem Notice.

1.


2. Other Terms and Conditions. All other terms and conditions of the Agreement shall remain in full force and effect.

This Amendment is hereby executed as of the Effective Date by the parties' authorized representatives set forth below.

Premier Purchasing Partners, L.P.            OmniCell Technologies
("Purchasing Partners")                      ("Seller")

By: PREMIER PLANS, INC.,
    Its General Partner

    By: /s/ Lynn Detlor                      By: /s/ Jeff L. Arbuckle
       ------------------------------           -------------------------------
    Printed Name: Lynn Detlor                Printed Name: Jeff L. Arbuckle
                 --------------------                     ---------------------
    Title: President P.P.                    Title: Vice President of Marketing
          ---------------------------              ----------------------------

                                      2.


EXHIBIT 10.7

June 26, 1997

Mr. Jeff Arbuckle

Central Vice President
OmniCell Technologies, Inc.
1101 East Meadow Drive
Palo Alto, CA 94303

Dear Jeff:

The University HealthSystem Consortium Services Corporation accepts your proposal in response to our Request for Proposal CE-426 Supply Dispensing which was dated and signed by Shelly Asher, President/CEO on November 21, 1996. Agreement CE-426 was awarded dual supplier to OmniCell and Diebold. The OmniCell portion of the award will hereafter be known as CE-426B Supply Dispensing. This agreement for Automated Supply Dispensing Systems is to include our complete supply dispensing product line. To access either UHCSC agreements, CE-426A with Diebold or CE-426B with OmniCell, UHCSC Eligible Participants will be required to make a Sole Source commitment for a minimum of 80% of the products covered in the agreement by signing a UHCSC Post Award Commitment Document.

The initial term of the agreement will be from June 1, 1997 through June 30, 1999. Prices contained in this bid will remain firm for the initial two year term of the agreement. At the end of the initial term of the agreement, the committed participants will decide whether or not to ex-tend the agreement. If any of the extension options are exercised prices may increase, per line item for all supply dispensing systems, no more than ___ per year for years three through six. Prices for the service contracts are fixed, for the first two years and prices many increase no more than ___ in year three and no more than ___ in years four through six.

The UHCSC Standard Terms and Conditions of Bid and the UHCSC Special Terms and Conditions shall govern this agreement as submitted by OmniCell and amended as follows:

UHCSC STANDARD TERMS & CONDITIONS

10A Delete exception. Reinsert original language. In the second sentence strike "orders shall be placed Monday through Friday, with delivery no later than noon the next day (Tuesday through Saturday)" and replace with "DELIVERY TERMS ARE 90 DAYS ARO". 10I Exception accepted as noted.
11A Exception accepted as noted.
12B Delete exception. Reinsert original language. Amend the first sentence as follows:
"The party directly placing the purchase order.....the Products purchased have been inspected and accepted WITHIN 30 DAYS AFTER DELIVERY. ONCE ACCEPTANCE FOR EQUIPMENT IS SIGNED, THE CP MAY NOT REVOKE ITS ACCEPTANCE". In the second sentence strike "fifteen" and change to "THIRTY".
12F Delete exception. Reinsert original language. Striking _____ and at the end of the sentence add "after acceptance". 12G Exception accepted as noted.

1.


Page 2
CE-426B Award Letter
OmniCell Technologies
June 26, 1997

13 Exception accepted as noted.
20 Delete exception. Replace with the following: "WE HEREBY WARRANT THAT, IF THE EQUIPMENT IS DEFECTIVE IN WORKMANSHIP OR MATERIALS, OR IF THE SOFTWARE WE PROVIDE IS DEFECTIVE DURING THE TERM OF THIS AGREEMENT, WE SHALL REPAIR OR REPLACE, AT OUR OPTION, THE DEFECTIVE PART, PARTS, SOFTWARE, OR EQUIPMENT AND YOU AGREE THAT SUCH REPAIR OR REPLACEMENT SHALL BE YOUR SOLE REMEDY AND RECOURSE IN THE EVENT OF SUCH DEFECT, UNLESS AN ARBITRATOR DETERMINES THAT SUCH ACTIVITY HAS FAILED TO PROVIDE YOU WITH A REASONABLE REMEDY. THE WARRANTY GRANTED HEREIN DOES NOT COVER ANY PRODUCTS THAT YOU MAY USE, CREATE, OR INSTALL THAT IS NOT PROVIDED BY US. THIS WARRAN1T IS IN LIEU OF ALL OTHER WARRANTIES, EXPRESSED OR IMPLIED, INCLUDING WARRANTIES OF MERCHANTABILITY, NONINFRINGEMENT, USE AND FITNESS FOR A PARTICULAR PURPOSE, BUT THE FORGOING DOES NOT AFFECT OUR OBLIGATIONS UNDER OTHER SECTIONS OF THIS AGREEMENT. THIS WARRANTY SHALL BE VOID AND OF NO FORCE OR EFFECT IF WE DETERMINE THAT ANY EQUIPMENT OR SOFTWARE DEFECT IS DUE TO YOUR MISUSE OR NEGLECT OR ANY UNAUTHORIZED REPAIRS OR TAMPERING WITH THE EQUIPMENT OR SOFTWARE."
25 Delete exception and replace with: "ANY CONTRACTS WHICH HAVE BEEN EXECUTED TO DATE WITH ANY CUSTOMER CANNOT BE TERMINATED UNLESS SPECIFIED IN THE TERMS OF THOSE AGREEMENTS. OMNICELL WILL ACCOMMODATE COTERMINOUS AGREEMENTS BY ADJUSTING THE PRICE OF NEW ORDERS TO ALLOW FOR COTERMINOUS COORDINATION WITH CURRENT RENTALS/LEASES OR EXTENDING THE TERM OF THE CURRENT RENTALS/LEASES TO GO COTERMINOUS WITH NEW ORDERS."
26 Delete exception. Reinsert original language. Delete sections two (2) and three (3). At the end of the paragraph add the following: "OMNICELL SHALL HAVE THE ABILITY TO HAVE SEPARATE AGREEMENTS FOR BETA AND/OR DEVELOPMENT ARRANGEMENTS WITH ANY CP, PROVIDED THAT OMNICELL HAS NOTIFIED UHCSC. THE TERMS AND CONDITIONS OF THESE INDIVIDUAL AGREEMENTS SHALL BE IN ADDITION TO ANY TERMS AND CONDITIONS OMNICELL HAS AGREED TO WITH UHCSC.". UHCSC and OmniCell have mutually agreed to the attached bilateral documents (Exhibit A) which are required documents that a CP accessing this agreement must sign and are limited to the following specific documents: Master Purchase Agreement, Master Rental Agreement, Master Service Agreement, Validation Agreement and the Supplement for each Master Agreement.
28 Delete exception. Reinsert original language. In the second sentence strike "$10,000,000" and replace with "$4,000,000". 30A Delete exception. Reinsert original language. Amend as follows: ". .
. whether at law or in equity, TO THE EXTENT arising from or caused. .
. contained in the Purchasing Agreement or (2) DEFECTIVE condition of any Product. . . defend and hold harmless shall not be applicable to the extent the claim, liability. . . failure to act of UHCSC, the CP or of the UHCAD, THEIR OFFICERS, DIRECTORS AND EMPLOYEES." 30B Delete exception. Reinsert original language.
47 Delete exception. Replace with: "TRAINING IS PROVIDED IN ACCORDANCE WITH OMNICELL'S RENTAL, PURCHASE AND SERVICE AGREEMENTS. INITIAL TRAINING ON-SITE DURING THE INSTALLATION IS PROVIDED AT NO CHARGE, RE-INSERVICING CAN BE PROVIDED AS SET FORTH IN THE APPLICABLE SERVICE AGREEMENT. SYSTEM ADMINISTRATOR TRAINING IS REQUIRED." See attached Exhibit B.

2.


Page 3
CE-426B Award Letter
OmniCell Technologies
June 26, 1997

UHCSC SPECIAL TERMS & CONDITIONS

3.0 Delete exception. Reinsert original language. Add the following to the end of the paragraph: "UPDATES/UPGRADES/ENHANCEMENTS WILL BE PROVIDED AT NO CHARGE FOR PRODUCTS WITH ACTIVE SERVICE/MAINTENANCE AGREEMENTS. FEATURE OPTIONS FOR PRODUCTS WILL BE CHARGEABLE, AT A DISCOUNT CONSISTENT WITH THE TERMS OF THE BID, AND WILL VARY DEPENDING ON THE OPTION. ALL OMNICELL PRODUCTS ARE FORWARD-BACKWARD COMPATIBLE, AND A MODULAR DESIGN ALLOWS FOR EASY UPDATES AND UPGRADES. CONTEMPORANEOUS WITH ORNNICELL'S ANNOUNCEMENT OF ANY NEW COMMERCIALLY AVAILABLE PRODUCT, OMNICELL WILL NOTIFY UHCSC IN WRITING OF THE NATURE, POTENTIAL USES AND PERFORMANCE SPECIFICATIONS OF THESE PRODUCTS.".

6.0 Delete exception. Reinsert original language. At the end of the first sentence add: "ONLY FOR EQUIPMENT INITIALLY INSTALLED IN EACH INSTITUTION UNDER A VALIDATION AGREEMENT". DELETE THE REST OF THE FIRST PARAGRAPH AND REPLACE WITH: "FOR ADDITIONAL EQUIPMENT, A PERIOD OF THIRTY DAYS FROM DELIVERY SHALL BE GIVEN TO THE CP FOR THE PURPOSE OF ACCEPTANCE TESTING. BY THE END OF THE THIRTY DAY PERIOD, ACCEPTANCE DOCUMENTS WILL BE SIGNED, WHICH WILL SIGNIFY THAT THE EQUIPMENT HAS MET OR EXCEEDED THE BID SPECIFICATIONS. ACCEPTANCE TESTING MAY INCLUDE, BUT IS NOT LIMITED TO, SAFETY TESTING, CALIBRATION, PERFORMANCE TESTING, DOCUMENTATION INSPECTION, AND TESTING FOR ADHERENCE TO HOSPITAL SPECIFICATIONS. INVOICE PAYMENT WILL BE INITIATED ON THIRTY DAYS TERMS AFTER ACCEPTANCE IS SIGNED. A COMPLETE SET OF ALL TEST DOCUMENTATION AND PROCEDURES SHALL BE MADE AVAILABLE TO HOSPITAL STAFF PRIOR TO FINAL ACCEPTANCE."
7.0 Delete exception. Reinsert original language. Add the following at the end of the paragraph: "Customers are responsible for the costs of site preparation. As part of the site preparation effort, OmniCell will work with customers to identify site preparation costs."
10.0 Exception accepted. Replace with the following: "WE HEREBY WARRANT THAT, IF THE EQUIPMENT IS DEFECTIVE IN WORKMANSHIP OR MATERIALS, OR IF THE SOFTWARE WE PROVIDE IS DEFECTIVE DURING THE TERM OF THIS AGREEMENT, WE SHALL REPAIR OR REPLACE, AT OUR OPTION, THE DEFECTIVE PART, PARTS, SOFTWARE, OR EQUIPMENT AND YOU AGREE THAT SUCH REPAIR OR REPLACEMENT SHALL BE YOUR SOLE REMEDY AND RECOURSE IN THE EVENT OF SUCH DEFECT, UNLESS AN ARBITRATOR DETERMINES THAT SUCH ACTIVITY HAS FAILED TO PROVIDE YOU WITH A REASONABLE REMEDY. THE WARRANTY GRANTED HEREIN DOES NOT COVER ANY PRODUCTS THAT YOU MAY USE, CREATE, OR INSTALL THAT IS NOT PROVIDED BY US. THIS WARRANTY IS IN LIEU OF ALL OTHER WARRANTIES, EXPRESSED OR IMPLIED, INCLUDING WARRANTIES OF MERCHANTABILITY, NONINFRINGEMENT, USE AND FITNESS FOR A PARTICULAR PURPOSE, BUT THE FORGOING DOES NOT AFFECT OUR OBLIGATIONS UNDER OTHER SECTIONS OF THIS AGREEMENT. THIS WARRANTY SHALL BE VOID AND OF NO FORCE OR EFFECT IF WE DETERMINE THAT ANY EQUIPMENT OR SOFTWARE DEFECT IS DUE TO YOUR MISUSE OR NEGLECT OR ANY UNAUTHORIZED REPAIRS OR TAMPERING WITH THE EQUIPMENT OR SOFTWARE."

3.


Page 4
CE-426B Award Letter
OmniCell Technologies
June 26, 1997

11.0 Delete exception. Reinsert original language. At the end of the first sentence add "ON ALL SYSTEMS IN A PARTICULAR INSTITUTION." Strike the second, third and fourth sentence and replace with: "IF UPTIME REQUIREMENTS ARE NOT MET IN ANY ONE MONTH, OMNICELL AGREES TO OFFER ONE MONTH'S SERVICE COST AT NO CHARGE FOR EQUIPMENT IN USE."
12.0 Delete exception. REPLACE with the following: "OMNICELL OFFERS TWO SERVICE PLANS: BASIC AND EXTENDED, AS OUTLINED IN THE ATTACHED MASTER SERVICE AGREEMENTS (EXHIBITS A) FOR RENTAL AND PURCHASE. OMNICELL PERSONNEL WILL PERFORM PREVENTATIVE MAINTENANCE FOR THE SERVICE CHARGES

       LISTED IN THE SYSTEM DESCRIPTION TITLED "ROUTINE EMERGENCY SERVICE" (see
       attached Exhibit C).".
13.0   Exception accepted as noted.
14.0   Delete exception.  REINSERT original language.  Amend the first sentence
       as follows:  "SUPPLIER SHALL PROVIDE TO THE CP ONE COMPLETE AND
       UNABRIDGED......"
15.0   Exception accepted as noted.
16.0   Delete exception.  Replace with the following: "A COMPLETE OVERVIEW OF
       RESPONSE TIMES ARE PROVIDED M SECTION 14 OF THE MASTER SERVICE AGREEMENT

(EXHIBIT A). IF THOSE RESPONSE TIMES ARE NOT MET, OMNICELL AGREES TO A PENALTY EQUIVALENT TO THE COST OF ONE MONTH'S SERVICE ON A PARTICULAR
UNIT."

17.0   Delete EXCEPTION.  Replace with the following: "MAINTENANCE WILL BE
       PROVIDED THROUGH THE CPS SYSTEM ADMINISTRATOR OR THROUGH THE SERVICE PLAN
       OF THE CPS CHOICE.  FAULTY EQUIPMENT WILL BE REPAIRED BY SERVICE
       PERSONNEL IN ACCORDANCE WITH THE SERVICE TERMS, THEREFORE, THE ONLY
       LOANER EQUIPMENT PROVIDED WILL BE A BACK-UP SERVER UNDER THE EXTENDED
       SERVICE PLAN, AS DESCRIBED IN THE SERVICE PLANS."
20.0   Delete exception.  Replace with the following: "OMNICELL DOES NOT PROVIDE
       DIAGNOSTIC SOFTWARE OR TRAINING ASSOCIATED WITH IT.  WHEN MUTUALLY AGREED
       BY OMNICELL AND CP, OMNICELL MAY PROVIDE A NON-COMMERCIAL PRODUCT,
       "JMAX", WHICH PROVIDES THE ABILITY TO PERFORM EQUIPMENT CONFIGURATION
       CALCULATIONS.  OMNICELL WILL NOT PROVIDE MAINTENANCE OR WARRANTY WITH
       THIS SOFTWARE, AND UHCSC ACKNOWLEDGES THAT OMNICELL IS IN NO WAY LIABLE
       FOR CUSTOMER'S USE OF THIS NON-COMMERCIAL PRODUCT."
21.0   Exception accepted as noted.  SEE the attached Exhibit A, Master Service
       Agreement section 14, for Service Contract Options.
22.0   Exception accepted as noted.
23.0   Exception accepted as noted.
24.0   Exception accepted as noted.
25.0   Exception accepted as noted.
27.0   Exception accepted as noted.
28.0   Exception accepted as noted.
32.0   Exception accepted as noted.
33.0   Exception accepted as noted.
34.0   Exception accepted as noted.
37.0   Exception accepted as noted.
38.0   Exception accepted as noted.

Should Eligible Participants (EPs) wish to avail themselves of this agreement, you will be notified in writing by UHCSC when they have signed the UHCSC Post Award Commitment

4.


Page 5
CE-426B Award Letter
OmniCell Technologies
June 26, 1997

Document and meet the requirements of a Committed Participant (CP). Please do not share agreement pricing with EPs. Any requests for pricing comparisons for EPs should be directed to Vicki Ioffe-Polman at UHCSC.

Enclosed are updated lists of UHCSC Eligible Participants (Schedule 1) and Supply Administrators. The Supply Administrators are UHCSC's primary contact in Materials Management/Purchasing at each of the hospitals. In the event that you would like to directly market to our members, this group would be your contact. Please send a copy of any mailing or promotional materials to my attention at UHCSC. An announcement of these awards will be sent to each Supply Administrator from this office.

The UHCSC Purchasing Programs have clinical end-user contact persons in Nursing, Information Technology and several other disciplines at each member hospital. Because these individuals generally have a position which is broader than product evaluation, UHC is not able to give you a list of their names. However, I would be happy to do a direct mailing of product information to them on your behalf. Please send 110 copies, per clinical area, of any material you would like forwarded to these clinicians to my attention at UHCSC.

Melanie and I are looking forward to working with you to successfully implement this agreement. Please sign and return one copy of this letter to my attention at UHCSC.

Sincerely,

/s/ Maureen J. Sheehan

Maureen J.  Sheehan
Program Director, Nursing Products and Services


Signed: /s/ Earl E. Fry
       ------------------------------
Printed Name: Earl E. Fry
             ------------------------
Title: VP & CFO                           Date: June 27, 1997
      -------------------------------          -----------------------

attachments

mah

cc: Henry Derewicz, Vice President
Andy Schoneich, Director
Melanie Hartmann, Assistant Director Vicki Ioffe-Polman, Member Support Specialist

5.


UNIVERSITY HEALTHSYSTEM CONSORTIUM
SERVICES CORPORATION

STANDARD TERMS AND CONDITIONS OF BID
FOR
SUPPLIER AGREEMENT

1. INTRODUCTION.

University HealthSystem Consortium Services Corporation ("UHCSC") is a taxable co-operative governed by University HealthSystem Consortium ("UHC") members, a non-profit corporation formed to aid academic health centers ("AHCs") in their efforts to maintain and strengthen their marketplace position. UHC has two membership categories (described in Subparagraphs A and B below) and two non-membership categories (described in Subparagraphs C and D below)

A. AHC HOSPITAL. The following types of ARC hospitals are eligible for UHC membership:

(1) Non-profit hospitals having common ownership with a college of medicine.

(2) Non-profit or governmental hospitals where the majority of medical school chairmen and hospital chiefs of service are the same persons.

(3) Specialty, non-general, hospitals which satisfy either (1) or (2) above.

B. ARC HOSPITAL SYSTEM. The following types of AMC hospital systems are eligible for UHC membership:

(1) The system includes at least one ARC hospital (as defined in Paragraph 1.A above).

(2) The system provides the clinical setting for no more than one medical school.

(3) The system includes at least one other health care provider formally affiliated with the ARC hospital.

C. NETWORK PARTICIPANT. An Network Participant ("NP") does not have membership status in UHC; however, it can participate in UHCSC programs if it meets the following participation criteria:

(1) The NP is sponsored by a UHC member who participates in the Group Purchasing Programs.

1.


(2) The NP complies with all policies, procedures and conditions of the UHC Group Purchasing Programs.

(3) The NP may be an acute care hospital or other health care provider.

D. ALTERNATE PURCHASING LOCATION. An Alternate Purchasing Location ("APL") does not have membership status in UHC; however, it can participate in UHCSC programs if it meets the following participation criteria:

(1) The APL is sponsored by a UHC member which directly, or indirectly through medical school chairmen or hospital chiefs of service, establishes and/or controls the health care policies of the APL.

(2) The APL is operated legally and organizationally as an integral and component part of either a UHC member or the entity which operates and controls the UHC member.

(3) The APL is not an acute care hospital.

2. INVITATION FOR BID.

A. The Invitation for Bid (the "Bid Invitation") consists of the transmittal letter accompanying these Standard Terms and Conditions of Bid (the "Transmittal Letter"), these Standard Terms and Conditions of Bid, the Special Conditions set forth in Appendix A (if any) to these Standard Terms and Conditions of bid (if any), the bid specifications attached to these Standard Terms and Conditions of Bid(the "Bid Specifications") and any other material listed in the table of contents attached hereto. The Bid Invitation applies to and is hereby made a part of any Purchasing Agreement (as defined in Paragraph
4.K) awarded pursuant hereto and to each purchase of products made thereunder.

B. The Bid Invitation applies to the following three methods of product distribution: (1) products distributed directly to a Committed Participant (the "CP") (as defined in Paragraph 3) by the Supplier (as defined in Paragraph 4.J); (2) products distributed to a CP through a distributor appointed or selected by the Supplier pursuant to Paragraph 8.B (the "Supplier Appointed Distributor" or "SAD"); and (3) products distributed to a CP by the Supplier through a distributor selected or appointed by UHCSC and/or the CP pursuant to Paragraph 8.D (the "UHCSC Appointed Distributor" or "UHCAD"). UHCSC and/or the CP shall have complete and sole discretion in selecting the method of product distribution and may change the method of product distribution selected from time to time during the Term of the Purchasing Agreement (as defined in Paragraph 9 A.)

C. Because the Bid Invitation applies to the three different methods of product distribution described in Paragraph 2.B, these Standard Terms and Conditions impose on the Supplier and the SADs (if this method of product distribution is selected) the same obligations and grant to the CPs and the UHCADs (if this method of product distribution is selected) the same rights. Notwithstanding anything to the contrary in these Standard Terms and Conditions, if the Supplier uses a SAD to distribute the products covered by the Purchasing Agreement (the

2.


"Products") the following conditions shall apply, as appropriate, except as otherwise expressly provided: (1) if the Supplier and the SAD are not parties to a contract, these Standard Terms and Conditions are hereby automatically amended to provide that the Supplier shall be required to use its best efforts to cause the SAD to accept and perform the obligations herein imposed upon the SAD and
(2) if the Supplier and the SAD are parties to a contract which does not empower the Supplier to cause the SAD to accept and perform one or more of the obligations herein imposed upon the SAD (the "excepted obligations") these Standard Terms and Conditions are hereby automatically amended to provide that the Supplier shall be required to use its best efforts to cause the SAD to accept and perform the excepted obligations herein imposed upon the SAD. Further, notwithstanding anything to the contrary in these Standard Terms and Conditions, the provisions of these Standard Terms and Conditions granting the UHCAD rights shall only be applicable if the Supplier uses the UHCAD to distribute the Products.

3. RELATIONSHIP OF PARTIES.

A. "Eligible Participants" or "EPs" are those institutions listed on Schedule I, as amended from time to time. Each EP is eligible to participate in UHCSC group purchasing agreements and is entitled to purchase under the Purchasing Agreement if, and after, it becomes a CP. UHCSC may amend Schedule I at any time to add or delete EPs by delivering a written notice of amendment to the Supplier.

B. "Committed Participants" or "CPs" are those EPs which agree to be bound by the UHCSC commitment policy agreement for the Products. UHCSC shall provide the Supplier from time to time a list of current CPs. No other commitment document, including any commitment document prepared by the Supplier, shall be necessary to qualify an EP as a CP. UHCSC may add or delete CPs by delivering a written notice of amendment to the Supplier. An EP which becomes a CP shall become entitled to purchase Products under the Purchasing Agreement within fifteen days after the posted date of said notice of amendment.

4. BIDS.

A. A firm (the "Bidder") shall submit to UHCSC a written response (the "Bid") to the Bid Invitation in the form and manner set forth in the Transmittal Letter or in the Bid Specifications {collectively, the "Instructions"). The Bid Opening Time is set forth in the Instructions. Except as may otherwise be provided in the Instructions, the bid must contain the original signature of an authorized agent of the Bidder and be accompanied by the Bid Invitation, signed by the bidder. The Bid shall become the property of UHCSC.

In addition, if requested in the Instructions, the Bidder shall submit to UHCSC, in the form and manner set forth in the Instructions, a written response (the "Exceptions Response") to these Standard Terms of Conditions and to the Special Conditions, setting forth the Bidder's exceptions and deviations thereto. The Exceptions Response must be submitted to UHCSC prior to the "Exceptions Response Date." The "Exceptions Response Date" is set forth in the Instructions. The Exceptions Response must set forth all of the Bidder's exceptions and deviations to these Standard Terms and Conditions and to the Special Conditions. Pursuant to the provisions of Paragraph 4b, UHCSC shall not consider a Bidder's Bid unless the Bidder submits to UHCSC its Exceptions Response prior to the Exceptions Response Date. Pursuant

3.


thereto, if a Bidder which desires to submit a Bid elects not to take any exceptions or deviations, it must submit to UHCSC an Exceptions Response in which it states that it is taking no exceptions or deviations in order for its Bid to be considered. From and after the date on which the bidder submits its Exceptions Response, the Bidder may not revise, modify or supplement the Exceptions Response except in UHCSC's sole discretion. The Exceptions response, together with revisions, modifications and supplements to the Exceptions Response, shall become a part of the bid only to the extent they are agreed to by UHCSC and the Bidder. Except as may otherwise be provided in the instructions, the Exceptions Response, and all revisions, modifications and supplements thereto, must contain the original signature of an authorized agent of the Bidder. The Exceptions Response, and all revisions, modifications and supplements thereto, shall become the property of UHCSC.

B. UHCSC will consider a Bid only if the following conditions are satisfied: (i) the Bidder submits to UHCSC the Bid prior to the Bid Opening Time; and (ii) if requested by UHCSC in the Instructions, the Bidder submits to UHCSC the Exceptions Response prior to the Exceptions Response Date. UHCSC will not accept late Bids unless UHCSC approves an extension of the Bid Opening Time prior to the Bid Opening Time in which case all bidders will be duly notified. In addition, UHCSC will not accept late Exceptions Responses unless UHCSC approves an extension of the Exceptions Response Date prior to the Exceptions Response Date in which case all bidders will be duly notified. If UHCSC approves the submission of a late Bid prior to the Bid Opening Time, then no Bids received prior to the Bid Opening Time will be opened thereon and UHCSC shall set and notify all Bidders of a new Bid Opening Time (the Bid Opening Time, together with the new Bid Opening Time, is referred to herein as the "Bid Opening Time"). Further, if UHCSC approves the submission of a late Exceptions Response prior to the 'Exceptions Response Date, then no Exceptions Responses received prior to the Exceptions Response Date will be opened thereon and USCSC shall set and notify all Bidders of a new Exceptions Response Date (the Exceptions Response Date, together with the new Exceptions Response Date, is referred to herein as the "Exceptions Response Date"). A Bidder may withdraw its Bid by delivering to UHCSC a written notice of withdrawal at any time prior to the Bid Opening time; provided, however, if a Bidder withdraws its Bid, it may not resubmit a Bid except in UHCSC's sole discretion. In addition, a Bidder may withdraw its Exceptions Response by delivering to UHCSC a written notice of withdrawal at any time prior to the Exceptions Response Date; provided, however, if a Bidder with-draws its Exceptions Response, it may not resubmit an Exceptions Response except in UHCSC's sole discretion. A Bidder may not withdraw a Bid after the Bid Opening Time; in addition, a Bidder may not withdraw an Exceptions Response after the Exceptions Response Date. Bids and Exceptions Responses submitted via facsimile machine will not be accepted.

C. The Bidder shall provide to UHCSC answers or clarifications to the Bid Invitation or technical data for any product subject to the Bid within five working days after it receives a request for answers or clarifications from UHCSC. All answers, clarifications and technical data provided pursuant hereto shall become part of the Bid and shall become the property of UHCSC.

D. Bidders may be required to complete and submit to UHCSC a vendor questionnaire prior to the Bid Opening Time and/or the Exceptions Response Date for use by UHCSC in evaluating Bids. The vendor questionnaire, and all documentation and information submitted in response thereto, shall become the property of UHCSC.

4.


E. At the Bid Opening Time, UHCSC will open the Bids and read publicly the names of the Bidders.

F. Bidders shall keep the prices, terms and all other conditions contained in their Bid firm for sixty days after the Bid Opening Time.

G. UHCSC shall have complete discretion in determining which Bidders, if any, shall be awarded a Purchasing Agreement. A PURCHASING AGREEMENT MAY BE AWARDED TO A PRODUCT, A PRODUCT LINE, OR A FAMILY OF PRODUCTS CONSISTING OF SOLE SOURCE AND MULTISOURCE PRODUCTS. In addition to price, other factors which UHCSC may use to evaluate Bids may include: (1) criteria which affect acceptability, including inspection, testing, quality, workmanship, delivery, and suitability for a particular purpose; (2) criteria which affect price, including rebates, free goods, volume discounts, pricing on an item that is contingent upon the award of one or more distinct, item(s) and payment terms;
(3) criteria which consider "value-added goods and services"; (4) criteria which consider the costs of converting from the CP's existing vendor to the new vendor; (5) criteria which consider the manner of distributing the products, including distribution through UHCADs and certified historically underutilized business (HUB) distributors; (6) criteria which consider the fact that the Bidder is itself a certified HUB distributor; (7) criteria relating to the use of generally accepted standards of electronic transmission for the processing of orders, invoices and other transactions; and (8) criteria relating to the payment of the Administrative Fee (as defined in Paragraph 18).

H. Each Bidder shall attach to its Bid or its Exceptions Response (if the Bidder is requested to submit the same in the Instructions) its return goods policy. Unless otherwise agreed to in writing by UHCSC, only those portions of a Bidder's return goods policy which are not inconsistent with the return goods policy set forth in Paragraph 13 shall become part of its Bid.

I. Each Bidder shall attach to its Bid or its Exceptions Response (if the Bidder is requested to submit the same in the Instructions) its industry-wide policy for the minimum shipment of goods. Unless otherwise agreed to in writing by UHCSC, only those portions of a Bidder's industry-wide policy which are not inconsistent with the terms of these Standard Terms and Conditions shall become part of its Bid.

J. Each Bidder shall attach to its Bid the following information: (1) the recyclability of products offered by the Bidder; (2) the amount and/or percentage of recycled materials contained in the products offered by the Bidder; and (3) the recycled content and/or environmental advantages of the packaging used for the products offered by the Bidder.

K. Upon the Supplier's receipt of the Letter of Award, the Bid Invitation, the Supplier's Bid, the Letter of Award and all other accompanying documentation approved by both UHCSC and the Supplier shall constitute the Purchasing Agreement between the Supplier and U/4CSC (the "Purchasing Agreement").

Bidders must submit their questions regarding the Bid Invitation in writing to UHCSC, Suite 700, 2001 Spring Road, Oak Brook, Illinois 60521-1890. (Please refer to the attached

5.


Instructions for Bid for the name of the UHCSC staff person to whom questions should be addressed). All questions must reference the Bid Invitation. UHCSC's responses to questions shall be in writing and, if pertinent to the intent or actual performance under a Purchasing Agreement, will be copied to all Bidders. If for any reason UHCSC gives oral responses, they shall not be binding upon UHCSC or the CPs.

5. PRICING.

A. In the Bid, the Bidder must set forth its product prices, and its product prices must be exclusive of all distribution costs. In operating its group purchasing program, UHCSC's intent is to separate the costs of product manufacture and product distribution in order to decrease both costs to the CPs.
THEREFORE, UHCSC MAY NOT ACCEPT A BID IF IT DOES NOT INCLUDE PRODUCT PRICES EXCLUSIVE OF ALL DISTRIBUTION COSTS.

B. The Bidder represents and warrants that the product prices set forth in its Bid are not higher than: (1) the prices it charged any distributor within the past sixty days; and (2) the prices it charged any comparable purchaser within the past sixty days; and (3) the prices offered to any EP within the past sixty days. "Past sixty days", as used herein, shall mean the sixty days immediately preceding the posted date of the Bid.

C. Within thirty days after the posted date of the Letter of Award, the Supplier shall submit to UHCSC, and, if requested, to each CP and UHCAD), complete product catalogs (with list prices) and price lists with the prices agreed to in the Purchasing Agreement (the "Award Prices").

D. If, from the Bid Opening Time until the expiration of the Term of the Purchasing Agreement, the Supplier offers to any EP a price for products of the type covered by the Purchasing Agreement that is lower than the Award Price, then the Award Price shall automatically be amended to reflect the lower price.

E. The Supplier may lower the Award Prices at any time. It may also increase any discount at any time.

F. Unless lowered pursuant to Subparagraphs D or E above, or otherwise, the Award Prices shall prevail and remain firm for the Term of the Purchasing Agreement.

G. During the term of the agreement, the Supplier agrees to disclose to any EP the existence of any applicable UHCSC contracts when an EP purchases products covered by a UHCSC contract from the Supplier.

6.


6. BID SPECIFICATIONS, DEVIATIONS AND EXCEPTIONS.

A. Each Bidder shall meet the terms, conditions and specifications (including the Bid Specifications) of the Bid Invitation. The Bidder must describe fully in its Bid or in its Exceptions Response (if the Bidder is requested to submit the same in the Instructions) all deviations or exceptions thereto. In the absence of such a description, a Bidder's Bid shall be deemed not to contain such deviation or exception and shall be accepted as if in strict compliance with the terms, conditions and specifications (including the Bid Specifications) of the Bid Invitation. If the Bid or the Exceptions Response contains deviations or exceptions, USCSC, in its sole discretion, may reject the Bid. UHCSC also reserves the right to accept the Bid (and/or the Exceptions Response) with deviations or exceptions, to waive any technicality in the Bid (and/or the Exceptions Response) and to accept any part of the Bid (and/or the Exceptions Response).

B. The Bid Specifications set forth the minimum acceptable specifications. The use of specific manufacturer and model numbers in the Bid Specifications is intended to establish the design, type, construction, quality, functional capability and/or performance level desired. If the Bidder includes substitutions in the Bid, the Bidder must identify the manufacturer and stock number and must include descriptive information to establish equivalency or superiority. UHCSC shall be the sole judge of equivalency or superiority. In awarding a Purchasing Agreement, UHCSC may select a manufacturer and model number other than that set forth in the Bid Specifications.

7. QUANTITIES.

A. Quantities shown on the Bid Specifications are merely estimates based on estimates supplied to UHCSC by selected CPs and are intended solely as an aid to assist the Bidder to submit a Bid.

B. UHCSC, the CPs and the UHCADs shall have no obligation to purchase any Products. Failure by UHCSC, the CPs and the UHCADs to purchase the estimated quantities shall not constitute either a breach of the Purchasing Agreement or grounds for termination of the Purchasing Agreement.

8. DISTRIBUTOR(S).

A. In awarding the Purchasing Agreement, UHCSC may give preference to Bidders which agree to make the Products available through a distributor and, in particular, a UHCAD. In addition, to encourage the participation of HUB enterprises, UHCSC may give preference to Bidders which agree to make the Products available through a distributor or a UHCAD which is a certified HUB distributor.

B. If a Bidder intends to appoint one or more SADs to distribute the Products, the Bidder must list the SADs in its Bid. The Supplier may not use a SAD and may not add or delete a SAD except with UHCSC's prior written consent. UHCSC may revoke its consent of a SAD for any reason at any time upon thirty days' prior written notice to the Supplier. During the term of the agreement, the Supplier agrees to require all SADs to disclose to any EP the existence of

7.


any applicable UHCSC contracts when an EP purchases products covered by a UHCSC contract from the SAD.

C. UHCSC shall have the right to select from among the SADs listed by the Supplier pursuant to Paragraph 8.B one or more SADs to distribute the Products. The Supplier shall make whatever arrangements are necessary with the SADs to: (1) implement the Purchasing Agreement, (2) sell at the Award Prices the Products for resale to the CPs, and (3) insure that the Supplier's obligations under the Purchasing Agreement are per-formed fully and completely to the extent possible.

D. UHCSC and/or the CPs shall have the right to appoint one or more UHCADs to distribute the Products to the CPs. The Supplier shall make whatever arrangements are necessary with the UHCADs to sell at the Award Prices the Products for resale to the CPs. The Supplier shall supply sufficient quantities of the Products ordered by the UHCADs in a timely manner for the UHCADs to be able to fulfill their obligations under their distribution agreements with UHCSC.

E. The Supplier represents and warrants to UHCSC and to each CP that its arrangements with the SADs and the UHCADs shall comply with all applicable laws.

F. UHCSC and each CP shall have the right, when required by law, regulation or internal policy, to appoint or select one or more certified HUB distributor(s) to distribute a certain dollar amount of the Products. The dollar amount to be distributed shall be specified by UHCSC and/or the CP; provided that such dollar amount shall be equal to at least the amount required or specified by the applicable law, regulation or internal policy requiring the appointment or selection. The CP exercising said right shall be entitled to make the final determination as to whether a HUB distributor is a "historically underutilized business" and certified under its applicable state law.

G. By submitting a Bid, the Supplier commits to use its reasonable efforts to appoint or select a certified HUB distributor(s) to distribute Products on behalf of the Supplier as requested by UHCSC and/or any CP. If within forty-five days after the request is made, the Supplier is unable to appoint a certified HUB distributor, the Supplier shall submit to UHCSC written documentation containing the following information and such other information as UHCSC may reasonably request: (1) a detailed statement of the efforts made by the Supplier to appoint or select a certified HUB distributor; (2) a detailed statement of the efforts made by the Supplier to negotiate with a certified HUB distributor; and (3) as to each HUB distributor which the Supplier considers unacceptable, a detailed statement of the reasons for the conclusion. Failure to submit the required documentation within the specified time may result in termination of the Purchasing Agreement.

9. TERM AND TERMINATION OF PURCHASING AGREEMENT.

A. The Purchasing Agreement shall be effective as of the effective date set forth in the Letter of Award (the "Award Date"). Unless sooner terminated, the Purchasing Agreement shall continue in full force and effect through the expiration date set forth in the Bid Specifications (the "Initial Term"); may be renewed for the period of time and in accordance

8.


with the procedures set forth in the Bid Specifications,. if any (the "Renewal Term"); and, thereafter, may be renewed at the option of UHCSC for one additional year by delivery of written notice thereof to the Supplier not less than ten days prior to the end of the Initial or Renewal Term. The Initial Term, together with the Renewal Term and any additional renewal term, if any, is referred to herein as the "Term".

B. UHCSC may terminate the Purchasing Agreement for any reason whatsoever, including changes in the market price of the Products, by delivering not less than thirty days' prior written notice thereof to the Supplier. UHCSC may terminate the Purchasing Agreement immediately upon the breach of the Purchasing Agreement by the Supplier or a SAD by delivering written notice thereof to the Supplier.

C. Without limiting in any way UHCSC's right to terminate the Purchasing Agreement upon not less than thirty days' prior written notice pursuant to Paragraph B above, the Purchasing Agreement shall be subject to force majeure, and in the event that the Supplier, a SA/), UHCSC, a CP or a UHCAD shall be prevented from performing any act required thereunder by reason of Acts of God, riots, insurrections, war or other reason of a like nature not within the control of the party not performing any of its obligations under the terms of the Purchasing Agreement, then performance of such obligations shall be excused for the period of non-performance and the period for the performance of any such obligations shall be extended for an equivalent period.

10. ORDERING.

A. Depending on the method of product distribution selected by UHCSC and/or a CP pursuant to Paragraph 2.B, the CPs shall place purchase orders with the Supplier, the SADs or the UHCADs; provided, however, if a CP places purchase orders with the UHCADs, then the UHCADs may place purchase orders with the Supplier or the SAD. Except as otherwise provided in the Bid Specifications or as mutually agreed to by the Supplier and a CP, orders shall be placed Monday through Friday, with delivery no later than noon the next day (Tuesday through Saturday). The Purchasing Agreement shall govern all orders and sales, notwithstanding any pre-printed terms on the forms of any of the par-ties; provided, however, to the extent the terms of the purchase orders of a CP or a UHCAD are not in conflict or inconsistent with the Purchasing Agreement, they are by this reference incorporated into the Purchasing Agreement as though set forth in full therein.

B. The Supplier or the SADs shall submit to each CP and UHCAD which requests it a confirmation of the CP's and the UHCAD's electronically placed order within one hour of the Supplier's or the SADs' receipt of the same from the CP or the UHCAD.

C. If the Supplier and UHCSC agree that the Products be made available exclusively for the use by the CPs, upon thirty days' prior written notice to the Supplier from UHCSC, the Supplier shall establish and implement the mechanisms and procedures necessary to ensure the immediate availability of requested Products for the exclusive use of the CPs named in the notice.

9.


D. The Supplier or the SADs shall keep the CPs and the UHCADs continuously informed of the status of product orders placed directly by them. The Supplier or the SADs shall communicate product order status in one of three ways: (1) the Supplier's or the SADs' computer print back to the computer printer of the CPs and the UHCADs; (2) access to the Supplier's or the SADs' computer via CP and UHCAD computer inquiry; and (3) personal telephone call from the Supplier's or the SADs' personnel to the CP and the UHCAD. The Supplier or the SADs shall consult with each CP and UHCAD to determine the best method of communicating product order status, and shall implement the method selected by each CP and UHCAD.

E. Unless otherwise agreed to in writing by UHCSC, notwithstanding the provisions of this Paragraph 10, the Supplier and the SADs shall use their best efforts to assist the CPs and the UHCADs to obtain Products on an emergency basis, including providing the CPs and the UHCADs with a list of responsible persons who can assist them to make orders twenty-four hours per day, seven days a week.

F. Upon the written approval of UHCSC, the Supplier may appoint in addition to a SAD an agent to perform some or all of its obligations under the Purchasing Agreement, including the Supplier's record keeping and reporting obligations; provided, however, that the Supplier's appointment of an agent shall not relieve the Supplier of its obligations under the Purchasing Agreement and the agent shall perform fully and completely all of the Supplier's obligations applicable to it.

G. The Supplier represents and warrants to UHCSC and the CPs that the Products are, if required, registered, and will not be distributed, sold or priced by the Supplier or the SADs in violation of any federal, state or local law.

H. The Supplier represents and warrants that as of 'the date of delivery to the CPs and the UHCADs all Products will not be adulterated or misbranded within the meaning of the Federal Food, Drug and Cosmetic Act, as amended, from time to time, and will not violate or cause a violation of any applicable law, ordinance, rule, regulation or order. The Supplier agrees it will comply, and will ensure that the SADs comply, with all Good Manufacturing Practices contained in 21 C.F.R. Part 820, as amended, from time to time, which are applicable to the Supplier and the SADs.

I. Purchase orders placed directly with the Supplier or the SADs by the CPs via the UHC Electronic Data Interchange Network, when available, will be entitled to an additional discount of 1% of the total dollar value of the purchase order. The discount shall be paid to each CP in the form of a credit memo which clearly references the applicable purchase order number.

J. The Supplier or the SADs shall keep the CPs and the UHCADs informed regarding back-orders and shall advise them when back-orders are available. The Supplier or the SADs shall ship back-orders from alternate locations if the back-orders are available at such alternate locations and if shipment from such alternate locations is requested. Unless otherwise agreed to in writing by USCSC and/or a CP, notwithstanding anything to the contrary herein, the Supplier and the SADs shall fill the CPs' back orders within five days.

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11. DELIVERY AND RISK OF LOSS.

A. Products shall be delivered F.O.B. CP, unless otherwise requested by the CP, or F.O.B. UHCAD, unless otherwise requested by the UHCAD). F.O.B. CP or F.O.B. UHCAD shall mean that the Supplier shall bear all transportation costs associated with the delivery and the risk of all loss or damage to the Products until such Products have been accepted by the CP or the UHCAD.

B. Minimum shipment for Products shall be in accordance with the CP's requirements, or in the absence of such requirements, the Supplier's industry-wide policy attached to its Bid pursuant to Paragraph 4.I.

C. Products shall not be delivered to the CPs or the UHCADs by the Supplier or by the SADs without a packing list and without the applicable purchase order number set forth on the packing slip, carton label and invoice.

D. The Supplier or the SADs shall immediately give to UHCSC, the CPs and the UHCADs written, or verbal followed by written, notice of any actual or potential problem, such as a labor dispute, which could delay or threaten to delay the timely delivery of Products by the Supplier or the SADs.

E. A CP or a UCAD shall have not less than thirty days from the date of delivery to the CP or installation of the Products in the CP, whichever is later, to inspect the Products and notify the Supplier or the SAD of any defects with the Products or any non-conformance with the terms of the Purchasing Agreement, in which case the CP or the UHCAD shall be entitled to reject any defective or nonconforming Products or to set off the price of the defective or nonconforming Products against any obligations due from the CP or the UHCAD to the Supplier or the SAD.

F. Even though a CP or a UHCAD may be deemed to have accepted Products under the Purchasing Agreement, the CP or the UHCAD shall be entitled to seek damages and other relief (as appropriate) if the Products are later determined to be defective or to be in breach of any warranty covering the Products.

G. Unless otherwise provided in the Bid Specifications, the Supplier or the SADs shall fill fully each purchase order for Products submitted by a CP or a UHCAD; and, for each CP, the Supplier's or the SAD's fill rate on the first delivery of each line item of each order shall be 98%, calculated by multiplying 100 times the quotient of the total lines shipped divided by the total lines ordered.

H. If the Supplier is or the SADs are unable to ship Products pursuant to the terms of the Purchasing Agreement, the Supplier or the SADs may offer to the CP or the UHCAD substitute Products which may be accepted or rejected in the sole discretion of the CP. The CP must approve all substitutions prior to shipment.

I. In the event of the default of the Supplier or the SAD or its failure to perform in accordance with the terms of the Purchasing Agreement, or under circumstances of its inability to fulfill Purchasing Agreement commitments due to product certification issues (e.g.,

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NDA/ANDA status, batch certification, etc.), the CP or the UHCAD may purchase the Products from other sources and the Supplier shall be liable and responsible to the CP or the UHCAD for all reasonable costs in excess of the Award Price plus any other damages which UHCSC, the CP or the UHCAD may incur. If the Supplier or the SAD fails to disclose to an EP the existence of an applicable UHCSC contract, the Supplier shall be liable and responsible to the EP for all reasonable costs in excess of the Award Price plus any other damages which UHCSC, the EP or the UHCAD incur.

J. If applicable, sterile Products and other Products with a limited shelf life sold by the Supplier pursuant to the Purchasing Agreement shall have expiration dates as long as possible. Unless required by stability considerations, there shall not be less than a eighteen month interval between a Product's date of delivery by the Supplier or the SADs to the CP or by the Supplier or the SADs to the UHCAD and its expiration date.

12. INVOICING AND PAYMENTS.

A. The party directly placing the purchase order with the Supplier or the SADs shall alone be liable or responsible for payment for the Products ordered. If the UHCAD directly places the purchase order, neither UHCSC nor any CP shall be liable or responsible for the purchase; if a CP directly places the purchase order, neither UHCSC nor any other CP shall be liable or responsible for the purchase.

B. The party directly placing the purchase order shall make payment in accordance with the terms of the purchase order (to the extent such terms are not in conflict or inconsistent with the terms of the Purchasing Agreement); provided, however, if a CP directly places the purchase order, it shall not be required to make payment until the Products purchased have been delivered, installed (if required), inspected and accepted as specified in Purchasing Agreement. Unless otherwise specified in the Purchasing Agreement, the CP shall have fifteen days to inspect and accept the Product from the date the Product is delivered or is installed, whichever is latter.

C. The Supplier or the SADs shall submit invoices to the CP or the UHCAD in accordance with instructions contained on the purchase orders including reference to the purchasing order number. Unless otherwise requested by a CP, invoices shall be sent in triplicate to the invoice payment processing address shown on the purchase order; if no address is shown, invoices shall be sent to the "ship to" address or to such other address as the CP or the UHCAD may instruct. The Supplier and the SAD shall identify on the invoices the quantities and types of Products ordered; the status of each Product if the quantities ordered are not delivered; and such other information as UHCSC may reasonably request from time to time.

D. Invoice discounts shall be determined from the date of receipt of the invoice and/or the date of acceptance of the Products. Cash discount terms stated on the Bid must be shown plainly on the invoice; however, cash discounts not shown on the invoice but included in the Bid may be taken. In addition, discounts set forth on the invoice, but not included in the Bid, may be taken.

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E. Errors on the invoices of the Supplier or the SADs must be corrected within fourteen days from (1) discovery by the Supplier or the SADs or
(2) notification to the Supplier or the SADs.

F. Unless otherwise provided in the Bid Specifications, invoice terms of the Purchasing Agreement shall be 2% 15, net 30.

G. The Supplier shall assist UHCSC and any CP with an interest in developing or the capability of developing an electronic invoice system to develop such a system. UHCSC's or the CP's development and implementation of such a system will entitle the CP with such a system to an additional discount of 0.5% from any invoice paid through such a system.

H. The Supplier shall assist UHCSC and any CP with an interest in developing or the capability of developing an electronic fund transfer system to develop such a system. UHCSC's or the CP's development and implementation of such a system will entitle the CP with such a system to an additional discount of 0.5% from any invoice paid through such a system.

13. RETURN GOODS POLICY.

A. Unless prohibited by law, the CP or the UHCAD, without authorization from the Supplier or the SAD, or waiver of other claims, may return Products ordered by it to the Supplier or the SAD under any of the following circumstances: (1) the Product is ordered or shipped in error; (2) the Product is no longer needed by the CP due to deletion from its standard supply list, e.g., formulary, or changes in usage patterns, provided the Product is returned at least six months prior to its expiration date and is in a re-saleable condition; (3) the Product is received outdated or is otherwise unusable; (4) the Product is received damaged, or is defective or nonconforming;
(5) the Product is one which a product manufacturer or supplier specifically authorizes for return through a distributor; or (6) the Product is recalled.

B. If Products are returned pursuant to Subparagraph A above, the Supplier or the SAD to which it is returned shall pay the freight for the returned Products, shall bear all risk of loss or damage to the Products from and after the time they leave the physical possession of the CP or the UHCAD and shall credit the CP or the UHCAD for the returned Products. The CP or the UHCAD shall determine the type of credit for returned Products (i.e., replacement products, credit memo, etc.). If the CP or the UHCAD elects credit, the Supplier or the SAD shall issue the credit within seven days after its receipt of the returned Product.

C. The right of the CP or the UHCAD to return Products is in addition to and not a limitation on any other rights and remedies it may have.

14. PRODUCT RECALLS.

The Supplier shall immediately give UHCSC, the CPs' Purchasing Office and the UHCADS written, or verbal followed by written, notice of any and all recalls of the Products, or of any products whose recall might affect the availability of such Products. If the recalled Product is a pharmaceutical, the Supplier shall also send written notice of the recall to the Director of Pharmacy of each CP.

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15. PACKAGING.

The Supplier shall give written notice to UHCSC, the CPs and the UHCADs of any change in packaging for any Products at least sixty days prior to the actual change. UHCSC reserves the right to cancel the Purchasing Agreement immediately upon receipt of notification of the change or any time thereafter by delivering written notice thereof to the Supplier.

16. QUALITY LEVEL.

Unless otherwise indicated in the Bid Invitation or unless agreed upon by a CP in connection with Products it may order, all Products shall be new. Products which are demonstrators, used, obsolete, seconds, or which have been discontinued are unacceptable unless otherwise specified in the Bid Invitation or the CP accepts delivery after receiving notice of the condition of the Products.

17. REPORTS.

A. If requested by a CP, within forty-five days after the end of a month ("Reporting Month"), the Supplier shall submit to the CP the following reports:

(1) A computer print-out listing alphabetically all Products purchased by and delivered to the CP during the Reporting Month, the current price of each Product, the total quantity of Products purchased during the most recent twelve months ending with the end of the Reporting Month and the total price for such quantity purchased.

(2) A computer print-out with all the information described in Paragraph 17.A(1), but arranged in de-creasing order by total dollars for the twelve month period ending with the end of the Reporting Month.

(3) A computer print-out listing alphabetically all Products which are stocked by the Supplier or the SAD, their current prices, and their order entry numbers.

(4) A computer print-out listing fill-rates for the Reporting Month determined in accordance with the description of fill-rate set forth in Paragraph 11.G.

(5) Such other reports as the CP may reasonably request.

B. Within forty-five days after the end of the Reporting Month, the Supplier shall submit to UHCSC the following reports:

(1) A report listing the total dollar purchases of each CP for the Reporting Month.

(2) A report itemizing the purchases of each CP for the Reporting Month, which report shall contain, at a minimum, a description of the Products purchased, the number of units purchased and the total dollar amount of the products purchased.

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C. The reports listed in Subparagraphs A and B above shall be in hard print form and/or in machine readable form (i.e., tape or diskette) in accordance with UHCSC established specifications.

18. ADMINISTRATIVE FEE.

A. The Supplier shall remit to UHCSC as an administrative fee (the "Administrative Fee") an amount equal to 2 % of the total dollar amount of all purchases made under the Purchasing Agreement by the CPs and the UHCADs and shall be calculated based on the Supplier's Award Prices. The Administrative Fee shall be paid to UHCSC within fifteen days after the end of each month and shall be calculated based upon said month's purchases. In determining the total dollar amount of said month's purchases, Products purchased under the Purchasing Agreement by CPs which became CPs during said month pursuant to the terms of Paragraph 3B of these Standard Terms and Conditions shall be included in such determination. If the Supplier and UHCSC enter into another purchasing agreement for products not covered by the Purchasing Agreement providing for the payment of an administrative fee, the Supplier may make payment of such administrative fee thereunder in one consolidated payment provided the Supplier provides UHCSC a report breaking down the administrative fee amounts attributable to each purchasing agreement. If the Administrative Fee is not timely paid when due, UHCSC shall be entitled to receive interest on the unpaid amount at the rate of 1 and 1/2% per month, or the greatest amount permitted by law, whichever is greater.

B. The Supplier shall pay the Administrative Fee by check made payable to the "University HealthSystem Consortium Services Corporation." All checks should reference the Purchasing Agreement number and should be mailed to the following address:

University HealthSystem Consortium
Services Corporation
Suite 700
2001 Spring Road
Oak Brook, Illinois 60521-1890
Attention: Accounts Receivable

19. SALES CALLS.

The Supplier shall consult with each CP to establish a specific time-table for sales calls by sales representatives. The Supplier shall establish the times of the sales calls to satisfy the needs of the CP.

20. WARRANTY.

A. The Supplier shall warrant the Products against defects in material, workmanship and design for the period set forth in the Bid. The Supplier shall make all necessary arrangements to assign any such warranty to the CPs where the Products are distributed to the CPs through an authorized distributor. If the purchased Products are equipment, the manufacturer's standard warranty shall apply at a minimum and must be honored by the Supplier. The Supplier represents and warrants that the Products shall conform to the specifications, drawings, and samples furnished by the Supplier or contained in the Bid

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Specifications, shall be free from defects in material, workmanship and design, and shall be safe for their intended use. If any Products are defective and a claim is made by a CP or a UHCAD on account of such defect during the warranty period, the Supplier shall, at the option of the CP or the UHCAD, either replace the defective Products or credit the CP or the UHCAD. The Supplier shall bear all costs of returning and replacing the defective Products, as well as all risk of loss or damage to the defective Products from and after the time they leave the physical possession of the CP or the UHCAD.

B. The warranties contained in this Paragraph 20 shall survive any inspection, delivery, acceptance or payment by a CP or a UHCAD. In addition, if there is at any time wide-spread failure of the Products even after the warranty period has ended, the CP or the I/HCA may return all said Products for credit or replacement, at its option. The remedies of this Paragraph 20 shall not be applicable where the defect is the direct result of an act or failure to act by the CP or the UHCAD. The remedies of this Paragraph are in addition to and not a limitation on any other rights or remedies that may be available against the Supplier.

21. DISPUTES.

The Supplier shall use its best efforts to resolve any dispute between it or a SAD and a CP or a UHCAD through negotiation. If the Supplier fails to resolve the dispute within a reasonable time, the Supplier shall submit such dispute to UHCSC which may attempt, in its sole discretion, to assist in the resolution of the dispute.

22. ARBITRATION.

UHCSC and the Bidder mutually agree that any controversy which may arise between them from the Award Date until the expiration of the Term of the Purchasing Agreement shall be resolved as follows: Whenever a controversy between them shall arise, the parties shall first use their good faith best efforts to resolve the controversy. If, following such attempt, the controversy remains unresolved for a period of at least thirty days, either party may request arbitration by written notice to the other party. Within ten days after receipt of such written request, the parties shall mutually select an arbitrator. If the parties cannot agree upon an arbitrator within such ten day period, within ten days thereafter, they shall jointly submit or either one of them may submit a request to the American Arbitration Association to select an arbitrator. Within thirty days after the selection of an arbitrator, the arbitrator shall conduct a formal hearing into the matter in dispute according to the applicable rules of the American Arbitration Association then in effect. All costs of arbitration, including the arbitrator's fee and transcript expenses, but excluding the parties' legal expenses, shall be borne equally by the parties. The arbitrator's award or decision may be enforced according to the provisions of Illinois law.

23. INSOLVENCY.

If the Supplier should become bankrupt or insolvent or make an unauthorized assignment or go into liquidation or should proceedings be initiated for the purpose of having a receiving order or winding up order made against the Supplier, or should the Supplier apply to the courts for protection from its creditors, then and in any such case, UHCSC and the CPs may, without

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prejudice to any of their other rights, demand adequate assurances of performance under the Purchasing Agreement and suspend their obligations thereunder until the Supplier's financial position appears satisfactory. Failing such assurances, UHCSC may terminate the Purchasing Agreement by written notice to the Supplier.

24. NONPAYMENT BY OR INSOLVENCY OF THE UHCAD.

If the UHCAD should fail to pay the Supplier or the SAD for Products or should become bankrupt or insolvent or make an unauthorized assignment or go into liquidation or should proceedings be initiated for the purpose of having a receiving order or winding up order made against the UHCAD, or should the UHCAD apply to the courts for protection from its creditors, then and in any such case, the Purchasing Agreement shall, not terminate, but the Supplier shall have the right, upon prior notice to UHCSC and the CPs, to discontinue providing Products through the UHCAD, and the Supplier shall thereafter provide Products to the CPs directly, through a SAD or through another UHCAD, as directed by UHCSC.

25. EXISTING CONTRACTS.

The Bidder agrees that without penalty or liability of any kind each EP with which the Bidder has a contract or contracts in force as of the Award Date for the Products may terminate any such existing contract or contracts with the Bidder within thirty days after either the Award Date or the date the EP becomes a CP, whichever is latter, by delivering written notice thereof to the Bidder. The foregoing right of termination shall apply irrespective of whether the Bidder is awarded a Purchasing Agreement.

26. BILATERAL CONTRACTS.

The Supplier and a CP, at their election, may enter into a bilateral contract in respect to the Products; provided, however, notwithstanding anything to the contrary in the bilateral contract, the following conditions shall apply with respect to such bilateral contract: (1) except with the prior written consent of UHCSC, the terms of the Purchasing Agreement shall supersede the terms of the bilateral contract in the event of conflict or inconsistency; (2) unless required by UHCSC, execution of the bilateral contract by the CP shall not be necessary for a CP to qualify as a CP and to purchase Products pursuant to the Purchasing Agreement; and (3) the term of the bilateral contract shall be coterminous with the Term of the Purchasing Agreement. The Supplier shall provide UHCSC with a copy of the bilateral contract and any amendments thereto for approval prior to their execution. No bilateral contract or any amendments thereto shall become effective unless first approved in writing by UHCSC. If approved, the Supplier shall provide UHCSC with an executed copy of the bilateral contract or any amendment thereto within fifteen days after execution by both the Supplier and the CP.

27. PATENT INFRINGEMENT.

The Supplier represents and warrants that the Products will be manufactured or produced in accordance with applicable federal labor laws and that sale or use of the Products will not infringe any United States patent. The Supplier will, at its own expense, defend every suit which shall be brought against UHCSC, a CP or a UHCAD (provided that the Supplier is notified in writing of such suit and the papers therein are delivered to it) for any alleged infringement of any

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patent by reason of the sale or use of the Products and shall pay all costs, damages and profits recoverable in any such suit.

28. INSURANCE.

A. The Supplier shall maintain and keep in force during the Term of the Purchasing Agreement product liability, general public liability and property damage insurance against any insurable claim or claims which might or could arise regarding Products purchased by the CPs or by the UHCADs from the Supplier or a SAD under the Purchasing Agreement. Such insurance shall contain a minimum combined single limit of liability for bodily injury and property damage in the amounts of not less than $1,000,000 per occurrence and $10,000,000 in the aggregate; shall name UHCSC, the CPs and the UHCADs, as their interests may appear, as additional insured, and shall contain an endorsement providing that the carrier will provide directly to all named insured copies of all notices and endorsements. The Supplier shall provide to UHCSC in its Bid and thereafter within fifteen days after UHCSC's request, an insurance certificate indicated the foregoing coverage, issued by an insurance company licensed to do business in the relevant states and signed by an authorized agent.

Notwithstanding anything to the contrary in this Paragraph, the Supplier may maintain a self-insurance program for all or any part of the foregoing liability risks, provided such self-insurance policy in all material respects complies with the requirements applicable to the product liability, general public liability and property damage insurance set forth in this Paragraph. The Supplier shall provide UHCSC in its Bid, and thereafter within fifteen days after UHCSC's request: (1) the self-insurance policy; (2) the name of the company managing the self-insurance program and providing reinsurance, if any;
(3) the most recent annual reports on claims and reserves for the program; and
(4) the most recent annual actuarial report on such program.

The Supplier shall not amend in any material respect that affects the interests of UHCSC, the CP, and the UHCAD, or terminate said liability insurance or self-insurance program except after thirty days' prior written notice to UHCSC and shall provide to UHCSC copies of all notices and endorsements as soon as practicable after it receives or gives them.

B. The Supplier shall (1) cause each SAD to agree to maintain and keep in force during the Term of the Purchasing Agreement product liability, general public liability and property damage insurance in coverage amounts deemed reasonable under industry standards against any insurable claim or claims which might or could arise regarding Products purchased by the CPs or by the UHCADs under the Purchasing Agreement, (2) name UHCSC, the CPs and the UHCADs as additional insured in any such insurance policy as their interests may appear, and (3) furnish to UHCSC (upon its request) an insurance certificate indicating the foregoing coverage, issued by an insurance company licensed to do business in the relevant states and signed by an authorized agent. If the SAD refuses or fails to agree to the foregoing, the Supplier shall immediately notify UHCSC.

29. COMPLIANCE WITH LAW.

The Supplier represents and warrants that to the best of its knowledge, after due inquiry, it is in compliance with all federal and state statutes, laws, ordinances and regulations applicable

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to it (the "Legal Requirements") which are material to the operation of its business and the conduct of its affairs, including Legal Requirements pertaining to the safety of the Products, occupational health and safety, environmental protection, nondiscrimination, antitrust, and equal employment opportunity. During the Term of the Purchasing Agreement, the Supplier shall: (1) promptly notify UHCSC of any lawsuits, claims, administrative actions or other proceedings asserted or commenced against it which assert in whole or in part that the Supplier is in noncompliance with any Legal Requirement which is material to the operation of its business and the conduct of its affairs and (2) promptly provide UHCSC with true and correct copies of all written notices of adverse findings from the U.S. Food and Drug Administration ("FDA") and all written results of FDA inspections which pertain to the Products.

30. HOLD HARMLESS.

A. The Supplier shall indemnify and hold harmless, and, if requested, defend UHCSC, the CPs and the UHCADs, and their respective officers, directors, regents, agents and employees, from and against any claims, liabilities, damages, actions, costs and expenses (including reasonable attorneys fees and court costs) of any kind or nature, whether at law or in equity, arising from or caused by (1) the breach of any representation, warranty, covenant or agreement of the Supplier contained in the Purchasing Agreement or (2) the condition of any Product sold pursuant to the Purchasing Agreement, existing at the time of its delivery, including a defect in material, .workmanship or design; provided that such indemnification and promise to indemnify, defend and hold harmless shall not be applicable where the claim, liability, damage, action, cost or expense arises as a result of an act or failure to act of UHCSC, the CP or of the UHCAD.

B. This Paragraph and the obligations contained herein shall survive the expiration or earlier termination of the Purchasing Agreement. The remedies of this Paragraph are in addition to and not a limitation on any other rights or remedies that may be available against the Supplier.

31. ANCILLARY AGREEMENTS.

A. Within thirty days after UHCSC sends a letter of award to a UHCAD, UHCSC shall submit to the Supplier a summary of the distributor agreement entered into by UHCSC and the UHCAD.

B. Within thirty days after the Supplier awards a contract to a SAD for the Products, the Supplier shall notify UHCSC of the distributor agreement entered into by the Supplier and the SAD.

32. CHOICE OF LAW.

The Purchasing Agreement shall be governed by and construed in accordance with the internal substantive laws of the State of Illinois and the Illinois courts shall have jurisdiction over all matters relating to the Purchasing Agreement; provided, however, in the event of a dispute between a CP and the Supplier, at the option of the CP, the Purchasing Agreement shall be governed by and construed in accordance with the internal substantive laws of the state in which

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the CP is located and the courts of the state in which the CP is located shall have jurisdiction over the dispute.

33. INDEPENDENT CONTRACTOR.

Each UHCAD is an independent contractor and is not an agent or employee of UHCSC or any CP. UHCSC, the CPs and their respective officers, directors, regents, agents and employees shall not be responsible or liable for any claim, damage or loss of the Supplier or any third party arising out of or resulting from the act or failure to act of a UHCAD.

34. REPRESENTATIONS AND WARRANTIES OF THE SUPPLIER.

In addition to the Supplier's other representations and warranties contained herein, the Supplier represents and warrants to UHCSC and to each CP as follows: (1) neither the Purchasing Agreement nor the transactions contemplated therein will violate, breach or cause a default under any provision of the charter or bylaws of the Supplier or any agreement, order, judgment, decree, or other restriction of any kind to which the Supplier is a party or by which it or any of its assets is bound or affected, or violate any law or regulation; and (2) the Purchasing Agreement and the transactions contemplated therein have been duly authorized and approved by all necessary action under applicable laws or otherwise, and the Purchasing Agreement has been duly executed by and constitutes the legal, valid and binding obligation of the Supplier, enforceable by UHCSC and/or the CPs in accordance with its terms.

35. OMNIBUS RECONCILIATION ACT.

To the extent that Section 1861(V) (1) (I) of the Social Security Act, as amended, (the "Statute") is applicable to the Purchasing Agreement, the Supplier shall comply with the following requirements of the Statute:

A. Until the expiration of four years after the services are furnished under the Purchasing Agreement, the Supplier shall make available, upon written request to the Secretary of the Department of Health and Human Services ("HHS"), or upon request to the Comptroller General, or their duly authorized representatives, the Purchasing Agreement, and all the books, documents and records of the Supplier that are necessary to certify the nature and extent of the costs incurred by the CPs under the Purchasing Agreement; and

B. If the Supplier carries out any of its duties through a subcontract, with a value or cost of $10,000 or more over a twelve-month period, with a related organization (as the term is defined with regard to a provider in 42 C.F.R. Section 405.427(b)), the subcontract shall contain a clause to the effect that until the expiration of four years after the services are furnished pursuant to the subcontract, the related organization shall make available, upon written request to the Secretary of the Department of HHS, or upon request to the Comptroller General, or any of their duly authorized representatives, the subcontract, and all the books, documents and records of such organization that are necessary to verify the nature and extent of such costs.

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36. OBLIGATIONS OF UHCSC.

A. UHCSC shall, after the award of the Purchasing Agreement, deliver a summary or copy of the Purchasing Agreement to each CP and each UHCAD and shall, from time to time, at the request of the Supplier, deliver to each CP and each UHCAD such materials supplied by the Supplier to UHCSC which relate to the purchase of Products.

B. UHCSC shall notify in writing the Supplier of the identity of each CP and each UHCAD which becomes or ceases to be a CP or a UHCAD during the Term of the Purchasing Agreement. The Supplier acknowledges and agrees that any institution that becomes a CP or a UHCAD during the Term of the Purchasing Agreement shall be deemed a "CP" or a "UHCAD" hereunder.

37. CERTIFICATION OF INDEPENDENT PRICE DETERMINATION.

The Bidder certifies, and in the case of a joint Bid, each Bidder thereto certifies as to its own organization, that: (1) the Bidder has not either directly or indirectly entered into any agreement, participated in any collusion or otherwise taken any action or restraint of free competitive bidding in connection with the Bid Invitation; (2) the prices in the Bid have been arrived at independently without consultation, communication, or agreement, as to any matter relating to such prices with any other Bidder or with any competitor; (3) unless otherwise required by law, the prices quoted in the Bid have not been knowingly disclosed by the Bidder and will not be knowingly disclosed by the Bidder directly or indirectly to any other Bidder or to any competitor; and (4) no attempt has been made or will be made by the Bidder to induce any other person or firm to submit or not to submit a Bid for the purpose of restricting competition.

38. DEFENSE OF THE PURCHASING AGREEMENT.

The Supplier shall, at its own expense, take such action as is reasonably necessary to defend the validity and enforceability of the Purchasing Agreement against any allegation in any litigation or proceeding commenced against it by a third party to the effect that the Purchasing Agreement is unlawful or unenforceable, and UHCSC shall cooperate with the Supplier in such defense. If UHCSC is a party to any litigation or proceeding involving such an allegation, the Supplier shall cooperate with UHCSC in its defense thereof.

39. THIRD PARTY BENEFICIARIES.

Each CP and UHCAD is an intended third party beneficiary of the Purchasing Agreement. All terms and conditions of the Purchasing Agreement shall inure to the benefit and be enforce-able by the CP and its successors and assigns and all terms and conditions of the Purchasing Agreement which are applicable to the UHCAD shall inure to the benefit and be enforceable by the UHCAD and its successors and assigns.

40. AUDIT OF PRICING.

The Supplier shall allow UHCSC or its representatives to make periodic visits for the express purpose of auditing invoices to ensure correct pricing and performance under the Purchasing Agreement. All visits will be at a mutually agreed upon time.

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41. NOTICES.

All notices or other communications required or permitted under the Purchasing Agreement shall be in writing and shall be deemed sufficient when mailed by United States mail, or delivered in person against receipt to the party to which it is to be given, at the address of such party set forth below:

If to the Supplier:

BY MAIL OR BY HAND DELIVERY
to the Address Set Forth by the Supplier

in the Bid

If to UHCSC:

BY MAIL OR BY HAND DELIVERY
University HealthSystem Consortium

Services Corporation
2001 Spring Road
Suite 700
Oak Brook, Illinois 60521-1890

If to a CP:

BY MAIL OR BY HAND DELIVERY
TO THE CORRECT ADDRESS OF THE
COMMITTED PARTICIPANT

or to such other address as the party shall have furnished in writing in accordance with the provisions of this Paragraph.

42. USE OF NAME, LOGOS, ETC.

The Supplier agrees (and shall obtain a similar agreement from each SAD) that it shall not use in any way in its promotional, informational or marketing activities or materials the name of UHCSC or any CP, the trademarks, logos or symbols of UHCSC or any CP, a description of the business or activities of UHCSC or any CP, or the award or content of the Purchasing Agreement without in each instance first obtaining the prior written consent of UHCSC.

43. CONFIDENTIAL INFORMATION.

A. The Supplier agrees (and shall obtain a similar agreement from each SAD) that it shall: (1) keep strictly confidential and hold in trust all confidential information of UHCSC and the CPs; (2) not use the confidential information for any purpose other than the performance of its obligations under the Purchasing Agreement, without the prior written consent of UHCSC; (3) not disclose the confidential information to any third party (unless required by law) without the prior written consent of UHCSC; and (4) not later than thirty days after the expiration or earlier

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termination of the Purchasing Agreement', return to UHCSC, or the CP, as the case may be, the confidential information.

B. "Confidential information", as used in Subparagraph A above, shall consist of all information relating to the prices and usage of the Products (including all information contained in the reports produced by the Supplier pursuant to Paragraph 17) and all documents and other materials of UHCSC and the CPs containing information relating to the programs of UHCSC and the CPs of a proprietary or sensitive nature not readily available through sources in the public domain. In no event shall the Supplier provide to the EPs any information relating to the prices it charges the CPs or the UHCADs for Products ordered pursuant to the Purchasing Agreement without the prior written consent of UHCSC.

44. NON-ASSIGNMENT.

A. The Purchasing Agreement shall be binding upon and inure to the benefit of the respective legal representatives, agents, successors and assigns of UHCSC and the Supplier. "Successors", as used herein, shall include successors in interest and successors in ownership, operation and control, and shall include a successor corporation or other legal entity resulting from a merger or consolidation and a corporation or other legal entity which acquires all or substantially all of the assets of the acquired party.

B. No assignment of the rights thereunder may be made without the prior written consent of the other party; except that UHCSC may assign its rights and obligations to any affiliate of UHCSC. Any assignment of such rights by either party in violation of this Paragraph shall not relieve that party of the responsibility of performing its obligations thereunder to the extent that such obligations are not satisfied in full by the assignee of such assignor.

45. HEADINGS.

Headings in the Bid Invitation are for convenience and reference only, and shall in no way be held to explain, modify, amplify or aid in its interpretation, construction or meaning.

46. SEVERABILITY.

Whenever possible, each provision of the Bid Invitation shall be interpreted in such a manner as to be effective and valid under applicable law, but if any provision of the Bid Invitation shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity without invalidating the remainder of such provision or the remaining provisions of the Purchasing Agreement.

47. INSERVICE TRAINING.

The Supplier will provide inservice training at its own cost for pertinent Products as requested by UHCSC or the CPs prior to and during the Term of the Purchasing Agreement.

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48. ENTIRE AGREEMENT.

A. These Standard Terms and Conditions of Bid shall apply to any purchase order issued by a CP or a UHCAD under the Purchasing Agreement unless the special conditions set forth in Appendix A (e.g., "Special Conditions Pharmaceutical"; "Special Radio-pharmaceuticals;" etc.) are applicable because the products subject thereto are described in Appendix A. In such case, the special conditions shall apply in addition to these Standard Terms and Conditions of Bid and shall supersede these Standard Terms and Conditions of Bid in the event of conflict or inconsistency.

B. The Purchasing Agreement, together with each CP's or each UHCAD's purchase order (to the extent the terms of such purchase order are not in conflict or inconsistent with the terms of the Purchasing Agreement) shall constitute the entire agreement between each CP or each UHCAD and the Supplier and no other terms and conditions in any document, acceptance, or acknowledgment shall be effective or binding upon a CP or a UHCAD unless expressly agreed to in writing by a CP.

Supplier:

ADDRESS:


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SIGNATURE:
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TITLE:                             DATE:
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                                         24.

1.0  INTRODUCTION

The Special Terms and Conditions Capital Equipment Purchasing Program set forth in this document are incorporated into and should be considered part of the UHCSC Standard Terms and Conditions of Bid for Supplier agreement. These Special Terms and Conditions apply only to capital equipment products and services, and will be considered in addition to the Standard Terms and Conditions of Bid. In the event of conflict or inconsistency, these Special Terms and Conditions will supersede any other terms and conditions set forth in the Standard Terms and Conditions of Bid. All defined terms used herein which are not defined in these Special Terms and Conditions shall have the meaning given those terms in the Standard Terms and Conditions of Bid.

2.0 FDA REQUIREMENTS

A Bidder shall provide evidence satisfactory to UHCSC to demonstrate compliance with the below specified provisions of the federal Food, Drug and Cosmetic Act (FD&C Act").

2.1 PREMARKET REVIEW.

A Bidder shall provide, together with each Bid, evidence satisfactory to demonstrate compliance with Food and Drug Administration ("FDA") premarket review requirements, if any, of the device subject to the Bid. Ordinarily, for each device reviewed by FDA under Section 510(k) of the FD&C Act a letter is received from the FDA determining that the device is "substantially equivalent" to a preamendment device. Where a premarket approval has been submitted to FDA, the Bidder should submit a copy of the notice of approval.

2.2 REPORTING AND TRACKING.

A Bidder shall submit, together with each Bid, a copy of this standard operating procedure for device tracking, if device tracking is required under the FD&C Act, for any device included in the Bid, together with a copy of its plan for compliance with the manufacturer medical device reporting requirements. Subsequent modifications to the procedure and plan shall be provided as they become adopted by the Bidder. A Supplier shall assist, upon request, each CP (CP) in complying with all device reporting and tracking obligations under the FD&C Act.

2.3 PRODUCT RECALLS/MODIFICATIONS

A Supplier will, at no cost to the CP, provide the CP with each product modification or replacement part necessary to correct a hazard notification/recall on all goods and services covered by the Purchasing Agreement. The hazard correction shall include, at no cost to the CP, all labor, transportation and travel to the CP's site.

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2.4 GMP INSPECTION REPORTS

A Bidder shall provide to UHCSC, together with each Bid, copies of all FDA Form 483's for the two most recent years together with evidence of actions taken by the Bidder to address to the FDA's satisfaction violations of the FD&C Act. A Supplier shall be under a continuing obligation to provide, on a timely basis, copies of all subsequent FDA Form 483's and also to provide immediate notice to UHCSC of any warning letter, recall, legal action or other regulatory action by or on behalf of the FDA that affects a product for which a Bid has been submitted and accepted by a Letter of Award.

3.0 NEW TECHNOLOGY

All Bidders, as a condition to submitting a Bid, will disclose to UHCSC pending new technology equipment planned for introduction for the next two years which provides the same function as the equipment subject to the Bid. Upon introduction of the Supplier's new technology equipment, each CP will be provided the option to exchange old technology equipment on a priority basis at discounted prices and terms that will comply with Section 5 of the Standard Terms and Conditions of Bid.

4.0 SAFE MEDICAL DEVICES ACT OF 1990

Each Bidder will be responsible for submitting their written plan of compliance with the Safe Medical Devices Act (SMDA) of 1990 for both User Reporting and Device Tracking. Suppliers will also be responsible for assisting the CP in upholding the guidelines set forth by the SMDA for hospitals. This requirement will not be fulfilled until the final SMDA ruling goes into effect. Suppliers will be required to satisfy the above request immediately upon the final effective date of the SMDA regardless of when the Purchasing Agreement had gone into effect, as long as the Agreement is valid during the initial implementation date of the ruling.

5.0 OSHA BLOOD BORNE PATHOGENS

Each Supplier shall abide by the state, federal, and hospital specific policies developed by the CP regarding Blood Borne Pathogens. It wi1l be the responsibility of the Suppliers and their representatives to request copies of guidelines and training from the CP in order to fulfill the requirements of the policy. The committed facility will be responsible for providing the Supplier with the necessary supplies according to the written policy.

6.0 NEW EQUIPMENT ACCEPTANCE

A period of sixty days from first clinical use shall be given to the CP for the purpose of acceptance testing. Upon completion of the installation, the equipment shall meet or exceed the Bid Specifications and the specifications set forth in the Supplier's published brochures. Acceptance testing shall include, but is not limited to, safety testing, calibration, performance testing, documentation inspection, and testing for adherence to hospital specifications. Formal acceptance and invoice payment will occur only after the results of the previously mentioned tests have been verified by hospital staff with at least thirty days of clinical use but not later than sixty days from first clinical use, at the CP's discretion A complete set of all test documentation and procedures shall be made available to hospital staff prior to final acceptance.

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If the equipment fails the acceptance testing, the CP shall, at its own discretion, return the equipment to the Supplier for a complete cash refund/exchange or may mandate the performance standards are met within five working days.

If the equipment passes the acceptance testing, the warranty period for the equipment shall begin sixty days from the first clinical use.

7.0 SITE PREPARATION

The Bidder shall provide to the CP a description of any pre-installation planning services provided by the Bidder, including any costs that may be incurred by the CP due to site preparation at the time the CT requests a bid from the Bidder. The Bidder shall also provide any drawings, specifications, or other material necessary for site preparation to be completed by the CP. The above mentioned materials must be supplied as, and shall become part of the Bid submitted by the Bidder to UHCSC.

8.0 INSTALLATION/ASSEMBLY

The Supplier shall provide a detailed description of the CP's and Supplier's installation obligations including, but not limited to, electrical, mechanical (HVAC), structural (including seismic where applicable), and plumbing requirements. Based on past installations and review of the CP's site, the Supplier shall estimate the cost the CT shall bear for each component of the installation regardless if supplied by the Supplier or the CP. The CP shall specify who will be responsible for installation. If the Supplier will be taking responsibility for installation, the Supplier shall supply a schedule with estimated dates and times for installation. If the CP will be taking responsibility for installation, the Supplier shall contact the individual selected by the CP that will be responsible for the installation of the equipment subject to the Bid.

The Supplier shall provide a delivery and installation schedule to the CP based on the specific details required by the CP.

If the product being purchased requires assembly (whether mechanical or electrical, including cables), the Supplier shall specify who will be responsible for assembly and any additional costs involved. If the Supplier will be taking responsibility for assembly, the Supplier shall supply a schedule of assembly requirements with estimated dates, times, and cost immediately after the time a purchase order is issued.

9.0 DATA CONVERSION/INTERFACES

In the event that the product being purchased will require conversion of data from another system, the Supplier agrees to perform this conversion either manually or electronically at no charge to the CP. The Supplier shall also supply the CP with the cost of performing data conversion during the warranty period and after the warranty has expired. The data conversion will include all data requested by the CP in writing and will take no longer then the agreed upon time limit that should have been disclosed by the Supplier to the CP prior to the commitment to

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purchase. It shall be the responsibility of the Supplier to inform the CP, in writing, of the length of time required to perform the conversion prior to the issuance of a purchase order.

The Supplier shall also agree to include all interfaces requested by the CP at no charge. Interfaces shall be real time connections to other information systems owned by the CP and their affiliated members. All software interfaces between devices and computerized information systems or between two devices shall be identified as standard (with the appropriate standard {e.g. ACR, NEMA III, HL7} referenced), proprietary ("off the shelf") or custom (to be specially developed for the purchase).

10.0 WARRANTY/GUARANTEE

The Supplier shall clearly state in writing to the CP what is included in the warranty in terms of equipment, attachments, subsystems, components, glassware, etc. The Supplier shall also supply a second clearly written document listing items that are limited in warranty or excluded from warranty coverage. During the warranty period, the Supplier agrees to supply the CP with free loaner equipment of identical type when the CP determines the need is required. Loaner equipment shall be available and delivered to the CP's site within twenty four hours of request at no charge to the CP.

During the warranty period, the Supplier will guarantee response to service calls within one hour by phone and four hours on site unless specified otherwise under unique instances. All warranty repairs will have 24 hour coverage at no additional charge where the CP will be allowed to determine whether the service response may be postponed to the following working day. A penalty equal to ___ of the total purchase price or the sum of the lease or rental will be payable by the Supplier for each late response and for each occurrence that scheduled maintenance is not performed by thc Supplier. This penalty fee will be available to the CP within thirty days as a cash refund or credit to be used for future purchases, at the CP's option per CP discretion.

The Supplier agrees to unconditionally guarantee all items against defect in materials, workmanship, design, and performance for a period of one year for all radiographic equipment and eighteen months for all other equipment. In case of failure, the Supplier guarantees to use new original manufacture parts and not rebuilt assemblies or components to perform the repair. If new manufacturer parts are not available, thc Supplier will perform the repair with reconditioned parts, and within thirty days replace the reconditioned parts with identical new assemblies, components, printed circuit boards, etc.

As part of the Bid, the Bidder will be required to submit, in writing, the equivalent cash value of thc above mentioned warranty/guarantee.

11.0 UPTIME/DOWNTIME CALCULATION (WARRANTY AND SERVICE CONTRACT)

The Supplier will guarantee that the equipment purchased under the Purchasing Agreement shall maintain a level of uptime better than or equal to 98%. Any costs associated with lost revenue due to failure by the Supplier to meet the agreed uptime requirement shall be paid by the Supplier. Lost revenue shall be calculated by multiplying the average number of procedures performed or the average number of times the equipment would have been used times the current

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hospital rate per use or procedure. The CP may elect to accept payment in the form of cash reimbursement or account credit which may be used for future purchases. Uptime shall be calculated using the following method:

100% uptime = H hours/day X D days/week X 13 weeks/quarter = T hours (total potential uptime hours/quarter)

(T- TNF) X 100

     % uptime =          T

where:    H is the pre-defined and agreed-upon number of hours per day that the
          system will typically be used.

          D is the pre-defined and agreed-upon number of days per week that the
          system is typically used.

          T is the total number of hours that the system will be in use per
          year.

          TNF is the number of hours the unit or any function of the unit is not

          operational during the quarter (the hours calculated will only include
          those hours that the unit would typically be in use).  This time does
          not included scheduled preventive maintenance.

If any portion of the total functionality of the equipment is unavailable for clinical use, the unit shall be considered down. Downtime scheduled for preventive maintenance, normal tube replacement (based on the average tube life), or any other scheduled event including those for the convenience of the hospital shall not be included in the downtime calculation

The % uptime shall be calculated every three months based on quarterly reports that will be supplied by the Supplier. If uptime is less than 98%, the CP will give written notice to the Supplier of its failure to meet the uptime requirement and the costs associated with lost revenue shall be payable by the Supplier within 30 days of receipt of the notice If the system falls below the guaranteed uptime, the Supplier shall extend the warranty by one week for every hour the system or function is not operational beyond the allowable 2%. The same shall apply for CPs that have chosen to place their -nits under contract after the warranty period has expired. The CP will be allowed to modify the number of hours the unit is operational at any time within the quarter under review. All calculations will be based on the agreed upon n-tuber of hours of operation during that quarter.

12.0 PREVENTIVE MAINTENANCE

During the warranty period, the Supplier shall perform preventive maintenance according to the manufacturer's recommendations and the policies developed by the CP, at no charge to the CP. The Supplier shall supply the CP with a written procedure that will be followed by the Supplier's representative during the preventive maintenance process. Reasonable additional testing shall be performed by the Supplier at no charge to the CP, upon request, to meet the requirements of procedures developed by the CP. The frequency of preventive maintenance and tests performed

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shall comply with the manufacturers recommendations, external codes (state, JCAHO, etc.), and all internal policies developed by the CP. During the warranty period, the Supplier shall provide preventive maintenance after hours at no additional charge if requested by the CP.

13.0 UPGRADES

The Supplier shall provide UHCSC and the CPs with a list of all optional software including costs for the software both during the warranty period and after the warranty period. Each CP shall be given all upgrades to acquired software from the date of issuance of the purchase order through the expiration of warranty, including penalty extensions, at no charge to the CP. Arrangements shall be made to install all software upgrades within two weeks after the release of any software upgrade. If the CP elects to purchase a maintenance contract of any type after the warranty, all upgrades shall be provided at no additional charge during the contract period. If the CP elects not to purchase a service contract, the cost of upgrades will be no higher then the Supplier's lowest published list price for the upgrade if a service contract had been purchased.

14.0 MANUALS/SCHEMATICS/INSPECTION PROCEDURES

Supplier shall provide to the CP two complete and unabridged sets of operator and service manuals for each model of equipment purchased including all subassemblies and peripheral devices (including those manufactured by other Suppliers). The technical service manuals furnished to the CP shall be at least as complete and comprehensive as those furnished to the Supplier's technical service personnel and minimally must include theory of operation (including software), electrical and mechanical schematics, preventive maintenance procedures and schedules, replacement parts lists, and troubleshooting documentation. All updates to the above mentioned manuals shall be provided to the CP within two weeks after release of such updates.

15.0 TRAINING

The Supplier shall provide inservice training for both operators and technical service staff of the CP at the CP's site at the Suppliers own cost for pertinent products or services as requested by UHCSC or CPs prior to the completion of the sixty day acceptance period. The Supplier will perform initial inservice training for the period required by the CP to complete training for the required personnel. The Supplier shall, at no tuition, travel, lodging, or out of pocket expenses to the CP, allow two staff members to attend the Supplier's technical service training school. The Supplier shall also allow the CP to reproduce all training material for use within the CP's facility. The Supplier shall provide to the CP a schedule for technical service training provided by the Supplier, and guarantee at least one space per CP in a technical service training class prior to the end of the warranty period. Failure to provide the opportunity for one attendee to attend technical service training class prior to the expiration of the warranty shall cause the warranty to be extended by thirty days after the technical training is provided. The Supplier shall provide follow-up inservice training as determined by the CP for the life of the equipment at no additional charge regardless of where the training is performed.

16.0 SERVICE RESPONSE TIME

The awarded Supplier shall guarantee a response time of one hour by phone and four hours on-site for warranty, contract, or time and materials service calls for all CPs. A penalty equal to 1%

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of the total purchase price or the sum of the lease or rental payments (as applicable) will be incurred by the Supplier for each occurrence of late response. This penalty fee will be available to the CP within thirty days as a cash refund or credit to be used for future purchases, at the CP's option. The Supplier shall provide twenty four hour service coverage during the warranty period for all CPs at no additional charge.

17.0 LOANER EQUIPMENT

In the event a CO's equipment is inoperable for any reason, the Supplier agrees to provide loaner equipment of identical (compatible with the system the CP is using) or superior type to the CP at its site at no additional charge during the term of the Purchasing Agreement. Loaner equipment shall be available and delivered to the CP's site within twenty four hours of the request by the CP. It will be the responsibility of the Suppliers service representative to offer a loaner when the equipment will be out of service. It will be left to the discretion of the hospital to determine whether a loaner will be required while equipment is out for repair. The Supplier shall also supply the CP with the cost of loaner equipment after the Purchasing Agreement has expired.

18.0 CUSTOMIZATION OF SOFTWARE

At the rime of Bid, the Bidder shall supply an outline of the cost per hour or per project that will be billed to the CP for the customization of software. The Bid shall also include any additional charges that the CP shall incur for annual maintenance, training, documentation, backup, etc. related to the customized software.

19.0 OPERATIONAL SOFTWARE

All software licensure agreements shall be clearly stated in writing and copies shall be submitted as part of the Bid. The Supplier shall also state whether software is included in the warranty of the goods and services stated in the Purchasing Agreement. All software necessary to operate the equipment/system shall become the property of the CP upon completion of the equipment acceptance. Ail new operational software shall be provided to the CP at no charge throughout the warranty period and through the expiration of any maintenance contract that is purchased for post-warranty service. Arrangements shall be made to install all new software releases within two weeks after the release of new software.

20.0 DIAGNOSTIC SOFTWARE

All software necessary to troubleshoot and maintain the equipment listed on the CP's purchase order shall be supplied to the CP at no charge. The diagnostic software shall be identical to that used by the Supplier's service representative Training for the use of diagnostic software shall be included in the service training provided by the Supplier, and the Suppliers telephone support shall also include assistance in diagnostic software operation. Training in the use of diagnostic software and diagnostic software upgrades will be offered by the Supplier, at no additional charge to the CP or the life of the equipment within the CP's facility. Software updates shall be provided to the CP within two weeks after the update release.

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21.0 SERVICE CONTRACT OPTIONS

The Bidder shall enclose, with the Bid, annual service contract options with annual costs specified for up to three years of coverage after the expiration of warranty. If warranty on parts (or labor) extends beyond the warranty for labor (or parts), then the parts (or labor) only contracts should be included for the period while a partial warranty applies and then for three years beyond. The types of contracts should include but are not limited to Full Service (Repair and Preventive Maintenance), Repair Only, Preventive Maintenance Only, Pans Only, Biomedical Screening; and Pans Consignment if available through the Supplier. Each contract should include a tabular listing of options for coverage hours and clearly state which items are covered or not covered with cost implications for each incremental change in these terms. If pre-printed contracts do not clearly list all items that are not covered under the Purchasing Agreement, a separate list must be attached for clarification. Any items, assemblies, or components that appear on the purchase order and which do not appear on the List of Items Not Covered will assumed to be covered in full by the contract. Multi-year agreements should be renewable annually based solely upon the CP's discretion which will include the CP's perception of the quality of service provided by the Supplier. Contract proposals should also include a guarantee of service quality and response time with penalties for the Supplier if these guarantees are not satisfied.

Regardless of which type of contract is chosen or whether a contract is chosen, the Supplier will supply the CP with clinical and technical telephone service response during the life of the equipment. In the response to the request for bid, the Supplier shall supply the types of telephone support available, the hours of coverage, and specify how to access the system. Telephone response Will be guaranteed to a maximum of one hour response time with a penalty equal to of the total purchase price or the sum of the lease or rental payments (as applicable) for each late response time. This penalty fee will be available to the CP within thirty days as a cash refund or credit that may be used for future service or purchases, at the CP's option.

If upgrades are to be provided at no charge as part of the service contract, the cost of any upgrade for CPs not electing to purchase service contracts shall not exceed $0% of the service contract cost and in no event shall the cost exceed the Supplier's lowest published price list for the upgrade.

22.0 SERVICE CONTRACT CANCELLATION

The CP reserves the right to cancel any service agreement, without cause or penalty, with thirty days prior written notification to the Supplier. Payment reimbursement will be prorated and the Supplier shall separate costs for preventive maintenance and repair for the purpose of allocating expenses. The Supplier will be required to leave the equipment in certifiable condition as deemed by hospital staff. The Supplier shall not cancel the contract without a minimum of thirty days prior written notification to the CP. Cancellation of the contract shall not effect the Suppliers response time and quality of support nor result in other penalties if the CP elects to use the Supplier for time and materials repairs, perform the work in-house, or obtain service from another Supplier.

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23.0 ESCROW OF SOURCE CODE

The Supplier agrees to keep and maintain copies of the CP's source code and documentation for such source code with an escrow agent at no charge to the CP. The escrow agent shall be authorized to release the source code to the CP in the event of that the Supplier ceases to conduct business or discontinues thc product purchased under the Purchasing Agreement.

24.0 MAINTENANCE/PREVENTIVE MAINTENANCE/OTHER CHARGES

The Bidder shall outline separately, in the Request for Bid, the charges that will be incurred for hourly service, overtime, travel, after hours preventive maintenance, Saturday service, Sunday service, holiday service, and any other charge that may relate after warranty/contract service. The Supplier shall inform the CP of the typical location that service will be dispatched from with the usual mileage and cost.

25.0 HISTORICAL PARTS/LABOR DATA

The Supplier shall provide the CP with historical parts/labor/cost data to assist the factory in the analysis of the contract value. The Supplier shall provide all data for the equipment being bid including any peripheral devices. Historical data should include typical repairs, parts usage, and service requests that had been issued by customers with similar facilities and usage both under warranty and after warranty.

26.0 SERVICE PERSONNEL QUALIFICATIONS

Service provided by the Supplier shall be performed by qualified and trained personnel, and work is to be scheduled whenever possible with minimal inconvenience to hospital staff, patients, and visitors. The CPs reserve the right to deem any service representative/sales representative as unacceptable. The Supplier shall supply replacement individuals, upon the CPs request, at no penalty or charge to the CP. The Bidder shall identify the quantity and qualifications of its service and training personnel in the Bid. The Supplier shall also supply each CP with a list of local service representative and their qualifications upon request.

27.0 REPLACEMENT PARTS

As provided in Section 10, of these Special Terms and Conditions, replacement parts used during the warranty period shall be newly manufactured parts or assemblies, unless the hospital agrees otherwise. In the case where new parts are not available, the service representative may install rebuilt parts in order to make the unit operational. Within thirty days after the repair, the rebuilt parts must be replaced with newly managed parts. After the warranty period, repairs must be made with new or like new parts. Parts replaced may be returned for credit to the Supplier, however, the CP reserves the right to retain parts removed from equipment. Ail parts that are not eligible for Supplier credit shall remain property of the CP. With regard to contracts that do not include parts, the Supplier shall only replace and charge for parts necessary to bring the equipment to operating condition. The Supplier shall warranty replacement parts and labor for one year, or according to standard warranty, whichever is longer.

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28.0 SERVICE/PARTS AVAILABILITY

The Supplier shall stock repair parts, circuit boards, tools, and any additional equipment necessary to support and maintain full functionality of purchased equipment for a minimum of five years beyond the discontinuation of manufacture of the model or the estimated useful life of the equipment as stated to the CP at time of purchase, whichever is longer. The Supplier shall provide factory trained service personnel for use by, and at the discretion of, the CP to contract for the repair and maintenance of the purchased equipment at the Supplier's stated cost for the same time period as mentioned above. The Supplier shall supply the CP with current pricing for parts and service including any discounts available. Parts shall be supplied at no more than published list price provided to the hospital. The Supplier agrees to notify the CP in writing one year prior to the discontinuation of service or parts. Parts available after discontinuation of product production must be maintained at the same level as pre-discontinuation for the five year period. Complete assembly replacement instead of component parts is not acceptable.

Supplier service personnel shall be located within a four hour on-site response time of the CP for the length of time stated in the Purchasing Agreement. The CP shall be able to obtain parts seven days a week, twenty four hours a day. The repair parts shall be available for delivery within twenty four hours of request.

29.0 DETAILED SERVICE REPORTS

The Supplier's service representative must complete a detailed service report on all service requests, regardless of the problem or whether the equipment is under warranty, contract, or time and material coverage. The service report shall detail travel time, labor hours (both regular and overtime), parts used with part n-tubers and description, start time and date, completion time and date, and any cost associated with the service. The service report shall identify the device being serviced by serial number and/or Clinical Engineering identification number. A brief description of the problem and action taken to correct the problem is required on all service reports. The service report must also include an acceptance signature from hospital staff after the service is completed to verify satisfaction with the service.

Complete maintenance records shall be maintained by the Supplier and copies of each service report are to be submitted to the CP immediately following each service call or preventive maintenance. A complete summary of life to date service shall be available to the CP upon request Any quality assurance program available by the Supplier for the equipment and documentation of such shall be provided to the CP upon request at no charge.

At the CP's option, the Supplier shall display the service provider's business card prominently on the face of the equipment. The card shall indicate appropriate phone numbers for twenty-four hour contact.

30.0 REPAIR ESTIMATES/AUTHORIZATIONS

The Supplier's service representative must report to the Clinical/Biomedical Engineering representative or user department prior to beginning any work and after the completion of any service. Supplier service representative shall, after initial inspection, provide a written cost estimate of repairs to hospital staff prior to beginning work After the estimate has been approved

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service may be performed. It will be the responsibility of thc Supplier to work with the CP in determining who will be authorized to approve estimates. Any costs that exceed the amount of the estimate shall not be charged to the CP.

31.0 LIMIT ON CALLS

The Supplier will not limit the amount of calls a CP could make before charges will be incurred by CP. In the case where thc CP continues to place a large number of calls, it will become the responsibility of the Supplier to determine why thc calls are being placed and how the problem will be resolved. The Supplier shall absorb all costs involved in resolving thc concern to the CP's satisfaction.

32.0 NUISANCE CALLS

The Supplier may not limit the number of "No Problem Found" calls from the CP. Nuisance calls related to training problems, operator error, abuse, etc. shall become the responsibility of the Supplier to resolve. Ail costs involved in the resolution of such problem will become the responsibility of the Supplier. The issues shall not be considered resolved until the CP is satisfied with the solution.

33.0 SHIPPING AND FREIGHT

The Supplier shall pay all shipping costs, including insurance, for the transportation of equipment and parts during the initial purchase and any following purchases/repairs for the life of the equipment. The Supplier will be responsible for both shipping from the Supplier to the CP and from the CP to the Supplier. If the Supplier chooses not to insure shipping, the Supplier shall be held responsible for any losses or damage and will agree to replace the item with a new product within one week of the reported loss or damage. The Supplier agrees to resolve any claims with thc CP within one week of thc claim.

34.0 DUTIES/TAXES

Deliveries of goods subject to the Purchasing Agreement shall be F.O.B. CP unless otherwise specified by the CP. All prices presented to CPs shall be the final purchase price and shall include any applicable duties/taxes.

35.0 INVOICING

The Supplier service invoice will clearly separate costs for parts, labor, and travel. Invoices will be sent to thc CP within thirty days of completed service or purchase. Terms of the invoice will allow thc CP a minimum of thirty days for payment, and will be sent to the CP according to the policies and procedures developed by each individual hospital.

36.0 ORDER CANCELLATION/RESTOCKING

The Bidder shall indicate in writing in the Bid, that the CPs will not be charged any cancellation or restocking fees. Service parts could be returned without any fee if they are returned within a

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reasonable time period after delivery, arc still enclosed in the original packaging material, and are returned in new condition.

37.0 REFERENCES

The Supplier shall make available to the CP a list of all installations (including UHC members) of the Supplier's identical goods and services included in the Purchasing Agreement within a fifty mile radius of the CP. The list shall include contact names, titles, telephone numbers, types of installation, and the model n-tuber of the equipment if not identical to that listed on the Purchasing Agreement. UHCSC and the CPs reserve the right to contact any of the Supplier's references without notice to or authorization from the Supplier.

38.0 ENVIRONMENTAL ISSUES

The Supplier shall bear all costs associated with the removal of packaging, crating, and other material associated with the installation of the equipment. The Supplier, at the discretion of the CP, shall remove the retired equipment at the Supplier's expense. The Supplier will include in the bid any cost reductions, rebates, credits, etc. associated with recyclable materials/supplies returned to the Supplier, as well as, price reductions for acquisition of recycled or remanufactured materials/supplies obtained from the Supplier. The cost of waste disposal will be considered when purchasing commodities from the Supplier.

39.0 REPORTS TO UHCSC

The Supplier shall submit a complete price catalogue to UHCSC and maintain the price list with updates as released. Quarterly agreement activity reports shall be sent to UHCSC indicating all purchases by CPs, and including at minimum equipment model n-tuber, list price, net price, and hospital purchase order number. Referenced quotations shall be provided to UHCSC, as requested, for all capital equipment purchases made by the CPs.

40.0 SUPPLIES

Supplies necessary for the operation of the equipment in the Purchasing Agreement shall be made available by the Supplier to the CP at the supplier's published price list with any applicable discount for the duration of the Purchasing Agreement. The Supplier shall state whether these parts are only available through the Supplier, or whether they are available from other sources. The Supplier shall not hold the CP liable in any way if the CP chooses to purchase supplies from parties other then the Supplier. All warranties and guarantees shall remain in force regardless of the source from which the CP purchases supplies.

41.0 TAKEOVERS/ACQUISITIONS/MERGERS

The Purchasing Agreement and terms of the Purchasing Agreement shall remain in force for the term of the Purchasing Agreement notwithstanding any takeover, acquisition, or merger of., or by, the Supplier.

12.


42.0 SUPPLIER ACCEPTANCE OF TERMS

SUPPLIER:

TITLE:

ADDRESS:


SIGNATURE:

DATE:

REVISED 12/95

13.


EXHIBIT 10.8

BEST AND FINAL PROPOSAL

FOR:

GSA SUPPLY CONTRACT

JUNE 13, 1997

SOLICITATION #: M3-QI-91 OSIII

SOLICITATION ISSUED BY: VA NATIONAL ACQUISITION CENTER (90N-M3), 1ST AVENUE, 1 BLOCK NORTH OF 22ND STREET, BUILDING 37, HINES, IL 60141

THIS PROPOSAL OR QUOTATION INCLUDES DATA THAT SHALL NOT BE DISCLOSED OUTSIDE THE GOVERNMENT AND SHALL NOT BE DUPLICATED, USED OR DISCLOSED-IN WHOLE OR IN PART-FOR ANY PURPOSE OTHER THAN TO EVALUATE THIS PROPOSAL OR QUOTATION. IF, HOWEVER, A CONTRACT IS AWARDED TO THIS OFFEROR OR QUOTER AS A RESULT OF OR IN CONNECTION WITH THE SUBMISSION OF THIS DATA, THE GOVERNMENT SHALL HAVE THE RIGHT TO DUPLICATE, USE, OR DISCLOSE THE DATA TO THE EXTENT PROVIDED IN THE RESULTING CONTRACT. THIS RESTRICTION DOES NOT LIMIT THE GOVERNMENT'S RIGHT TO USE INFORMATION CONTAINED IN THIS DATA IF IT IS OBTAINED FROM ANOTHER SOURCE WITHOUT RESTRICTION. THE DATA SUBJECT TO THIS RESTRICTION ARE CONTAINED IN SHEETS 1-41 AND THE ATTACHED EXHIBITS A-H REFERENCED IN THIS RFP RESPONSE.


QUANTITY DISCOUNT(S)

OmniCell is offering a flat discount off of the purchase and rental prices listed in Exhibit B REGARDLESS OF THE ORDER VOLUME.

- Both our supply and pharmacy automation products are offered to the Government at the same discount.

- The discount includes the discount offered in our original solicitation bid under Part IV-Representations and Instructions, Section M-Evaluation Factors for Award, Part B-Discount and Sales Information page 140.

- NOTE: NET RENTAL AND PURCHASE PRICES ARE LISTED IN EXHIBIT D.

BASIC DISCOUNT(S)

NON-VALIDATION DISCOUNT

OmniCell is offering an additional net discount to individual facilities which choose to purchase the OmniCell system without a validation (i.e., free-use-period, trial, evaluation).

COMBINATION COMMITMENT DISCOUNT

Government facilities will receive an additional net discount by committing to buy OmniCell's supply and pharmacy system. If the facility has already installed OmniCell's supply or pharmacy system and chooses to install the other system, thee net discount will be awarded on a forward going basis once the member facility purchases the additional systems.

DISCOUNTS ON SERVICE

OmniCell does NOT normally discount service prices to customers. The following discounts are offered to government facilities off of the service list prices in EXHIBIT B.

- NOTE: DISCOUNTED SERVICE PRICES ARE LISTED IN EXHIBIT E.

- EXTENDED SERVICE DISCOUNT: OmniCell offers a discount (rounded to nearest $5) off of the Extended Service list prices for all government facilities regardless of the volume of equipment ordered.

- BIO-MED TRAINING DISCOUNT: OmniCell Basic and Extended service list prices (12 month fixed price) will be discounted by _____ (rounded to nearest $5) if a government facility agrees to the following:

1. Send a minimum of two Bio-reed personnel to OmniCell's headquarters for system administrator training.

1.


2. These two OmniCell trained personnel must be available to perform on-site maintenance services normally performed by OmniCell personnel. This will include all services that OmniCell is able to train hospital bio-med personnel to perform.

3. The first call follow-up from the OmniCell help desk will go to the government facility's bio-med service personnel.

OmniCell will provide training in Palo Alto, California, for two bio-med personnel at no charge for the training class (normally a $1,000 per person fee). The government facility will pay the class fee for additional personnel. The government facility will pay for all travel and lodging expenses incurred by its personnel.

TEMPORARY PRICE REDUCTIONS (PROMOTIONS(S))

6 MONTH PROMOTIONAL DISCOUNT

Government facilities will receive an additional net promotional discount for the first 6 months after our GSA contract is executed.

DRAWER PROMOTIONAL PERIOD

We would like to offer the government a promotional period on the following pharmacy drawers. The promotional reduction to list price is available through September 30, 1997.

                                           CURRENT PRICE LIST             PROMO PRICE
Locking Drawer                                   $3,000                      $2,000
Return Drawer                                    $2,500                      $2,000
Sensing Drawer                                   $2,000                      $1,500

PROMPT PAYMENT DISCOUNT

OmniCell does not offer a prompt payment discount.

END OF CONTRACT-ADDITIONAL DISCOUNT (AGGREGATE)(1)

OmniCell does not offer any end of contract discount.

SMALL REQUIREMENT (MINIMUM ORDER)

There is no minimum order.


(1) End of Contract Additional Discount, Solicitation Offer, Page 139, M3-Q1-91.

2.


FOB POINT(2)

OmniCell will ship equipment to government facilities in the 48 contiguous States and the District of Columbia F.O.B destination as specified in the contract.

DELIVERY TIME(3)

Delivery time is 90 days After Receipt of Order (ARO).

EMERGENCY DELIVERY

OmniCell agrees with term "I-FSS-140-B, Urgent Requirements (Jan 1994), page 8 of Amendment 5" for emergency delivery purposes.

FOREIGN ITEMS(4)

NONE

RETURN/EXCHANGE GOODS POLICY

NONE

WARRANTY(5)

OmniCell offers all warranties and service through a renewable service agreement. The renewable service agreement covers defectives in workmanship or materials for the duration of the service term. The standard service term is 12 months. The service contract is renewed on an annual basis.

We are offering the Government a 12 month warranty period. Below are listed the terms from OmniCell's Master Service Agreement which constitute the one year warranty we are offering the Government. If a Government facility would like any of the other terms from the Master Service Agreement they must sign the optional Master Service Agreement and pay for the additional services at the GSA service prices. The warranty consists of terms (5) Installation, (7) Interfaces, (8) Training, and (10) Limited Warranties.

WARRANTY TERMS

5. INSTALLATION. You agree to execute an OmniCell Installation Worksheet prior to any Equipment installation. We shall make reasonable commercial efforts to complete the installation of such Equipment in a timely manner upon receipt of confirmation that the Equipment has arrived at your location. Prior to arrival of the Equipment at your location, you agree to provide adequate space for the Equipment under conditions suitable to the proper functioning of the Equipment. In addition, you agree to provide clean commercial power including our specified Uninterrupted


(2) FOB terms, Amendment 4, Page 10 and 11, M3-Q1-91.
(3) Order terms, Amendment 2, Page 2, M3-Q1-91.
(4) Manufacturing Facilities/Place of Performance, Solicitation Offer, Page 127, M3-Q 1-91.
(5) Warranty, Solicitation Offer, Page 138, M3-Q1-91.

3.


Power Supply ("UPS") and the necessary communication cable (telephone extension cable and jack or Local Area Network ("LAN") connection and jack) to each location where the Equipment will be placed. You agree to provide a dedicated direct inward dial (DID) communication line for remote access for service ("RAS") at the location of the OmniCenter. If this dedicated R. AS line is not provided, service will be charged at twice the quoted monthly fee amount for the OmniCenter. We shall provide all installation personnel, tools, equipment, and material necessary to install the Equipment and will install it in a workmanlike manner.

7. INTERFACES. You agree to provide service for your side of any Software or Hardware interfaces.

A. SOFTWARE AND SERVICE AT NO CHARGE. OmniCell agrees to provide the following initial interface Software and services at no charge to you within the first twelve
(12) months from the date of this Master Service Agreement.

I. ADT INTERFACE: We will provide at no charge, Software which will run on the OmniCell System and will receive Admitting, Discharge, Transfer ("ADT") messages from your ADT/Patient Management system. These ADT messages will be processed by the OmniCell System to update patient information in the OmniCell database. The format of the ADT interface messages, and the communications mechanism will be mutually agreed upon by us, the ADT/Patient Management system vendor, and you. Software installation, software set-up, and up to 20 hours of testing are included as part of our side of the ADT interface. We are not responsible for producing and transmitting ADT interface records from the ADT system. We are only responsible for receiving ADT interface records and processing the records on the OmniCell System. We are not responsible for development, installation, set-up, or testing of the ADT system side of the ADT interface.

II. PATIENT CHARGE INTERFACE: OmniCell will provide at no charge, Software which will run on the OmniCell System and will produce interface records for each chargeable transaction that occurs on the OmniCell System. These patient charge interface records will be transmitted to the Customer's Patient Accounting system in real-time, or as a daily batch. he format of the Patient Charge interface messages, and the communications mechanism will be mutually agreed upon by us, the Patient Accounting system vendor, and you. Software installation, software set-up, and up to 20 hours of testing are included as part of our side of the Patient Charge interface. We are not responsible for the processing of the Patient Charge interface records which occurs on the Patient Accounting system. We are not responsible for development, installation, set-up, or testing of the Patient Accounting system side of the Patient Charge interface.

III. SUPPLY INVENTORY REPLENISHMENT INTERFACE: We will provide at no charge, Software which will run on the OmniCell System and will produce interface records indicating the quantities of items that are required to replenish each OmniSupplier. These Supply Inventory Replenishment interface records will be transmitted to your Materials Management system in real-time, or in batches. The format of the Supply Inventory Replenishment interface messages, and the communications mechanism will be mutually agreed upon by us, the Materials Management system vendor, and you. Software installation, software set-up, and up to 30 hours of testing are included as part of our side of the Supply Inventor, Replenishment interface. We are not responsible for the processing of the Supply Inventory Replenishment interface records which occurs on the Materials Management system. We are not responsible for development, installation, set-up, or testing of the Materials Management system side of the Supply Inventory Replenishment interface.

IV. PHARMACY TRANSACTION CHARGES: OmniCell will provide at no charge. Software which will run on the OmniCell System and will produce interface records for each chargeable pharmacy transaction that occurs on the OmniCell System. These pharmacy patient

4.


charge interface records will be transmitted to the Customer's Pharmacy system in real-time, or as a daily batch. The format of the Patient Charge interface messages, and the communications mechanism will be mutually agreed upon by us, the Pharmacy system vendor, and you. Software installation, software set-up, and up to 20 hours of testing are included as part of our side of the Pharmacy Patient Charge interface. We are not responsible for the processing of the Pharmacy Patient Charge interface records which occurs on the Pharmacy system. We are not responsible for development, installation, set-up, or testing of the Pharmacy system side of the Pharmacy Patient Charge interface.

B. CHARGEABLE SOFTWARE AND SERVICE: We will charge you for the following Software and services:

I. INTERFACE MODIFICATIONS: If you request changes to an interface after initial installation, testing, and your acceptance of that interface, a fee will be charged to you for those modifications. "Modifications" includes, but is not limited to: a) change in record format; b) change in communications mechanism; c) addition of new record types; and d) addition of new processing functionality.

II. ADDITIONAL INTERFACES: Any interfaces in addition to the ADT Interface, Patient Charge Interface, and Supply Inventory Replenishment Interface, and including initial interfaces not written within the first twelve (12) months described in Section A above will be charged to you at a rate of $5,000 per interface. The specifications for each interface will be mutually agreed upon by us, the vendor responsible for the other side of the interface, and you.

III. REPLACEMENT OF AN EXISTING INTERFACE: If an existing interface between the OmniCell System and one of your Hospital Information System ("HIS") systems must be replaced by a new interface, the implementation of the replacement interface will be charged to you at a rate of $5,000. The specifications for the replacement interface must be collectively agreed upon by us, the vendor responsible for the other side of the interface, and you.

8. TRAINING. You agree to select, and we shall provide training in the management, maintenance and use of the Equipment to, one of your employees who is qualified to act as "System Administrator." The System Administrator is responsible for administering and managing the performance of the Equipment, including maintaining the files and monitoring the performance of the Equipment. The System Administrator shall be responsible for reviewing and evaluating all end-user requests for service and informing us of any problems which the System Administrator cannot resolve. We shall provide training at our Headquarters location for one System Administrator in the system management and use of the Equipment. We shall also provide reasonable end-user training for each location of Equipment. You agree to also select one of our employees as a back-up System Administrator.

MANDATORY TRAINING: Government facilities are required to have appropriate personnel participate in a week of training prior to the clinical use of the system. The "System Administrator Training Course" is held at OmniCell's headquarters in Palo Alto, California. Training must be completed prior to the clinical use of the system in order to enforce any warranty and indemnification claims. OmniCell will provide in-service and clinical training related to the Equipment ("Train the Trainer"). OmniCell will maintain a properly qualified training staff to provide such in-service and clinical training, and it shall be the responsibility of each Government Facility to ensure that its appropriate personnel attend and complete such training. Appropriate personnel must complete training prior to the clinical use of the system.

10. LIMITED WARRANTIES. We hereby warrant that, if the Equipment is defective in workmanship or materials, or if the Software we provide is defective during the term of this Agreement, we shall repair or replace, at our option, the defective part, parts, Software, or Equipment, and you agree

5.


that such repair or replacement shall be your sole remedy and recourse in the event of such defect. THE WARRANTY GRANTED HEREIN DOES NOT COVER ANY PRODUCTS THAT YOU MAY USE, CREATE, OR INSTALL THAT IS NOT PROVIDED BY US. THIS WARRANTY IS IN LIEU OF ALL OTHER WARRANTIES, EXPRESSED OR IMPLIED, INCLUDING WARRANTIES OF MERCHANTABILITY, NONINFRINGEMENT, USE AND FITNESS FOR A PARTICULAR PURPOSE. THIS WARRANTY SHALL BE VOID AND OF NO FORCE OR EFFECT IF WE DETERMINE THAT ANY EQUIPMENT OR SOFTWARE DEFECT IS DUE TO YOUR MISUSE OR NEGLECT OR ANY UNAUTHORIZED REPAIRS OR TAMPERING WITH THE EQUIPMENT OR SOFTWARE.

INSTALLATION(6)

User manuals will be provided at the time of purchase in accordance with the contract terms. In addition, during the site visit, OmniCell personnel will meet with the healthcare facility's personnel to review the installation and training process. A summary of the installation requirements are listed below.

NOTE: An installation procedure and checklist is attached in Exhibit G.

ELECTRICAL, COMMUNICATIONS AND DATA REQUIREMENTS

There are several facility requirements which must be met in order for the OmniCell System to be installed. During our site visit we will inspect each area to ensure that the necessary resources are available. A pre-installation checklist is attached for your review.

/X/ ELECTRICAL REQUIREMENTS-Provide electrical service according to OmniCell's specifications of one outlet for each OmniSupplier control unit and auxiliary unit, and the OmniCenter site. The hospital is responsible for all electrical and cabling charges. All OmniSupplier control units and auxiliary units and OmniCenter computers use ll0VAC.

/X/ TELEPHONE REQUIREMENTS-Provide telephone installation according to OmniCell's specifications of one telephone line per OmniSupplier site, and three (3) to five (5) telephone lines per OmniCenter XPC. The lines needed are as follows:

1. One DID (Direct inward dial)-to conduct Remote Diagnostics

2. Analog phone lines to call the units. (In addition to the DID line)

An OmniCell Project Manager will consult with you to ensure that adequate phone lines are available.

/X/ NETWORK REQUIREMENTS-OmniCell supports network connections between the OmniSuppliers and the OmniCenter XPC. For those customers planning to transfer to network connections, it is recommended that, if new phone wiring


(6) Installation and Instruction, Solicitation Offer, page 139, M3-Q1-91.

6.


is installed, Cat 5 wiring be used. Termination for the Cat 5 wiring may still be to non-EtherNet standards during the interim, but the Cat 5 wiring will accommodate the future network conversion. Alternatively, the customer may choose to provide both RJll phone jacks and RJ45 EtherNet jacks.

ENVIRONMENTAL REQUIREMENTS

/X/ Provide appropriate clearances around each unit. Adequate air flow must not be blocked

/X/ Provide a floor plan showing the location of where each OmniSupplier will be placed

/X/ Regulate the temperature range from 50DEG. to 95DEG. F

/X/ Maintain a humidity range of 08%-80% without condensation.

EQUIPMENT AND INVENTORY REQUIREMENTS

Provide a list of items, item IDs, charge IDs, predicted par levels, manufacturer name and number, unit of issue and unit of stock for each OmniSupplier location in one of the following file formats: Excel (.xls); Lotus 1-2-3 (.wk*); or database (.dbf)

OR

Provide a Master Item list with predicted par levels, unit of issue and unit of stock for each OmniSupplier location in one of the following file formats: Excel
(.xls); Lotus 1-2-3 (.wk*); or database (.dbf)

/X/ Provide access to items that may require measuring, before configuration of the OmniSupplier.

/X/ Gather the inventory items to be stocked in each OmniSupplier prior to the OmniSupplier's setup for in-service (normally 2-3 days prior to in-service.)

/X/ Provide user IDs for personnel who will be using the System and identify each users System access level.

CONFIGURATION

Each OmniSupplier cabinet is custom built for the unique needs of each point-of-use area. In order to develop the cabinet configuration, we obtain PAR lists on disk for all proposed areas and conduct a configuration analysis using our proprietary JMAX technology and our database of the exact dimensions of tens of thousands of items. Our manufacturing process requires that each configuration is reviewed and signed off by hospital staff (i.e., Director of Materials, D/rector of Pharmacy, Director of Nursing) in order to build and ship the equipment.

7.


The initial OmniSupplier configuration is provided with the purchase of the cabinet. Training is provided to allow hospital personnel to reconfigure OmniSupplier cabinets if required. Additional parts required for reconfigurations can be purchased from OmniCell using the part list in Exhibit C. Any facility requesting reconfiguration services from OmniCell field support personnel will be charged the prevailing field service charge amount.

TRAINING(7)

Below are listed OmniCell's training policies for the Government. These are more favorable than those offered to commercial customers.

SYSTEM ADMINISTRATOR TRAINING

Due to the technical nature of the network environment, OmniCell requires that one person from the facility, who is familiar with systems, be appointed as a OmniCell System Administrator.

One System Administrator should be selected for each OmniCell system that is implemented-one for pharmacy and one for supply system. An additional System Administrator should also be selected for backup purposes. The System Administrators are responsible for working with OmniCell in learning basic troubleshooting and maintenance skills for the OmniCell System. These people should be comfortable with computers and have some knowledge of networks. All training courses are available to the System Administrator. All training courses are provided at OmniCell's headquarters in Palo Alto, CA.

TRAVEL AND EXPENSES

OmniCell will cover the expenses of the initial Government facility employees attending System Administrator Training.

/X/ INITIAL GOVERNMENT EMPLOYEES: Each Government facility may send a maximum of two employees if either supply systems or pharmacy systems are purchased, or a maximum of four employees if BOTH supply AND pharmacy systems are purchased. The facility will cover all travel expenses for any additional trainees.

/X/ TRAVEL ARRANGEMENTS: All travel arrangements must be made by OmniCell Technologies. Attendees are required to provide OmniCell with a 30 day notice of training attendance in order to schedule training and travel. Training and travel arrangements cannot be provided with less than the 30 day notice. All travel arrangements are non-refundable. If a Government employee cancels training attendance, OmniCell will cover the costs of canceled attendance and the Government employee will have to cover any future training and travel expenses.


(7) Installation and Instruction, Solicitation Offer, page 139, Me-Q1-91.

8.


LOCATION AND TRAINING

The actual course fee for the initial candidates (maximum of two or four) will be provided at no charge. Additional trainees must prepay the $1,000 training fee person and will pay all travel, lodging and miscellaneous expenses.

/X/ SYSTEM ADMINISTRATOR TRAINING I: (System Administrator) The System Administrator Training course covers OmniCell Product Overview, Nurse Functions, Head Nurse Functions, Restock Functions, Data Entry Clerk Functions, Material Manager Functions, Reports Analysis, and "Train the Trainer" overview.

/X/ SYSTEM ADMINISTRATOR TRAINING II: (System Administrator) The objectives of this course are as follows: participants will be able to identify all software and hardware components of the OmniCenter and OmniSupplier, be able to reconfigure an OmniSupplier, monitor all ADT, Inventory and Billing interfaces and perform first level trouble shooting if a problem occurs.

BIO-MED TRAINING

See "Discounts on Service" above for the discount available for participating in the Bio-Med Training program. The government facility must assist in scheduling BioMed's approval to operate the OmniCell system in the hospital. OmniCell suggests that a minimum of two OmniCell-trained Bio-med personnel be available to perform on-site maintenance services normally performed by OmniCell personnel. This will include all services that OmniCell is able to train Bio-med personnel to perform. The first call follow-up from the OmniCell help desk will go to Bio-med service personnel. OmniCell will provide training in Palo Alto, CA, for two Bio-med personnel at no charge for the training class (normally a $1,000 per person fee). Hospitals are responsible for all travel and lodging expenses incurred by its personnel.

TRAIN THE TRAINER PROGRAM

OmniCell employs a "train the trainer" program. All training provided to the facility staff will be provided to designated people by the healthcare institution who will train additional personnel throughout the installation of the system.

/X/ ADDITIONAL SYSTEMS: As additional OmniSupplier cabinets are installed in the facility, the facility's trainers will provide training to ensure that nurses and restock personnel can operate the system.

/X/ TRAINING VIDEOS: Training videos are provided with the acquisition of the system to assist with new employee training.

/X/ TRAINING FOR SOFTWARE UPDATES: Software release notes are provided with the installation of software updates. These release notes are provided to the facility trainers so that they can educate users (i.e., nurses, restock personnel, etc.) on new features and functionality.

9.


SERVICE AGREEMENT

OmniCell offers customers a choice of selecting from one of two service plans:
the Basic Service Plan and the Extended Service Plan. Service levels provided under each plan are detailed below.

OmniCell's standard Service Agreement is attached.

BASIC SERVICE PLAN

The following details the important features of the Basic Service Plan:

-----------------------------------------------------------------------------------------------------------------------
BASIC SERVICE PLAN                                    DISABLED SYSTEM/HARDWARE OR SOFTWARE MALFUNCTION
-----------------------------------------------------------------------------------------------------------------------
Phone Support                                         24 hours/Day
                                                      7 Days/Week
-----------------------------------------------------------------------------------------------------------------------
Response Time                                         30 Minutes
         Phone:                                       (Monday-Friday 5AM - 6PM PST)
                                                      2 Hours
                                                      (Monday-Friday 6PM - 5AM PST & Saturday-Sunday)
-----------------------------------------------------------------------------------------------------------------------
         On-Site:                                     Within 24 Hours for Disabled System
                                                      Within 48 Hours for Hardware or Software Malfunction
-----------------------------------------------------------------------------------------------------------------------
On-Site Availability (if necessary)                   24 Hours/Day, 7 Days/Week for Disabled System
                                                       9AM - 5PM Monday-Friday for Hardware or Software Malfunction
-----------------------------------------------------------------------------------------------------------------------
Repair/Replacement Parts                              Included (Except in cases of equipment misuse)
-----------------------------------------------------------------------------------------------------------------------
Remote Software & Interface Diagnostics               Included
-----------------------------------------------------------------------------------------------------------------------
System Administrator Training                         Two training slots no-charge.  $1,000 per additional
                                                      attendee.  (Travel and expenses are included for two attendees
                                                      only)
-----------------------------------------------------------------------------------------------------------------------

EXTENDED SERVICE PLAN

The following details the important features of the Extended Service Plan:

-----------------------------------------------------------------------------------------------------------------------
EXTENDED SERVICE PLAN                                   DISABLED SYSTEM/HARDWARE OR SOFTWARE MALFUNCTION
-----------------------------------------------------------------------------------------------------------------------
Phone Support                                           24 Hours/Day
                                                        7 Days/Week
-----------------------------------------------------------------------------------------------------------------------
Response Time                                           30 Minutes
         Phone:                                         (Monday-Friday 5AM - 6PM PST)
         On-Site:                                       Within 24 hours
-----------------------------------------------------------------------------------------------------------------------
On-Site Availability (if necessary)                     24 Hours/Day
                                                        7 Days/Week
-----------------------------------------------------------------------------------------------------------------------
Repair/Replacement Parts                                Included (Except in cases of equipment misuse)
-----------------------------------------------------------------------------------------------------------------------
Remote Software & Interface Diagnostics                 Included
-----------------------------------------------------------------------------------------------------------------------
Interface Support (ADT, Billing & Inventory)            Included
-----------------------------------------------------------------------------------------------------------------------
Backup Server                                           Included
-----------------------------------------------------------------------------------------------------------------------
Annual System Checkup                                   Included
-----------------------------------------------------------------------------------------------------------------------
Three Days - System Optimization Consulting             Included
-----------------------------------------------------------------------------------------------------------------------
System Administrator Training                           Two attendees at no charge per every 20 frames purchased
                                                        $1,000 per additional attendee.  (Travel and expenses are
                                                        included for two attendees only)
-----------------------------------------------------------------------------------------------------------------------

10.


ADDITIONAL SERVICE

OmniCell provides the required personnel to install the OmniCell system. If the systems need to be reconfigured, modified or moved, OmniCell field personnel can assist for the applicable fee-based service charge listed below. The charts below list the type of items which will require a PO for completion by OmniCell:

-----------------------------------------------------------------------------------------------------------------------
SERVICE ITEM                                                               SERVICE ESTIMATE
-----------------------------------------------------------------------------------------------------------------------
Misuse of OmniSupplier Hardware (broken button bars, plexiglass, etc.)*    $675 minimum plus $150 per hour after
                                                                           four hours - Plus parts
-----------------------------------------------------------------------------------------------------------------------
Computer Damage Due to Customer Failure to Install UPS Protection for      $675 minimum plus $150 per hour after
OmniSupplier Units and OmniCenter Server (correct corrupt files, etc.)     four hours - Plus parts
-----------------------------------------------------------------------------------------------------------------------
Physically Move OmniSupplier Units or OmniCenter Server After Live Date    $675 minimum plus $150 per hour after
                                                                           four hours
-----------------------------------------------------------------------------------------------------------------------
Reconfiguration of OmniSupplier Units*                                     $675 minimum plus $150 per hour after
                                                                           four hours - Plus parts
-----------------------------------------------------------------------------------------------------------------------
Field Installation of Product Modules                                      $500 plus cost of product module
-----------------------------------------------------------------------------------------------------------------------
New Interface                                                              $5,000 to $20,000
-----------------------------------------------------------------------------------------------------------------------
Modification of Existing Interface Code                                    $1,000 to $3,000
-----------------------------------------------------------------------------------------------------------------------
Database Management*                                                       $675 minimum plus $150 per hour after
                                                                           four hours
-----------------------------------------------------------------------------------------------------------------------
Reconnecting OmniSupplier Units to Power or Communications*                $675 minimum plus $150 per hour after
                                                                           four hours
-----------------------------------------------------------------------------------------------------------------------
On-Site Performance of System Maintenance Due to Customer Failure to       $675 minimum plus $150 per hour after
Install a RAS Connection to the OmniCenter Server                          four hours - Plus parts
-----------------------------------------------------------------------------------------------------------------------

* The System Administrator(s) from your hospital have been trained by qualified OmniCell personnel to perform these Service Items.

ADDITIONAL AVAILABLE FEE-BASED SERVICES

-----------------------------------------------------------------------------------------------------------------------
FEE-BASED SERVICE                             MINIMUM 1/2 DAY CHARGE        ADDITIONAL CHARGE
-----------------------------------------------------------------------------------------------------------------------
Re-training                                   $675                          $150/hour after four hours
-----------------------------------------------------------------------------------------------------------------------
System Administrator Functions                $675                          $150/hour after four hours
-----------------------------------------------------------------------------------------------------------------------
Inventory Management Consulting               $1,250                        $2,000/Day
-----------------------------------------------------------------------------------------------------------------------
Backup Server (Included with Extended Plan)                                 $15,000 with $120/month service fee
-----------------------------------------------------------------------------------------------------------------------
Annual System Checkup (Included with                                        $1,200/OmniSupplier PC box
Extended Plan)
-----------------------------------------------------------------------------------------------------------------------
Three Days - System Optimization Consulting                                 $6,000
(Included with Extended Plan)
-----------------------------------------------------------------------------------------------------------------------

ACCEPTANCE OF GOVERNMENT CREDIT CARDS(8)

We elect not to accept the government commercial credit card for payment for supplied issued against the schedule contract.


(8) Acceptance of Government Commercial Credit Card, Solicitation Offer, page 100, M3-Q1-91.

11.


TRACKING CUSTOMER AND PRICE/DISCOUNT RELATIONSHIP

The customer designated as the "tracking customer" will be Premier. The government and OmniCell Technologies, Inc. agree that if during the course of this contract, for any sale under the Maximum Order (MO), the net price of any awarded item is reduced to Premier, then the government net price will be reduced proportionally.

SUMMARY-PREMIER OFFER FOR DUAL SUPPLY CONTRACT

For Premier, we will receive a supply only dual award where our products will be listed jointly with Baxter Healthcare Corp.'s pharmacy SureMed products. Customers will be able to buy OmniCell's pharmacy products, as we have added our pharmacy products to the contract at the same discount as the supply products.

1. Award Type-Non-Exclusive Supply Contract

2. Products Listed-Supply and Pharmacy products

3. Product Discount Application-same discounts are applied to pharmacy and supply products.

4. Volume Discounts (Pharmacy and Supply Products)

- $0 to $200,000 = _____

- $200,001 to $1,000,000 = ______

- Volume over $1,000,000 = _____

5. Non-Validation Discount

6. Combination Discount for Buying OmniCell Supply AND SureMed or OmniCell Pharmacy = _______

7. Exclusivity Discount = ______. This two percent net discount applies for Premier members with a minimum of three acute care hospitals who sign up to utilize OmniCell as its exclusive automation vendor. Since no part of the GSA contract is exclusive, this discount should not be used for the purposes of price comparison; however, we have illustrated both price comparison scenarios. The Government net price is lower than the net Premier pricing even with the exclusivity discount included.

8. Service Discount = _____ on Bio-Med program only

9. Warranty = none

10. FOB = OmniCell (Customers pay shipping charges)

11. Training Discount NONE

12.


SUMMARY-GOVERNMENT OFFER FOR NON-EXCLUSIVE PHARMACY CONTRACT

For the Government, we make the offer to receive a non-exclusive pharmacy award. As with the Premier contract, customers will be able to buy both OmniCell's pharmacy and supply products, as we have listed both product lines on the contract. The same discounts will be applied to all pharmacy and supply products.

1. Award Type-Non-Exclusive Pharmacy Contract

2. Products Listed-Pharmacy and Supply products

3. Product Discount Application-same discounts are applied to pharmacy and supply products.

4. Volume Discounts (Pharmacy and Supply Products)

- $0 to $200,000 = _____

- $200,001 to $1,000,000 = _____

- Volume over $1,000,000 = _____

5. Non-Validation Discount = _____

6. Combination Discount for Buying OmniCell pharmacy and supply = _____

7. Promotional Discount for first 6 months of contract = _____

8. Service Discounts

- _____ on Extended service prices

- _____ on Bio-Med program

9. Warranty = one (1) year warranty is offered

10. FOB = Destination

11. Training Discount: Two (2) System Administrators per supply or pharmacy system at no-charge, travel included (approximately a _____ discount, see calculation below).

CUMULATIVE DISCOUNT AND VALUE OF INCENTIVES

The net cumulative discount to the government and the value of all incentives is calculated below.

DISCOUNT (S) OFF PRICE LIST

The net discount resulting from the government discount and all incentive
discounts is _____ off of OmniCell's commercial price list. This discount
calculation does not take into account

13.


1. The 1 year of warranty not offered to other customers,

2. No-charge for shipping,

3. Discounts on service,

4. Training Discounts.

----------------------------------------------------------------------
Discount/Incentive                               Percent          Net
----------------------------------------------------------------------
Government Discount                               ___%            ___%
----------------------------------------------------------------------
Non-Validation Discount                           ___%            ___%
----------------------------------------------------------------------
Combination Discount                              ___%            ___%
----------------------------------------------------------------------
6 Month Promo Period                              ___%            ___%
----------------------------------------------------------------------
Government Net Discount                           ___%            ___%
----------------------------------------------------------------------

VALUE OF WARRANTY AS A DISCOUNT

The value of the warranty can be expressed as the value of each annual service contract. For example, the Basic Service price for a 3 Cell OmniSupplier is $_______ per month. The extended one year contract is ______. The total purchase price and extended one year service contract for a 3 Cell OmniSupplier is ____ plus _____ or _____. A one year no-charge warranty period represents _______ discount off of the total first year cost of the 3 Cell OmniSupplier.

VALUE OF SHIPPING AS A DISCOUNT

OmniCell will ship equipment to government facilities in the 48 contiguous States and the District of Columbia F.O.B destination as specified in the contract.(9)

The value of shipping can be expressed as a discount from the list price and shipping to any point in the 48 contiguous states. Our estimated shipping costs to different locations in the country are listed below. Shipping costs for units shipped individually and in truckloads are listed. The average shipping cost per cell is ________. A 3 Cell OmniSupplier would cost approximately $_____ to ship. The extended purchase and shipping cost of a 3 Cell is _______. By incurring the cost of shipping, OmniCell is effectively offering the government a ______ discount off of the 3 Cell OmniSupplier cost.

--------------------------------------------------------------------------------------------------------
                                               Approximate Cost Per   Approximate Cost Per
                                                Cell if Shipped in     Call if Shipped by
           Area                   Miles            Single Units            Truck Load           Average
--------------------------------------------------------------------------------------------------------
Los Angeles                        400                 $120                   $ 70                $ 95
--------------------------------------------------------------------------------------------------------
Denver                            1226                 $120                   $ 85                $103
--------------------------------------------------------------------------------------------------------
Chicago                           2155                 $125                   $115                $120
--------------------------------------------------------------------------------------------------------
New York                          2944                 S165                   $145                $155
--------------------------------------------------------------------------------------------------------
AVERAGE                                                                                           $118
--------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------


(9) 9 FOB terms Amendment 4. Page 10 and 11, M3-Q1-91.

14.


VALUE OF T&E AS A DISCOUNT

The value of Travel and Expenses (T&E) for System Administrator training can be expressed as a discount from the total cost of the system. Our estimated costs of one attendee at a week long system administrator training class is ______ per attendee. The purchase price for an average sale of fifteen (15) are shown below cabinets (Supply _____ Pharmacy RX _____ and Combo _______). By incurring the cost of T&E, Omnicell is effectively offering the government a _______ to ___ discount off of the 3 Cell OmniSupplier net quote.

---------------------------------------------------------------------------------------
T&E                                          SUPPLY            RX              COMBO
---------------------------------------------------------------------------------------
People                                             2                2                4
---------------------------------------------------------------------------------------
Cost                                       $   2,500         $  2,500        $   2,500
---------------------------------------------------------------------------------------
Total                                      $   5,000         $  5,000        $  10,000
---------------------------------------------------------------------------------------

---------------------------------------------------------------------------------------
QUOTE                                      SUPPLY (1)        RX (2)          COMBO (3)
---------------------------------------------------------------------------------------
Unit Price                                 $  21,000        $  29,000        $  41.000
---------------------------------------------------------------------------------------
Average units/sale                                15               15               15
---------------------------------------------------------------------------------------
Average Sale                               $ 315,000        $ 435,000        $ 615,000
---------------------------------------------------------------------------------------
Volume                                         18.00%           18.00%           18.00%
---------------------------------------------------------------------------------------
No Val                                          3.00%            3.00%            3.00%
---------------------------------------------------------------------------------------
Combo                                           0.00%            0.00%            2.00%
---------------------------------------------------------------------------------------
Promo                                           2.00%            2.00%            2.00%
---------------------------------------------------------------------------------------
Total                                          22.05%           22.05%           23.61%
---------------------------------------------------------------------------------------
Net Quote                                  $ 245,540        $ 339,079        $ 469,800
---------------------------------------------------------------------------------------
T&E                                        $   5,000        $   5,000        $  10,000
---------------------------------------------------------------------------------------
Quote net of T&E                           $ 250,540        $ 344,079        $ 479,800
---------------------------------------------------------------------------------------
T&E Discount (%)                                2.00%            1.45%            2.08%
---------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------

EQUIPMENT CONFIGURATION OF THE UNIT MODELS LISTED BY UNIT PRICE

(1) 3 Cell
(2) 1 Cell, 1 return drawer, 2 locking drawers, 6 sensing drawers
(3) 3 Cell, 1 return drawer, 2 locking drawers, 6 sensing drawers, RX Option

TOTAL DISCOUNT TO GOVERNMENT

The value of all discounts and incentives offered to the government is calculated below as a ______% discount off of the total cost, including annual service and shipping. The example below uses the 3 Cell OmniSupplier cabinet list price to illustrate the total discount to the Government.

--------------------------------------------------------
3 Cell List Price                            $    21,000
--------------------------------------------------------
Cost of annual service                       $       900
--------------------------------------------------------
Cost of shipping                             $       354
--------------------------------------------------------
Total 3 Cell List Cost                       $    22,254
--------------------------------------------------------

15.


---------------------------------------------------------------------
Discount/Incentive                         Percent          Net Price
---------------------------------------------------------------------
Government Discount                                   %  $
---------------------------------------------------------------------
Non-Validation Discount                               %  $
---------------------------------------------------------------------
Combo Discount                                        %  $
---------------------------------------------------------------------
Promo Discount (6 mo.)                                %  $
---------------------------------------------------------------------
Net Discount off Price List                           %  $
---------------------------------------------------------------------

---------------------------------------------------------------------
Cost of annual service                       $
---------------------------------------------------------------------
Cost of shipping                             $
---------------------------------------------------------------------
Total Additional Cost                        $
---------------------------------------------------------------------
---------------------------------------------------------------------
Net Price with Additional Costs              $
---------------------------------------------------------------------
---------------------------------------------------------------------
VALUE OF WARRANTY AND SHIPPING AS A          $
DISCOUNT
---------------------------------------------------------------------
---------------------------------------------------------------------
TOTAL DISCOUNT TO THE GOVERNMENT             %
---------------------------------------------------------------------
---------------------------------------------------------------------

NET DISCOUNT MODELS

The below model calculates the net price to the Government and Premier given:
(1) discounts offered, (2) warranty, (3) shipping, and (4) travel and expenses for System Administrator Training.

Two models are shown: one with the Premier exclusivity discount included and one with the Premier exclusivity discount removed.

The chart below summarized the net discount off of the total cost of the system.

-------------------------------------------------------------------------------------------------------------
                                                With Premier Exclusivity          Without Premier Exclusivity
                                                        Discount                             Discount
-------------------------------------------------------------------------------------------------------------
Government                                                 %                                     %
-------------------------------------------------------------------------------------------------------------
Premier                                                    %                                     %
-------------------------------------------------------------------------------------------------------------
Discount Spread                                            %                                     %
-------------------------------------------------------------------------------------------------------------

16.


DISCOUNT MODEL WITH PREMIER EXCLUSIVITY DISCOUNT

-----------------------------------------------------
3 CELL OMNISUPPLIER COST BREAK DOWN
-----------------------------------------------------
3 Cell OmniSupplier List                   $   21,000
-----------------------------------------------------
Annual Service                             $      900
-----------------------------------------------------
Shipping                                   $      354
-----------------------------------------------------
Total Cost                                 $   22,254
-----------------------------------------------------
Average units per sale                     $       15
-----------------------------------------------------
Extended Cost                              $  333,810
-----------------------------------------------------
-----------------------------------------------------

PREMIER MODEL - NON-EXCLUSIVE SUPPLY CONTRACT

---------------------------------------------------------------------------------------------------------------------
Purchase range                        < 200           Nets            200-1MM              Nets          Net Prices
---------------------------------------------------------------------------------------------------------------------
Volume disc.                                  %              %                    %                 %  $
---------------------------------------------------------------------------------------------------------------------
No validation                                 %              %                    %                 %  $
---------------------------------------------------------------------------------------------------------------------
Combo                                         %              %                    %                 %  $
---------------------------------------------------------------------------------------------------------------------
Exclusive Group                               %              %                    %                 %  $
---------------------------------------------------------------------------------------------------------------------
Over $1,000,000 additional discount                                                  OPEN
---------------------------------------------------------------------------------------------------------------------
Warranty Discount                    NONE                          NONE                                $
---------------------------------------------------------------------------------------------------------------------
Shipping Discount                    NONE                          NONE                                $
---------------------------------------------------------------------------------------------------------------------
3 Cell OmniSupplier Net Cost
---------------------------------------------------------------------------------------------------------------------
Number of Units                                                                                                    15
---------------------------------------------------------------------------------------------------------------------
T&E Cost for 2 people @ $2,500                                                                         $        5,000
---------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------
Extended Cost
---------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------
PREMIER DISCOUNT OFF OF TOTAL COST
---------------------------------------------------------------------------------------------------------------------

GOVERNMENT MODEL - NON-EXCLUSIVE PHARMACY CONTRACT
---------------------------------------------------------------------------------------------------------------------
Purchase range                        < 200           Nets            200-1MM              Nets          Net Prices
---------------------------------------------------------------------------------------------------------------------
Volume disc.                                                 %                    %                 %  $
---------------------------------------------------------------------------------------------------------------------
No validation                                                %                    %                 %  $
---------------------------------------------------------------------------------------------------------------------
Combo                                                        %                    %                 %  $
---------------------------------------------------------------------------------------------------------------------
Promotional Period                                           %                    %                 %  $
---------------------------------------------------------------------------------------------------------------------
Over $1,000,000 additional discount                                                  OPEN
---------------------------------------------------------------------------------------------------------------------
Warranty Discount                    NO-CHARGE                     NO-CHARGE                           $
---------------------------------------------------------------------------------------------------------------------
Shipping Discount                    NO-CHARGE                     NO-CHARGE                           $
---------------------------------------------------------------------------------------------------------------------
3 Cell OmniSupplier Net Cost                                                                           $
---------------------------------------------------------------------------------------------------------------------
Number of Units                                                                                                    15
---------------------------------------------------------------------------------------------------------------------
T&E Cost for 2 people @ $2,500                                  NO-CHARGE
---------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------
Extended Cost
---------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------
GOVERNMENT DISCOUNT OFF TOTAL COST
---------------------------------------------------------------------------------------------------------------------
DISCOUNT DELTA
---------------------------------------------------------------------------------------------------------------------

17.


DISCOUNT MODEL WITH PREMIER 2% EXCLUSIVITY DISCOUNT

3 CELL OMNISUPPLIER COST BREAK DOWN
-------------------------------------------------------
3 Cell OmniSupplier List                   $     21,000
-------------------------------------------------------
Annual Service                             $        900
-------------------------------------------------------
Shipping                                   $        354
-------------------------------------------------------
Total Cost                                 $     22,254
-------------------------------------------------------
Average units per sale                     $         15
-------------------------------------------------------
Extended Cost                              $    333,810
-------------------------------------------------------
-------------------------------------------------------

PREMIER MODEL - NON-EXCLUSIVE SUPPLY CONTRACT
---------------------------------------------------------------------------------------------------------------------
Purchase range                        < 200           Nets            200-1MM              Nets          Net Prices
---------------------------------------------------------------------------------------------------------------------
Volume disc.                                  %              %                    %                 %  $
---------------------------------------------------------------------------------------------------------------------
No validation                                 %              %                    %                 %  $
---------------------------------------------------------------------------------------------------------------------
Combo                                         %              %                    %                 %  $
---------------------------------------------------------------------------------------------------------------------
Exclusive Group                               %              %                    %                 %  $
---------------------------------------------------------------------------------------------------------------------
Over $1,000,000 additional discount                                                  OPEN
---------------------------------------------------------------------------------------------------------------------
Warranty Discount                    NONE                          NONE                                $
---------------------------------------------------------------------------------------------------------------------
Shipping Discount                    NONE                          NONE                                $
---------------------------------------------------------------------------------------------------------------------
3 Cell OmniSupplier Net Cost
---------------------------------------------------------------------------------------------------------------------
Number of Units                                                                                                    15
---------------------------------------------------------------------------------------------------------------------
T&E Cost for 2 people @ $2,500                                                                         $        5,000
---------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------
Extended Cost
---------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------
PREMIER DISCOUNT OFF OF TOTAL COST
---------------------------------------------------------------------------------------------------------------------

GOVERNMENT MODEL - NON-EXCLUSIVE PHARMACY CONTRACT
---------------------------------------------------------------------------------------------------------------------
Purchase range                        < 200           Nets            200-1MM              Nets          Net Prices
---------------------------------------------------------------------------------------------------------------------
Volume disc.                                                 %                    %                 %  $
---------------------------------------------------------------------------------------------------------------------
No validation                                                %                    %                 %  $
---------------------------------------------------------------------------------------------------------------------
Combo                                                        %                    %                 %  $
---------------------------------------------------------------------------------------------------------------------
Promotional Period                                           %                    %                 %  $
---------------------------------------------------------------------------------------------------------------------
Over $1,000,000 additional discount                                                  OPEN
---------------------------------------------------------------------------------------------------------------------
Warranty Discount                    NO-CHARGE                     NO-CHARGE                           $
---------------------------------------------------------------------------------------------------------------------
Shipping Discount                    NO-CHARGE                     NO-CHARGE                           $
---------------------------------------------------------------------------------------------------------------------
3 Cell OmniSupplier Net Cost                                                                           $
---------------------------------------------------------------------------------------------------------------------
Number of Units                                                                                                    15
---------------------------------------------------------------------------------------------------------------------
T&E Cost for 2 people @ $2,500                                     NO-CHARGE
---------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------
Extended Cost
---------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------
GOVERNMENT DISCOUNT OFF TOTAL COST
---------------------------------------------------------------------------------------------------------------------
DISCOUNT DELTA
---------------------------------------------------------------------------------------------------------------------

18.


OMNICELL CONTRACT TERM ADDITIONS

The following terms will be added to OmniCell's GSA contract. These terms are taken from the OmniCell Master Purchase Agreement and have been modified per prior discussions for inclusion in this contract.

PURCHASE TERMS

You agree to purchase from us certain equipment (hereinafter "Equipment") and to license from us the accompanying software (as herein defined) as more fully described on the attached Supplement to Master Purchase Agreement ("Supplement") which is incorporated herein and any subsequent Supplements entered into by you and us, on the terms and conditions set forth herein. You agree to pay to us the purchase price shown below for each unit of Equipment as set forth on each Supplement. For purposes of this Agreement, Equipment will also include all replacement parts for the Equipment which you may receive under the Master Service Agreement you have entered into with us in connection with this Agreement. All Equipment you order will be new unless otherwise noted as "used" or "reconditioned" on the relevant Supplement.

ADDITIONAL EQUIPMENT

If you would like to add OmniCell Equipment to your system, we shall send you a Supplement listing such additional Equipment ("Additional Equipment") and the purchase price per unit. Upon execution of the Supplement, we will deliver the Additional Equipment listed thereon in accordance with the terms of the FSS Contract. All terms of this FSS Contract shall apply to Additional Equipment listed on any mutually executed Supplement(s).

LOSS AND DAMAGE

You agree to assume and bear the entire risk of casualty, or damage to the equipment from any cause whatsoever from the date of delivery of the equipment to your premises. No casualty or damage shall relieve you from the obligation to make payment or to comply with any other obligation under this agreement.

LIMITATION OF LIABILITY

In no event shall OmniCell be liable for any indirect, incidental, special or consequential damages, including loss of profits, revenue, data or use, incurred by any of government facility or any third party, whether in an action in contract or tort, or based on a warranty.

OmniCell will guarantee a 95% cumulative up-time for all equipment in each Government facility. For each month that passes, where the 95% up-time is not maintained, OmniCell agrees to waive the service fees for one month.

For example, if a facility has 10 units installed, they would have 7,200 hours of operation in a thirty day month. If the facility has more that 360 hours (5%) of downtime (as calculated by the facility), the service fees for the entire installation would be waived for one month.

19.


SOFTWARE

Subject to the terms of the Agreement, we grant to you the right to use one copy, only of any software provided to you by us relating to the operation, information storage and retrieval, record keeping, and communication of the Equipment (the "Software") only in the manner described in the written materials accompanying the Software and solely as installed on the Equipment in object code form. You agree not to use it in any other way. You agree that the structure and organization of the Software are valuable trade secrets of ours and agree to protect the Software as you would other confidential, copyrighted material. You understand and agree that we own the Software and any copies of it and that the Software is licensed to you only for your use in connection with the Equipment. You agree that you will neither modify, nor alter the Software, nor decompile, reverse engineer, disassemble or otherwise attempt to obtain the source code of the Software, or to encourage any third party to do so.

USE OF INFORMATION

You hereby grant to us an irrevocable, perpetual and royalty-free right and license to utilize the Equipment to collect information (the "Information") with regard to the use of the Equipment by you, including supply utilization, inventory management, and billing information, provided that we shall have no right to use any personal patient identifying information (such as name, address, telephone number, or social security number). Your hereby agree to grant to us an irrevocable, perpetual, royalty-free right and license to use the Information for any purpose. We agree to keep confidential the name of your hospital in connection with the Information unless otherwise agreed by us and you.

OTHER RIGHTS

You agree that any delay or failure to enforce our rights under this FSS Contract does not prevent us from enforcing any rights at a later time.

NOTICES

Any notices given under this Agreement shall be deemed received five (5) days after the date of mailing, one (1) day after dispatch by overnight courier service, or upon receipt if by hand delivery.

MANDATORY TRAINING

Government facilities are required to have appropriate personnel participate in a week of training prior to the clinical use of the system. The "System Administrator Training Course" is held at OmniCell's headquarters in Palo Alto, California. Training must be completed prior to the clinical use of the system in order to enforce any warranty and indemnification claims. OmniCell will provide in-service and clinical training related to the Equipment ("Train the Trainer"). OmniCell will maintain a properly qualified training staff to provide such in-service and clinical training, and it shall be the responsibility of each Government Facility to ensure that its appropriate personnel attend and complete such training. Appropriate personnel must complete training prior to the clinical use of the system.

20.


BASIS FOR PRICE NEGOTIATIONS M-FSS-330(10)

CERTIFICATE OF ESTABLISHED CATALOG OR MARKET PRICE

Offeror certifies that to the best of his knowledge and belief:

1. The price(s) quoted in this proposal is based on established catalog or market prices of commercial items, as defined in FAR 15.804-3 ( c ), in effect on the date of the offer or on the dates of any revisions submitted during the course of negotiations.

2. Substantial quantities of the items have been sold to the general public at such prices.

3. All of the data (including sales data) submitted with this offer are accurate, complete, and current representations of actual transactions to the date when price negotiations are concluded.

NAME AND TITLE OF PERSON AUTHORIZED TO SIGN OFFER (type or print)

NAME:                               Sheldon Asher
-------------------------------------------------------------------------------

SIGNATURE:                          /s/ Sheldon Asher
-------------------------------------------------------------------------------

FIRM:                               OmniCell Technologies, Inc.
-------------------------------------------------------------------------------

DATE OF EXECUTION:                  June 13, 1997
-------------------------------------------------------------------------------

----------

(10) Solicitation Offer, page 136, M3-Q1-91.

21.


REQUIREMENT FOR CERTIFICATION OF PROCUREMENT INTEGRITY 52.203-8(11)

Certificate of Procurement Integrity

(1) I, SHELDON ASHER (name of certifier), am the officer or employee responsible for the preparation of this offer bid and hereby certify that, to the best of my knowledge and belief, with the exception of any information described in this certificate, I have no information concerning a violation or possible violation of subsection 27(a), (d), or (f) of the Office of Federal Procurement Policy Act, as amended (41 U.S.C 423), (hereinafter referred to as "the Act"), as implemented in the FAR, occurring during the conduct of this procurement M3-Q1-91 (solicitation number).

(2) As required by subsection 27(e)(1)(B) of the Act, I further certify that, to the best of my knowledge and belief, each officer, employee, agent, representative, and consultant of OMNICELL TECHNOLOGIES, INC. (Name of Offeror) who has participated personally and substantially in the preparation or submission of this offer has certified that he or she is familiar with, and comply with, the requirements of subsection 27 (a) of the Act, as implemented in the FAR, and will report immediately to me any information concerning a violation or possible violation of Subsection 27(a), (b), (d) or (f) of the Act, as implemented in the FAR, pertaining to this procurement.

(3) Violations or possible violations: (CONTINUE ON PLAIN BOND PAPER IF NECESSARY, AND LABEL CERTIFICATE OF PROCUREMENT INTEGRITY (CONTINUATION SHEET), ENTER NONE IF NONE EXISTS)

NONE


(4) I agree that, if awarded a contract under this solicitation, the certifications required by subsection 27(e)(1)(B) of the Act shall be maintained in accordance with paragraph (1) of this provision.

(Signature of the officer or, employee responsible for the offer and date)

                                /s/ Sheldon Asher
--------------------------------------------------------------------------------

(Typed name of the officer or employee responsible for the offer)

Sheldon Asher

* Subsections 27(a), (b), and (d) are effective on December 1, 1990. Subsection 27(f) is effective on June 1, 1991.

THIS CERTIFICATION CONCERNS A MATTER WITHIN THE JURISDICTION OF AN AGENCY OF THE UNITED STATES AND THE MAK1NG OF A FALSE, FICTITIOUS, OR FRAUDULENT CERTIFICATION MAY RENDER THE MAKER SUBJECT TO PROSECUTION UNDER TITLE 18, UNITED STATES CODE,
SECTION 1001.

(End of Certification)


(11) Amendment Four (4) page 50-52 of 59 or Amendment 2 Attachment A page 1 and 2

22.


EXHIBIT A
OMNICELL PRODUCT AND UL APPROVAL

------------------------------------------------------------------------------------------------------------
                                                                                       Nationally Recognized
                                                                                         Testing Laboratory
Product Category         Description                                      Model #         (NRTL) Approval
------------------------------------------------------------------------------------------------------------
Cabinets (1)             1 Cell (OS104)                                    OS104                 UL
                         -----------------------------------------------------------------------------------
                              1 Aux. (OX104)                               OX104                 UL
                         -----------------------------------------------------------------------------------
                         2 Cell (OS224)                                    OS224                 UL
                         -----------------------------------------------------------------------------------
                              2 Aux. (OX224)                               OX224                 UL
                         -----------------------------------------------------------------------------------
                         3 Cell (OS344)                                    OS344                 UL
                         -----------------------------------------------------------------------------------
                              3 Aux (OX344)                                OX344                 UL
                         -----------------------------------------------------------------------------------
                         4 Cell (OS448)                                    OS448                 UL
                         -----------------------------------------------------------------------------------
                         5 Cell (OS568)                                    OS568                 UL
                         -----------------------------------------------------------------------------------
                         6 Cell (OS688)                                    OS688                 UL
                         -----------------------------------------------------------------------------------
                         2 LOW Cell (OS176) (special order)                OS176         Est. July 31, 1997
                         -----------------------------------------------------------------------------------
                         Xpress (OS56) (special order)                     OS56          Est. July 31, 1998
                         -----------------------------------------------------------------------------------
                         Xpress (OS56-7)                                  OS56-7         Est. July 31, 1999
------------------------------------------------------------------------------------------------------------
Modules (2)              Supply Drawer (OSD24)                             OSD24                 UL
                         -----------------------------------------------------------------------------------
                         Cath  Rack (OCR48)                                OCR48            NOT REQUIRED
                         -----------------------------------------------------------------------------------
                         Suture Rack (OSR24)                               OSR24            NOT REQUIRED
                         -----------------------------------------------------------------------------------
                         Mag Card Reader (MCRIOO)                         MCRIOO            NOT REQUIRED
                         -----------------------------------------------------------------------------------
                         Locking Drawer (OLL12)                            OLL12            NOT REQUIRED
                         -----------------------------------------------------------------------------------
                         Sensing Drawer (OSL12)                            OSL12            NOT REQUIRED
                         -----------------------------------------------------------------------------------
                         Return Drawer(ORDIO)                              ORD10            NOT REQUIRED
                         -----------------------------------------------------------------------------------
                         Guiding Drawer (OGD24)                            OGD24            NOT REQUIRED
------------------------------------------------------------------------------------------------------------
Cabinet Options          OmniSupplier PLUS Option (OS2U)                   OS2U             NOT REQUIRED
                         -----------------------------------------------------------------------------------
                         OmniSupplier RX Option (OS-RXU)                  OS-RXU            NOT REQUIRED
                         -----------------------------------------------------------------------------------
                         MOV Option (OS-MOV)                              OS-MOV            NOT REQUIRED
                         -----------------------------------------------------------------------------------
                         OmniSuppIier Printer (OSP)                         OSP             NOT REQUIRED
------------------------------------------------------------------------------------------------------------
OmniCenter               OmniCenter (XPC100)                              XPC100                 UL
                         -----------------------------------------------------------------------------------
                         OmniCenter Supply Option (XPC-SP)                XPC-SP            NOT REQUIRED
                         -----------------------------------------------------------------------------------
                              OmniCenter RX Option (XPC-RX)               XPC-RX            NOT REQUIRED
                         -----------------------------------------------------------------------------------
                              OmniCenter Cath  Option (XPC-CL)            XPC-CL            NOT REQUIRED
                         -----------------------------------------------------------------------------------
                              OmniXpress Option (XTC-XP)                  XPC-XP            NOT REQUIRED
                         -----------------------------------------------------------------------------------
                         Transaction Processor (TPC 100)                  TPCl00                 UL
                         -----------------------------------------------------------------------------------
                         Network Workstation (NPC100)                     NPC100                 UL
                         -----------------------------------------------------------------------------------
                         Partner Processor (PPC 100)                      PPCl00                 UL
                         -----------------------------------------------------------------------------------
                         OmniSupplier PC Box (OSPC)                        OSPC             NOT REQUIRED
                         -----------------------------------------------------------------------------------
                         OmniSupplier Aux. Box (OSAX)                      OSAX             NOT REQUIRED
------------------------------------------------------------------------------------------------------------


EXHIBIT B
OMNICELL COMMERCIAL PRICE LIST

--------------------------------------------------------------------------------------------------------------------------
                                                                                      60 Month      Basic 12      Extended
                                                                         Purchase     Rental        Month         12 Month
Product Category   Description                           Model #           Price      (per mo.)      Service       Service
--------------------------------------------------------------------------------------------------------------------------
Cabinets (1)       1 Cell (OS 104)                       OS104         $   14,000   $      280    $       55    $      155
                   -------------------------------------------------------------------------------------------------------
                   1 Aux. (OX104)                        OX104         $   10,500   $      210    $       10    $      110
                   -------------------------------------------------------------------------------------------------------
                   2 Cell (OS224)                        OS224         $   16,000   $      320    $       65    $      165
                   -------------------------------------------------------------------------------------------------------
                   2 Aux. (OX224)                        OX224         $   12,000   $      240    $       20    $      120
                   -------------------------------------------------------------------------------------------------------
                   3 Cell (OS344)                        OS344         $   21,000   $      420    $       75    $      175
                   -------------------------------------------------------------------------------------------------------
                   3 Aux (OX344)                         OX344         $   18,000   $      360    $       30    $      130
                   -------------------------------------------------------------------------------------------------------
                   4 Cell (OS448)                        OS448         $   27,000   $      540    $       85    $      185
                   -------------------------------------------------------------------------------------------------------
                   5 Cell (OS568)                        OS568         $   32,000   $      640    $       95    $      195
                   -------------------------------------------------------------------------------------------------------
                   6 Cell (OS688)                        OS688         $   37,000   $      740    $      105    $      205
                   -------------------------------------------------------------------------------------------------------
                   2 LOW Cell (OS 176) (special  order)  OS176         $   17,600   $      352    $       75    $      175
                   -------------------------------------------------------------------------------------------------------
                   Xpress (OS56) (special order)         OS56          $    8,000   $      160    $       45    $      145
                   -------------------------------------------------------------------------------------------------------
                   Xpress (OS56-7)                       OS56-7        $    9,000   $      180    $       45    $      145
--------------------------------------------------------------------------------------------------------------------------
Modules (2)        Supply Drawer (OSD24)                 OSD24         $    2,000   $       40    $        5    $        5
                   -------------------------------------------------------------------------------------------------------
                   Cath Rack (OCR48)                     OCR48         $    5,000   $      100    $       15    $       15
                   -------------------------------------------------------------------------------------------------------
                   Suture Rack (OSR24)                   OSR24         $    5,000   $      100    $       15    $       15
                   -------------------------------------------------------------------------------------------------------
                   Mag  Card Reader (MCR 100)            MCRIOO        $    2,500   $       50    $        5    $        5
                   -------------------------------------------------------------------------------------------------------
                   Locking Drawer (OLL  12)              OLL12         $    3,000   $       60    $        5    $        5
                   -------------------------------------------------------------------------------------------------------
                   Sensing Drawer (OSL  12)              OSL12         $    2,000   $       40    $        5    $        5
                   -------------------------------------------------------------------------------------------------------
                   Return Drawer (ORD 10)                ORD10         $    2,500   $       50             5    $
                   -------------------------------------------------------------------------------------------------------
                   Guiding Drawer (OGD24)                OGD24         $    2,000   $       40    $        5    $        5
--------------------------------------------------------------------------------------------------------------------------
Cabinet Options    OmniSupplier PLUS Option (OS2U~       OS2U          $    2,000   $       40    $        5    $        5
                   -------------------------------------------------------------------------------------------------------
                   OmniSupplier RX Option (OS-RXU)       OS-RXU        $    5,000   $      100    $    -        $    -
                   -------------------------------------------------------------------------------------------------------
                   MOV Option (OS-MOV)                   OS-MOV        $    2,750   $       55    $    -        $    -
                   -------------------------------------------------------------------------------------------------------
                   OmniSupplier Printer (OSP)            OSP           $    3,000   $       60    $        5    $        5
--------------------------------------------------------------------------------------------------------------------------
OmniCenter         OmniCenter (XPC 100)                  XPC 100       $   20,000   $      400    $       80    $       80
                   -------------------------------------------------------------------------------------------------------
                   OmniCenter Supply Option (XPC-SP)     XPC-SP        $   10,000   $      200    $       40    $       40
                   -------------------------------------------------------------------------------------------------------
                   OmniCenter RX Option (XPC-RX)         XPC-RX        $   10,000   $      200    $       40    $       40
                   -------------------------------------------------------------------------------------------------------
                   OmniCenter Cath Option (XPC-CL)       XPC-CL        $    5,000   $      100    $       20    $       20
                   -------------------------------------------------------------------------------------------------------
                   OmniXpress Option (XPC-XP)            XPC-XP        $    3,500   $       70    $       10    $       10
                   -------------------------------------------------------------------------------------------------------
                   Transaction Processor (TPC 100)       TPCIOO        5   15,000   $      300    $       60    $       60
                   -------------------------------------------------------------------------------------------------------
                   Network Workstation (NPC 100)         NPC  100      $   20,000   $      400    $       80    $       so
                   -------------------------------------------------------------------------------------------------------
                   Partner Processor (PPC 100)           PPCIOO        $   15,000   $      300    $       60    $       60
                   -------------------------------------------------------------------------------------------------------
                   OmniSupplier PC Box (OSPC)            OSPC          $    5,000   $      100    $       25    $       25
                   -------------------------------------------------------------------------------------------------------
                   OmniSupplier Aux. Box (OSAX)          OSAX          $    1,500   $       30    $       10    $       10
--------------------------------------------------------------------------------------------------------------------------

PRICE LIST FOOTNOTES

(1) 4 Cell, 5 Cell and 6 Cell cabinets are sold factory shipped and bundled. Auxiliary units ordered for installed units, will be priced using the auxiliary prices. The standard bundled configurations are:

* 4 Cell = 2 Cell + 2 Cell Auxiliary
* 5 Cell = 3 Cell + 2 Cell Auxiliary
* 6 Cell = 3 Cell + 3 Cell Auxiliary

(2) Prices for modules are factory installed. Modules sold for installation in the field will incur a $500 field installation charge. This charge can be added to the purchase price or a $12 charge can be added to the 60 month rental price.


EXHIBIT C
OMNICELL COMMERCIAL PARTS LIST

---------------------------------------------------------------------------------------------
                                                                     OmniCell       Omnicell
Category     Part                                         Quantity  Part Number      Price
---------------------------------------------------------------------------------------------
Drawer       Drawer Bin                                      1                   $      15.00
             --------------------------------------------------------------------------------
             Full high drawer partition                      1                   $       2.50
             --------------------------------------------------------------------------------
             Half high drawer partition                      1                   $       1.50
---------------------------------------------------------------------------------------------
Labels       Shelf Labels (#5667)                          sheet      95-3000    $       2.50
             --------------------------------------------------------------------------------
             Cath Rack Front Labels (#5663)                sheet      95-3018    $       2.50
             --------------------------------------------------------------------------------
             Cath Rack Button Labels                       sheet      65-3007    $       5.00
---------------------------------------------------------------------------------------------
Shelf        Shelf (wire grill)                              1        54-3001    $      50.00
             --------------------------------------------------------------------------------
             Switch Panel Assembly (4 parts)                 1                   $     175.00
             --------------------------------------------------------------------------------
             OS Switch Panel                                 1        71-3000    $     125.00
             --------------------------------------------------------------------------------
             CL Rack Switch Panel                            1        71-3002    $     175.00
             --------------------------------------------------------------------------------
             Shelf Clip                                      1        57-3001    $       5.00
             --------------------------------------------------------------------------------
             Single High Shelf Divider                       1        57-3008    $      10.00
             --------------------------------------------------------------------------------
             Double High Shelf Divider                       1        57-3009    $      15.00
             --------------------------------------------------------------------------------
             Triple High Shelf Divider                       1        56-3014    $      30.00
             --------------------------------------------------------------------------------
             Each Labels (each)                              1        65-3003    $       0.10
             --------------------------------------------------------------------------------
             Box Labels (each)                               1        65-3004    $       0.10
             --------------------------------------------------------------------------------
             Button Covers                              sheet of 15   65-3002    $       5.00
             --------------------------------------------------------------------------------
             Single Wide Suture Tray                         1        57-3000    $       8.00
             --------------------------------------------------------------------------------
             Double Wide Suture Tray                         1        90-6003    $      25.00
             --------------------------------------------------------------------------------
             Can Dispenser                                   1        54-3004    $      80.00
             --------------------------------------------------------------------------------
             Scrub Sack                                      1        90-6008    $     100.00
---------------------------------------------------------------------------------------------
Frame        Seismic Restraint Kit                           1           -       $     500.00
             --------------------------------------------------------------------------------
             UPS Mount                                       1        53-2052    $     100.00
---------------------------------------------------------------------------------------------
Doors        Full cell door                                  1        11-4108    $   1,000.00
             --------------------------------------------------------------------------------
             PC door                                         1        11-4102    $     500.00
             --------------------------------------------------------------------------------
             One third door                                  1        11-4101    $     500.00
             --------------------------------------------------------------------------------
             Two third door                                  1        11-4100    $     750.00
             --------------------------------------------------------------------------------
             Panel, Cell Divider, Opaque, Omni2              1      6-2029 Rev   $     750.00
             --------------------------------------------------------------------------------
             Panel, Door, Full High, Opaque, Omni2           1      6-4017 Rev   $   1,000.00
             --------------------------------------------------------------------------------
             Panel, Door, 2/3 High, Opaque, Omni2            1      6-4018 Rev   $     750.00
             --------------------------------------------------------------------------------
             Panel, Door, PC Box, Opaque, Omni2              1      6-4019 Rev   $     500.00
---------------------------------------------------------------------------------------------
Computer     Laser Printer Cartridge (Lexmark)               1        70-0017    $     250.00
             --------------------------------------------------------------------------------
             Toner Cartridge (2000 Okidata)                  1        70-0034    $      50.00
             --------------------------------------------------------------------------------
             Okidata Printer Drum                            1        70-0044    $     250.00
             --------------------------------------------------------------------------------
             Backup tapes                                    1        70-0016    $      25.00
             --------------------------------------------------------------------------------
             Additional Paper Tray                           1        70-0012    $     400.00
             --------------------------------------------------------------------------------
             Pharmacy Printer thermal paper                  1        95-6015    $       5.00
             --------------------------------------------------------------------------------
             Lexmark  Printer                                1        70-0010    $   1,300.00
             --------------------------------------------------------------------------------
             Server Cart                                     1        70-0001    $     500.00
---------------------------------------------------------------------------------------------
Training     Supply Nurse Training Video                     1        63-0001    $      20.00
             --------------------------------------------------------------------------------
             Supply Restock Training Video                   1        63-0000    $      20.00
             --------------------------------------------------------------------------------
             Pharmacy Training Video                         1        63-0002    $      20.00
             --------------------------------------------------------------------------------
             OmniSupplier User Guide                         1        60-0010    $      10.00
             --------------------------------------------------------------------------------
             OmniCenter User Guide                           1        60-0009    $      20.00
             --------------------------------------------------------------------------------
             Pharmacy Flip Guide                             1        60-0011    $      15.00
             --------------------------------------------------------------------------------
             Implementation Guide                            1                   $      20.00
             --------------------------------------------------------------------------------
             Reports Booklet                                 1                   $      20.00
---------------------------------------------------------------------------------------------
UPS (1)
             APC #BP280                                      1        74-0000    $     275.00
             --------------------------------------------------------------------------------

             Medical Grade -APC BK45OX-06                    1        74-0001    $     350 00
             --------------------------------------------------------------------------------
             Graybar Electronic-PBX                          1        70-0014    $   1,000.00
---------------------------------------------------------------------------------------------

*SHIPPING AND HANDLING CHARGES ARE PREPAID AND ADDED TO THE INVOICE

(1) UPS purchased in volume from OmniCell use $275 price. Validation UPS or volume purchases from Preferred Vendor use $175 price.


EXHIBIT D
OMNICELL GOVERNMENT NET PURCHASE PRICES

                                        Government Discount
Discounts                               Non-Validation Discount
                                        Combination Discount
                                        6 Month Promo Period
                                        Net Discount

-----------------------------------------------------------------------------------
                                                                         Purchase
Product Category       Description                           Model #       Price
-----------------------------------------------------------------------------------
Cabinets (1)           1 Cell (OS 104)                        OS104     $    14,000
                       ------------------------------------------------------------
                          1 Aux. (OX104)                      OX104     $    10,500
                       ------------------------------------------------------------
                       2 Cell (OS224)                         OS224     $    16,000
                       ------------------------------------------------------------
                          2 Aux. (OX224)                      OX224     $    12,000
                       ------------------------------------------------------------
                       3 Cell (OS344)                         OS344     $    21,000
                       ------------------------------------------------------------
                          3 Aux (OX344)                       OX344     $    18,000
                       ------------------------------------------------------------
                       4 Cell (OS448)                         OS449     $    27,000
                       ------------------------------------------------------------
                       5 Cell (OS568)                         OS568     $    32,000
                       ------------------------------------------------------------
                       6 Cell (OS688)                         OS688     $    37,000
                       ------------------------------------------------------------
                          2 LOW Cell (OS176) (special         OS176     $    17,600
                          order)
                       ------------------------------------------------------------
                       Xpress (OS56) (special order)          OS56      $     8,000
                       ------------------------------------------------------------
                       Xpress (OS56-7)                       OS56-7     $     9,000
-----------------------------------------------------------------------------------
Modules (2)            Supply Drawer (OSD24)                  OSD24     $     2,000
                       ------------------------------------------------------------
                       Cath Rack (OCR48)                      OCR48     $     5,000
                       ------------------------------------------------------------
                       Suture Rack (OSR24)                    OSR24     $     5,000
                       ------------------------------------------------------------
                       Mag Card Reader (MCR100)              MCRI00     $     2,500
                       ------------------------------------------------------------
                       Locking Drawer (OLL12)                 OLL12     $     3,000
                       ------------------------------------------------------------
                       Sensing Drawer (OSL12)                 OSL12     $     2,000
                       ------------------------------------------------------------
                       Return Drawer (ORD10)                  ORD10     $     2,500
                       ------------------------------------------------------------
                       Guiding Drawer (OGD24)                 OGD24     $     2,000
-----------------------------------------------------------------------------------
Cabinet Options        OmniSupplier PLUS Option (OS2U)        OS2U      $     2,000
                       ------------------------------------------------------------
                       OmniSupplier RX Option (OS-RXU)       OS-RXU     $     5,000
                       ------------------------------------------------------------
                       MOV Option (OS-MOV)                   OS-MOV     $     2,750
                       ------------------------------------------------------------
                       OmniSupplier Printer (OSP)              OSP      $     3,000
-----------------------------------------------------------------------------------
OmniCenter             OmniCenter (XPC100)                   XPC100     $    20,000
                       ------------------------------------------------------------
                          OmniCenter Supply Option           XPC-SP     $    10,000
                          (XPC-SP)
                       ------------------------------------------------------------
                          OmniCenter RX Option (XPC-RX)      XPC-RX     $    10,000
                       ------------------------------------------------------------
                          OmniCenter Cath Option (XPC-CL)    XPC-CL     $     5,000
                       ------------------------------------------------------------
                          OmniXpress Option (XPC-XP)         XPC-XP     $     3,500
                       ------------------------------------------------------------
                       Transaction Processor (TPC IGO)       TPC100     $    15,000
                       ------------------------------------------------------------
                       Network Workstation (NPC 100)         NPC100     $    20,000
                       ------------------------------------------------------------
                       Partner Processor (PPC 100)           PPC100     $    15,000
                       ------------------------------------------------------------
                       OmniSupplier PC Box (OSPC)             OSPC      $     5.000
                       ------------------------------------------------------------
                       OmniSupplier Aux. Box (OSAX)           OSAX      $     1,500
-----------------------------------------------------------------------------------

PRICE LIST FOOTNOTES

(1) 4 Cell, 5 Cell and 6 Cell cabinets are sold factory shipped and bundled. Auxiliary units ordered for installed units will be priced using the auxiliary prices. The standard bundled configurations are:
* 4 Cell = 2 Cell + 2 Cell Auxiliary
* 5 Cell = 3 Cell + 2 Cell Auxiliary
* 6 Cell = 3 Cell + 3 Cell Auxiliary

(2) Prices for modules are factory installed. Modules sold for installation in the field %% ill incur a $500 field installation charge. This charge can be added to the purchase price or a $12 charge can be added to the 60 month rental price.


EXHIBIT D (CONTINUED)
OMNICELL GOVERNMENT 60 MONTH RENTAL PRICES

                                             Government Discount
Discounts                                    Non-Validation Discount
                                             Combination Discount
                                             6 Month Promo Period
                                             Net Discount

-----------------------------------------------------------------------------------
                                                                         60 Month
                                                                          Rental
Product Category        Description                         Model #     (per mo.)
-----------------------------------------------------------------------------------
Cabinets                1 Cell (OS104)                       OS104      $       280
                       ------------------------------------------------------------
                           1 Aux. (OX104)                    OX104      $       210
                       ------------------------------------------------------------
                        2 Cell (OS224)                       OS224      $       320
                       ------------------------------------------------------------
                           2 Aux (OX224)                     OX224      $       240
                       ------------------------------------------------------------
                        3 Cell (OS344)                       OS344      $       420
                       ------------------------------------------------------------
                           3 Aux (OX344)                     OX344      $       360
                       ------------------------------------------------------------
                        4 Cell (OS448)                       OS448      $       540
                       ------------------------------------------------------------
                        5 Cell (OS568)                       OS568      $       640
                       ------------------------------------------------------------
                        6 Cell (OS688)                       OS688      $       740
                       ------------------------------------------------------------
                           2 LOW Cell (OS176) (special       OS176      $       352
                           order)
                       ------------------------------------------------------------
                        Xpress (OS56) (special order)         OS56      $       160
                       ------------------------------------------------------------
                        Xpress (OS56-7)                      OS56-7     $       180
-----------------------------------------------------------------------------------
Modules (2)             Supply Drawer (OSD24)                OSD24      $        40
                       ------------------------------------------------------------
                        Cath Rack (OCR48)                    OCR48      $       100
                       ------------------------------------------------------------
                        Suture Rack (OSR24)                  OSR24      $       100
                       ------------------------------------------------------------
                        Mag Card Reader (MCR100)            MICRI00     $        50
                       ------------------------------------------------------------
                        Locking Drawer (OLL12)               OLL12      $        60
                       ------------------------------------------------------------
                        Sensing Drawer (OSL12)               OSL12      $        40
                       ------------------------------------------------------------
                        Return Drawer (ORD10)                ORD10      $        50
                       ------------------------------------------------------------
                        Guiding Drawer (OGD24)               OGD24      $        40
-----------------------------------------------------------------------------------
Cabinet Options         OmniSupplier PLUS Option (OS2U)       OS2U      $        40
                       ------------------------------------------------------------
                        OmniSupplier RX Option (OS-RXU)      OS-RXU     $       100
                       ------------------------------------------------------------
                        MOV Option (OS-MOV)                  OS-MOV     $        55
                       ------------------------------------------------------------
                        OmniSupplier Printer (OSP)            OSP       $        60
-----------------------------------------------------------------------------------
OmniCenter              OmniCenter (XPC100)                  XPCl00     $       400
                       ------------------------------------------------------------
                           OmniCenter Supply Option          XPC-SP     $       200
                           (XPC-SP)
                       ------------------------------------------------------------
                           OmniCenter RX Option (XPC-RX)     XPC-RX     $       200
                       ------------------------------------------------------------
                           OmniCenter Cath Option            XPC-CL     $       100
                           (XPC-CL)
                       ------------------------------------------------------------
                           OmniXpress Option (XPC-XP)        XPC-XP     $        70
                       ------------------------------------------------------------
                        Transaction Processor (TPC 100)      TPC100     $       300
                       ------------------------------------------------------------
                        Network Workstation (NPC 100)        NPC100     $       400
                       ------------------------------------------------------------
                        Partner Processor (PPC 100)          PPC100     $        00
                       ------------------------------------------------------------
                        OmniSupplier PC Box (OSPC)            OSPC      $       100
                       ------------------------------------------------------------
                        OmniSupplier Aux, Box (OSAX)          OSAX      $        30
-----------------------------------------------------------------------------------

PRICE LIST FOOTNOTES

(1) 4 Cell, 5 Cell and 6 Cell cabinets are sold factory shipped and bundled. Auxiliary units ordered for installed units will be priced using the auxiliary prices. The standard bundled configurations are:
* 4 Cell = 2 Cell + 2 Cell Auxiliary
* 5 Cell = 3 Cell + 2 Cell Auxiliary
* 6 Cell = 3 Cell + 3 Cell Auxiliary

(2) Prices for modules are factory installed. Modules sold for installation in the field %% ill incur a $500 field installation charge. This charge can be added to the purchase price or a $12 charge can be added to the 60 month rental price.


EXHIBIT E
OMNICELL GOVERNMENT NET SERVICE PRICES

------------------------------------------------------------------------------------------------------------------------
                                                                  Government   Government     Basic 12
                                                                   Basic 12    Extended 12      Month      Extended 12
                                                                     Month     Month           Bio-Med    Month Bio-Med
Product Category    Description                       Model #       Service    Service         Service       Service
------------------------------------------------------------------------------------------------------------------------
Cabinets (1)        1 Cell (OS104)                    OS104      $          55 $        145 $          45 $          130
                    ----------------------------------------------------------------------------------------------------
                      1 Aux. (OX104)                  OX104      $          10 $        105 $          10 $           95
                    ----------------------------------------------------------------------------------------------------
                    2 Cell (OS224)                    OS224      $          65 $        155 $          55 $          140
                    ----------------------------------------------------------------------------------------------------
                      2 Aux (OX224)                   OX224      $          20 $        115 $          15 $          100
                    ----------------------------------------------------------------------------------------------------
                    3 Cell (OS344)                    OS344      $          75 $        165 $          65 $          150
                    ----------------------------------------------------------------------------------------------------
                      3 Aux (OX344)                   OX344      $          30 $        125 $          25 $          110
                    ----------------------------------------------------------------------------------------------------
                    Cell (OS448)                      OS448      $          85 $        175 $          70 $          155
                    ----------------------------------------------------------------------------------------------------
                    5 Cell (OS568)                    OS568      $          95 $        185 $          80 $          165
                    ----------------------------------------------------------------------------------------------------
                    6 Cell (OS688)                    OS688      $         105 $        195 $          90 $          175
                    ----------------------------------------------------------------------------------------------------
                      2 LOW Cell (OS176) (special     OS176      $          75 $        165 $          65 $          150
                      order)
                    ----------------------------------------------------------------------------------------------------
                    Xpress (OS56) (special order)     OS56       $          45 $        140 $          40 $          125
                    ----------------------------------------------------------------------------------------------------
                    Xpress (OS56-7)                   OS56-7     $          45 $        140 $          40 $          125
------------------------------------------------------------------------------------------------------------------------
Modules (2)         Supply Drawer (OSD24)             OSD24      $           5 $          5 $           5 $            5
                    ----------------------------------------------------------------------------------------------------
                    Cath Rack (OCR48)                 OCR48      $          15 $         15 $          15 $           15
                    ----------------------------------------------------------------------------------------------------
                    Suture Rack (OSR24)               OSR24      $          15 $         15 $          15 $           15
                    ----------------------------------------------------------------------------------------------------
                    Mag Card Reader (MCR 100)         MCR100     $           5 $          5 $           5 $            5
                    ----------------------------------------------------------------------------------------------------
                    Locking Drawer (OLL12)            OLL12      $           5 $          5 $           5 $            5
                    ----------------------------------------------------------------------------------------------------
                    Sensing Drawer (OSL12)            OSL12      $           5 $          5 $           5 $            5
                    ----------------------------------------------------------------------------------------------------
                    Return Drawer (ORD10)             ORD10      $           5 $          5 $           5 $            5
                    ----------------------------------------------------------------------------------------------------
                    Guiding Drawer (OGD24)            OGD24      $           5 $          5 $           5 $            5
------------------------------------------------------------------------------------------------------------------------
Cabinet Options     OmniSupplier PLUS Option (OS2U)   OS2U       $           5 $          5 $           5 $            5
                    ----------------------------------------------------------------------------------------------------
                    OmniSupplier RX Option (OS-RXU)   OS-RXU     $      -      $      -     $      -      $      -
                    ----------------------------------------------------------------------------------------------------
                    MOV Option (OS-MOV)               OS-MOV     $      -      $      -     $      -      $      -
                    ----------------------------------------------------------------------------------------------------
                    OmniSupplier Printer (OSP)        OSP        $           5 $          5 $           5 $            5
------------------------------------------------------------------------------------------------------------------------
OmniCenter          OmniCenter (XPC 100)              XPC100     $          80 $         75 $          70 $           70
                    ----------------------------------------------------------------------------------------------------
                      OmniCenter Supply Option        XPC-SP     $          40 $         40 $          35 $           35
                      (XPC-SP)
                    ----------------------------------------------------------------------------------------------------
                      OmniCenter RX Option XPC-RX     XPC-RX     $          40 $         40 $          35 $           35
                    ----------------------------------------------------------------------------------------------------
                      OmniCenter Cath Option (XPC-CL) XPC-CL     $          20 $         20 $          15 $           15
                    ----------------------------------------------------------------------------------------------------
                      OmniXpress Option (XPC-XP)      XPC-XP     $          10 $         10 $          10 $           10
                    ----------------------------------------------------------------------------------------------------
                    Transaction Processor (TPC 100)   TPC100     $          60 $         55 $          50 $           50
                    ----------------------------------------------------------------------------------------------------
                    Network Workstation (NPC 100)     NPC100     $          80 $         75 $          70 $           70
                    ----------------------------------------------------------------------------------------------------
                    Partner Processor (PPC 100)       PPCl00     $          60 $         55 $          50 $           50
                    ----------------------------------------------------------------------------------------------------
                    OmniSupplier PC Box (OSPC)        OSPC       $          25 $         25 $          20 $           20
                    ----------------------------------------------------------------------------------------------------
                    OmniSupplier Aux. Box (OSAX)      OSAX       $          10 $         10 $          10 $           10
------------------------------------------------------------------------------------------------------------------------

PRICE LIST FOOTNOTES

(1) 4 Cell, 5 Cell and 6 Cell cabinets are sold factory shipped and bundled. Auxiliary units ordered for installed units will be priced using the auxiliary prices. The standard bundled configurations are:
* 4 Cell = 2 Cell + 2 Cell Auxiliary
* 5 Cell = 3 Cell + 2 Cell Auxiliary
* 6 Cell = 3 Cell + 3 Cell Auxiliary

(2) Prices for modules are factory installed. Modules sold for installation in the field %% ill incur a $500 field installation charge. This charge can be added to the purchase price or a $12 charge can be added to the 60 month rental price.


EXHIBIT A ATTACHMENT TO PURCHASE ORDER #950327 TO OMNICELL
TECHNOLOGIES, INC. DATED 5/27/98

EXHIBIT A

                                                                                                                   DIFFERENCE
 LEASE NUMBER              CUSTOMER NAME                TERM        PAYMENT      AMOUNT AT    AMOUNT ORIGINALLY       OWED
                                                                                    9.5%        PAID OMNICELL       OMNICELL
0241202         Memorial Mission Hospital, Inc.          60           1,564.00     74,469.59           70,309.68      4,159.91
0241203         Memorial Mission Hospital, Inc.          60           4,498.00    214,171.49          202,207.76     11,963.73
0241204         Memorial Mission Hospital, Inc.          60           1,445.00     68,803.43           64,961.03      3,842.40
0241206         Memorial Mission Hospital, Inc.          60           3,297.00    156,986.09          148,216.76      8,769.33
0241207         Memorial Mission Hospital, Inc.          60           1,234.00     58,756.70           55,474.52      3,282.18
0241208         Memorial Mission Hospital, Inc.          60             617.00     29,378.35           27,737.26      1,641.09
0241209         Memorial Mission Hospital, Inc.          60             288.00     13,713.07           12,947.05        766.02
0241210         Memorial Mission Hospital, Inc.          60             205.00      9,761.04            9,215.78        545.26
0297802         Sedona Medical Center, Inc.              60             680.00     32,378.08           30,569.43      1,808.65
0353701         Monmouth Medical Center Inc.             48           4,652.00    185,167.96          175,018.82     10,149.14
0361301         St. Mary's Hospital of Richmon           60           1,150.92     54,800.86           51,156.68      3,644.18
0361302         St. Mary's Hospital of Richmon           60           4,717.42    224,619.14          205,109.10     19,510.04
0361304         St. Mary's Hospital of Richmon           60           3,597.04    171,272.44          161,705.07      9,567.37
0361305         St. Mary's Hospital of Richmon           60           1,908.00     90,849.09           85,774.21      5,074.88
0361306         St. Mary's Hospital of Richmon           60             540.40     25,731.05           24,293.70      1,437.35
0361307         St. Mary's Hospital of Richmon           60             700.88     33,372.28           31,508.09      1,864.19
0361308         St. Mary's Hospital of Richmon           60           1,417.16     67,477.83           63,708.48      3,769.35
0361309         St. Mary's Hospital of Richmon           60           1,125.00     53,566.68           50,574.42      2,992.26
0361310         St. Mary's Hospital of Richmon           60             358.00     17,046.11           16,093.90        952.21
0361311         St. Mary's Hospital of Richmon           60             950.40     45,253.13           42,725.26      2,527.87
0361501         Marcus J. Lawrence Medical Ct            60           2,190.00    104,276.47           97,342.25      6,934.22
0361502         Marcus J. Lawrence Medical Ct            60             435.00     20,712.45           19,555.44      1,157.01
0371701         Ball Memorial Hospital Inc.              60           2,160.00    102,848.03           97,102.88      5,745.15
0371702         Ball Memorial Hospital Inc.              60           3,936.00    187,411.96          176,943.03     10,468.93
0374701         Richmond Memorial Hospital               60           2,035.84     96,936.17           91,521.26      5,414.91
0374702         Richmond Memorial Hospital               60           1,907.30     90,815.76           85,742.74      5,073.02
0374901         Memorial Health System Inc.              60           4,555.00    216,885.54          204,770.20     12,115.34
0374902         Memorial Health System Inc.              60           2,296.00    109,323.64          103,216.77      6,106.87
0374903         Memorial Health System Inc.              60           3,587.00    170,794.39          161,253.72      9,540.67
0374904         Memorial Health System Inc.              60           1,685.00     80,230.98           75,749.24      4,481.74
0375601         University of Arkansas For Me            60           2,154.00    102,562.34           96,833.15      5,729.19
0375602         University of Arkansas For Me            57             637.67     29,161.19           27,602.90      1,558.29
0375603         University of Arkansas For Me            56           1,593.22     71,842.88           68,062.35      3,780.53
0375604         University of Arkansas For Me            54             602.37     26,384.87           25,039.71      1,345.16
0389101         Tenet Healthcare Corporation             48           8,778.78    349,430.09          333,365.04     16,065.05
                                                                     ---------  ------------        ------------    ----------

                                              Total                  73,498.40  3,387,191.15        3,193,407.68    193,783.47
                                                                     ---------  ------------        ------------    ----------
                                                                     ---------  ------------        ------------    ----------

Rate: 0.095

1.


TABLE OF CONTENTS

                                                                     PAGE
Quantity Discount(s)....................................................1

Basic Discount(s).......................................................1

Non-Validation Discount.................................................1

Combination Commitment Discount.........................................1

Discounts on Service....................................................1

Temporary Price Reductions (Promotions(s))..............................2

6 Month Promotional Discount............................................2

Drawer Promotional Period...............................................2

Prompt Payment Discount.................................................2

End of Contract-Additional Discount (Aggregate).........................2

Small Requirement (Minimum Order).......................................2

FOB Point...............................................................3

Delivery Time...........................................................3

Emergency Delivery......................................................3

Foreign Items...........................................................3

Return/Exchange Goods Policy............................................3

Warranty................................................................3

Installation............................................................6

Electrical, Communications and Data Requirements........................6

Environmental Requirements..............................................7

Equipment and Inventory Requirements....................................7

Configuration...........................................................7

Training................................................................8

System Administrator Training...........................................8

Travel and Expenses.....................................................8

Bio-Med Training........................................................9

Train the Trainer Program...............................................9

Service Agreement......................................................10

Basic Service Plan.....................................................10

Extended Service Plan..................................................10

Additional Service.....................................................11


                                       i.

                               TABLE OF CONTENTS
                                  (CONTINUED)

                                                                     PAGE
Additional Available Fee-Based Services................................11

Acceptance of Government Credit Cards..................................11

Tracking Customer and Price/Discount Relationship......................12

Summary-Premier Offer for Dual Supply Contract.........................12

Summary-Government Offer for Non-exclusive Pharmacy Contract...........13

Cumulative Discount and Value of Incentives............................13

Discount (s) Off Price List............................................13

Value of Warranty as a Discount........................................14

Value of Shipping as a Discount........................................14

Value of T&E as a Discount.............................................15

Total Discount to Government...........................................15

Net Discount Models....................................................16

OmniCell Contract Term Additions.......................................19

Purchase Terms.........................................................19

Additional Equipment...................................................19

Loss and Damage........................................................19

Limitation of Liability................................................19

Software...............................................................20

Use of Information.....................................................20

Other Rights...........................................................20

Notices................................................................20

Mandatory Training.....................................................20

Basis for Price Negotiations M-FSS-330.................................21

Requirement for Certification of Procurement Integrity 52.203-8........22

ii.


EXHIBIT 10.9

ASSET PURCHASE AGREEMENT

Dated as of December 18, 1998

Between

BAXTER HEALTHCARE CORPORATION

and

OMNICELL TECHNOLOGIES INC.


TABLE OF CONTENTS

                                                                                                   Page
ARTICLE 1      PURCHASE OF ASSETS...............................................................      1
     1.1   Purchased Assets.....................................................................      1
     1.2   Excluded Assets......................................................................      3

ARTICLE 2      CONSIDERATION....................................................................      4
     2.1   Preliminary Purchase Price; Payment of Preliminary Purchase Price....................      4
     2.2   Purchase Price Adjustment............................................................      5
     2.3   Assumption of Liabilities............................................................      6
     2.4   Non-Assignable Contracts.............................................................      7
     2.5   Allocation of Purchase Price.........................................................      7

ARTICLE 3      REPRESENTATIONS AND WARRANTIES OF THE SELLER.....................................      8
     3.1   Organization, Qualification and Corporate Power......................................      8
     3.2   Authorization of Transaction.........................................................      8
     3.3   Noncontravention.....................................................................      8
     3.4   No Material Consents.................................................................      9
     3.5   Latest Balance Sheet.................................................................      9
     3.6   Recent Events........................................................................      9
     3.7   Tax Matters..........................................................................     10
     3.8   Title and Condition of Properties....................................................     10
     3.9   Intellectual Property................................................................     10
     3.10  Contracts............................................................................     11
     3.11  Inventory............................................................................     12
     3.12  Litigation...........................................................................     12
     3.13  Employment Matters...................................................................     13
     3.14  Employees and Executive Compensation.................................................     13
     3.15  Licenses, Permits and Approvals......................................................     13
     3.16  Compliance with Laws.................................................................     14
     3.17  Product Warranty.....................................................................     14
     3.18  Installation.........................................................................     14
     3.19  Brokers' Fees........................................................................     14
     3.20  Accounting for Returns...............................................................     14

i.


TABLE OF CONTENTS

                                                                                                   Page
     3.21  Year 2000 Compliance Obligations.....................................................     14

ARTICLE 4      REPRESENTATIONS AND WARRANTIES OF THE BUYER......................................     15
     4.1   Corporate Status.....................................................................     15
     4.2   Authority for Transaction............................................................     15
     4.3   No Breach or Default.................................................................     15
     4.4   Financial Statements; Books and Records..............................................     15
     4.5   Recent Events........................................................................     16
     4.6   Brokerage............................................................................     16
     4.7   Litigation...........................................................................     16

ARTICLE 5      COVENANTS PRIOR TO CLOSING.......................................................     16
     5.1   Conduct of Operations................................................................     16
     5.2   Buyer Access to Seller's Records and Premises........................................     16
     5.3   Seller Access to Buyer's Records and Premises........................................     17
     5.4   Buyer Confidentiality................................................................     17
     5.5   Seller Confidentiality...............................................................     17
     5.6   Cooperation..........................................................................     18
     5.7   HSR Approval.........................................................................     18
     5.8   Notice of Developments...............................................................     18
     5.9   Certain Employee and Employee Plan Matters...........................................     18
     5.10  Service and Installation.............................................................     21
     5.11  No Third-Party Beneficiaries.........................................................     21
     5.12  No Negotiation.......................................................................     21
     5.13  Use of Seller's Trademarks...........................................................     21
     5.14  Collection of Accounts Receivable....................................................     22
     5.15  Purchase of Leased Equipment.........................................................     22

ARTICLE 6      CONDITIONS PRECEDENT TO THE BUYER'S OBLIGATIONS..................................     23
     6.1   The Seller's Closing Documents.......................................................     23
     6.2   Representations and Warranties.......................................................     23
     6.3   Obligations..........................................................................     23
     6.4   No Injunction or Restraint...........................................................     23

ii.


TABLE OF CONTENTS

                                                                                                   Page
     6.5   Legal Opinion of Counsel for the Seller..............................................     23
     6.6   Consents from Third Parties..........................................................     23
     6.7   HSR Clearance........................................................................     23
     6.8   No Material Adverse Change...........................................................     23
     6.9   Audited Financials...................................................................     24
     6.10  Carve-Out Financials.................................................................     24

ARTICLE 7      CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE SELLER............................     24
     7.1   Buyer' Closing Documents.............................................................     24
     7.2   Representations and Warranties.......................................................     24
     7.3   Obligations..........................................................................     24
     7.4   No Injunction or Restraint...........................................................     24
     7.5   No Material Adverse Change...........................................................     24
     7.6   HSR Approval.........................................................................     25
     7.7   Legal Opinion........................................................................     25
     7.8   Consents and Approvals...............................................................     25
     7.9   Loan Agreement.......................................................................     25
     7.10  Companion Sale.......................................................................     25

ARTICLE 8      TERMINATION......................................................................     25
     8.1   Termination..........................................................................     25
     8.2   Effect of Termination................................................................     26

ARTICLE 9      CLOSING..........................................................................     26
     9.1   Time and Place of Closing............................................................     26
     9.2   Deliveries by the Seller.............................................................     26
     9.3   Deliveries by the Buyer..............................................................     27
     9.4   Termination of Distribution Agreement; Credit Against Reimburseable Expenses.........     28

ARTICLE 10     POST-CLOSING OBLIGATIONS OF THE PARTIES..........................................     29
     10.1  Further Obligations of the Parties...................................................     29
     10.2  Taxes................................................................................     29
     10.3  Sales Taxes..........................................................................     30

iii.


TABLE OF CONTENTS

                                                                                                   Page
     10.4  Delivery of 1998 Audited Financials..................................................     30
     10.5  Seller Covenant Not to Compete.......................................................     30

ARTICLE 11     SURVIVAL OF WARRANTIES AND INDEMNIFICATION.......................................     30
     11.1  Survival.............................................................................     30
     11.2  Indemnification by the Seller........................................................     31
     11.3  Limits on the Seller's Indemnification Obligation....................................     31
     11.4  Indemnification by Buyer.............................................................     32
     11.5  Limits on Buyer's Indemnification Obligations........................................     32
     11.6  Matters Involving Third Parties......................................................     32
     11.7  Additional Limitations...............................................................     33

ARTICLE 12     MISCELLANEOUS PROVISIONS.........................................................     34
     12.1  Certain Definitions..................................................................     34
     12.2  Notices..............................................................................     38
     12.3  Assignability; Binding Effect........................................................     39
     12.4  Governing Law; Venue.................................................................     39
     12.5  Counterparts.........................................................................     39
     12.6  Entire Agreement.....................................................................     39
     12.7  Confidentiality......................................................................     39
     12.8  Number/Gender........................................................................     39
     12.9  Captions.............................................................................     40
     12.10 Allocation of Fees and Expenses......................................................     40
     12.11 Severability.........................................................................     40
     12.12 Construction.........................................................................     40
     12.13 No Public Announcement...............................................................     40

Exhibits

Exhibit A  Bill of Sale
Exhibit B  Loan Agreement
Exhibit C  Assumption Agreement
Exhibit D  Legal Opinion of Seller's Counsel
Exhibit E  Legal Opinion of Buyer's Counsel
Exhibit F  Transition Services Agreement
Exhibit G  Service and Installation Agreement

iv.


ASSET PURCHASE AGREEMENT

This Asset Purchase Agreement (this "Agreement") is made as of this 18/th/ day of December, 1998, by and between Baxter Healthcare Corporation, a Delaware corporation (the "Seller") and OmniCell Technologies Inc., a California corporation (the "Buyer").

Recitals

A. The Seller, through the Productivity Systems business unit of its I.V. Systems Division, designs, develops, markets, distributes and sells the Sure-Med System (the "Business").

B. The Buyer desires to acquire from the Seller, and the Seller desires to sell to the Buyer, pursuant to the terms and conditions of this Agreement, substantially all of the assets and rights owned or held by the Seller and used primarily in the conduct of the Business, together with certain specified liabilities and obligations of the Seller relating to the Business, all as more specifically set forth herein.

C. Certain capitalized terms used in this Agreement are defined in
Section 12.1.

Now Therefore, in consideration of the foregoing recitals, which are hereby incorporated herein, and the mutual promises herein contained, the parties hereby agree as follows:

ARTICLE 1

PURCHASE OF ASSETS

1.1 Purchased Assets. On the terms and subject to the conditions set forth in this Agreement, on the Closing Date, the Buyer shall purchase from the Seller and the Seller shall sell, transfer, assign and deliver to the Buyer, pursuant to a Bill of Sale and Assignment (the "Bill of Sale") to be executed and delivered at closing in the form attached hereto as Exhibit A, all of the Seller's right, title and interest in and to the following assets of the Seller to the extent used primarily in the conduct of the Business, wherever located (collectively, the "Purchased Assets") in each case free and clear of any and all Security Interests:

(a) all machinery, computer equipment and other equipment, together with all parts, tools and accessories relating thereto, and other tangible personal property, including but not limited to those specifically listed on Schedule 1.1(a) attached hereto ("Equipment");

(b) all inventory and supplies reflected on the Latest Balance Sheet (to the extent not sold, leased, consigned or otherwise disposed of in the Ordinary Course of Business prior to Closing) and other inventory and supplies acquired prior to Closing and reflected on the Closing Balance Sheet ("Inventory");

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(c) subject to Section 5.13, all packaging materials and other supplies;

(d) all goodwill directly incident to or directly associated with the Business, and only the Business, as a going concern, all customer lists and all other information and data relating to the customers or suppliers, and, whether or not registered, all design and product patents, trademarks, tradenames and service marks (including, without limitation, the name "SureMed" and all combinations with the foregoing), together with all goodwill associated therewith, all copyrightable works and works of authorship, whether or not registered, computer programs and software, (inclusive of all source code and related source code documentation), URLs and domain names, computer software documentation, trade secrets, and all processes, ideas, inventions and know how whether or not patentable, engineering drawings, plans and product specifications, promotional displays and materials, including all the Intellectual Property embodied by or otherwise related to any of the foregoing, and any registrations, applications, continuations and continuations-in-part related to any of the foregoing ("Intangible Assets");

(e) all contracts, arrangements, purchase orders, commitments and other agreements of the Seller ("Contracts") listed in Part 3.10 of the Seller Disclosure Schedule attached hereto and all Contracts which, by virtue of the provisions of Section 3.10, are not required to be disclosed in Part 3.10 of the Seller Disclosure Schedule (collectively, the "Assigned Contracts"), except the Excluded Leases (as defined in Section 1.2(c)), Foreign Customer Contracts, the contract between Seller and Allegiance Healthcare Corporation dated as of October 1, 1996 (the "Allegiance Contract") and other Contracts (the "Excluded Contracts") which are identified on Schedule 1.1(e) attached hereto;

(f) all business and operating Permits (as defined in Section 3.15) and product registrations, to the extent assignable;

(g) all data, books, files and records (provided that Seller may retain copies thereof), other than the original records, files and other information kept for financial reporting purposes, copies of which shall be provided to Buyer and considered Purchased Assets, or income tax purposes, and other than original records, files, invoices and other information related to the product leases and the Foreign Customer Contracts, copies of which shall be provided to Buyer and considered Purchased Assets, ("Business Records");

(h) all deposits, refunds, prepaid rentals, leases and licenses, catalog, packaging, promotional, trade show, advertising and royalty expenditures and unbilled charges and credits, and other prepaid assets to the extent reflected on the Latest Balance Sheet (to the extent not exhausted or realized prior to Closing) and other prepaid assets generated prior to Closing as reflected on the Closing Balance Sheet;

(i) all claims, warranties, choses of action, causes of action, rights of recovery and rights of set-off relating to the Purchased Assets or the Assumed Liabilities or relating primarily to the Business;

(j) all rights to receive and retain mail and other communications relating to the Purchased Assets, the Assumed Liabilities and/or the Business;

2.


(k) Seller's right, title and interest in and to all goods produced by the Business that are returned by a customer after the Closing;

(l) all other properties and assets of every kind, character or description except Excluded Assets.

1.2 Excluded Assets. Notwithstanding anything in Section 1.1 to the contrary, the Purchased Assets shall not include any of the following assets of the Seller ("Excluded Assets"):

(a) all cash and all accounts, notes and loans receivable;

(b) all furniture and fixtures;

(c) all product leases in effect as of the Closing Date and receivables outstanding thereunder (the "Excluded Leases");

(d) minute books and stock record books of the Seller;

(e) any rights under or with respect to any employee benefit plans of the Seller, except to the extent otherwise provided in Section 5.9

(f) all amounts billable or collectible under customer Contracts with respect to products shipped but not invoiced as of the Closing Date;

(g) contracts, agreements, understandings and arrangements with customers outside the United States or Canada (the "Foreign Customer Contracts");

(h) all rights, liabilities and obligations under the Excluded Contracts;

(i) all claims, warranties, choses of action, causes of action, rights of recovery and rights of set-off relating to the Excluded Assets or the Liabilities Not Assumed;

(j) all consideration to be received by and the rights of the Seller under this Agreement;

(k) original records, files and other information kept for financial reporting purposes or information related to the product leases and the Foreign Customer Contracts, provided however that copies of the foregoing shall be provided to Buyer and considered Purchased Assets, and original records, files and other information kept for income tax purposes;

(l) all Contracts of insurance and the proceeds thereof;

(m) Permits not relating exclusively to the Business or that are not transferable to Buyer;

(n) non-transferable software listed on Schedule 1.2(n) hereto;

(o) all equipment that is subject to any product lease;

3.


(p) trademarks, service marks and trade names not set forth in Part 3.9 of the Seller Disclosure Schedule, including the name "Baxter" or the words "Productivity Systems," or any derivation thereof and other marks (other than "SureMed" or any derivation thereof) which serve to identify Seller or Seller's Productivity Systems business unit;

(q) all rights to claims, refunds and causes of action related to the Excluded Assets or the Liabilities Not Assumed;

(r) all other assets, properties and rights of Seller not used primarily in the conduct of the Business and assets or properties located outside of the United States of America and Canada which are used in connection with the Foreign Customer Contracts;

(s) in the event the software license agreement between Seller and Sybase, Inc. dated as of August 29, 1996 (the "Sybase Agreement") is not assigned to Buyer, the amount prepaid thereunder as reflected on the Latest Balance Sheet under the account identified as "Software Licenses" included in the "Other Assets" account shall be an "Excluded Asset"; and

(t) the Allegiance Contract.

ARTICLE 2

CONSIDERATION

2.1 Preliminary Purchase Price; Payment of Preliminary Purchase Price.

(a) At the Closing, the Buyer shall pay an amount (the "Preliminary Purchase Price") equal to the Value of the Business based on the Latest Balance Sheet, less, if the Sybase Agreement is not assigned to Buyer, the amount prepaid thereunder as reflected on the Latest Balance Sheet under the account identified as "Software Licenses" included in the "Other Assets" account. The Preliminary Purchase Price shall be payable by delivery of (a) Two Million One Hundred Thousand Dollars ($2,100,000) in cash and (b) the Buyer's senior promissory note, in the form attached to the Loan Agreement, in the principal amount equal to the Preliminary Purchase Price less Two Million One Hundred Thousand Dollars ($2,100,000) (the "Purchase Note"). In connection with the issuance of the Purchase Note, the Buyer and the Seller shall also enter into a Loan Agreement as of the Closing Date in the form attached as Exhibit B (the "Loan Agreement"). The Preliminary Purchase Price (and therefore the principal amount due under the Purchase Note) will be subject to post-Closing adjustment pursuant to Section 2.2.

(b) For purposes of this Agreement,

(i) the term "Value of the Business" means the sum of (A) the Net Tangible Asset Value of the Business and (B) the Intangible Asset Value of the Business;

(ii) the term "Net Tangible Asset Value" means the assets (excluding the Intangible Assets) minus the liabilities as shown on the Latest Balance Sheet or the Closing Balance Sheet, as the case may be, minus (or plus if such amount is a negative number) the sum of the value shown on the applicable balance sheet of following (to the extent such following

4.


items are collectively in excess of reserves already reflected on the applicable balance sheet): (A) all used or damaged equipment or components held in inventory by Seller that is not capable of being refurbished by Seller; and (B) all equipment or components held in inventory by Seller that Seller does not reasonably expect to be sold during calendar year 1999 based upon market demand for such equipment or components during the twelve months preceding the date of this Agreement;

(iii) the term "Specified Intangible Assets" means the assets included in the accounts identified as (A) "Assets Under Construction Associated with Software Development" and included within the Property, Plant and Equipment account, (B) "Capitalized Software License" and (C) "Capitalized Software Development Costs" included with the "Other Assets" account; and

(iv) the term "Intangible Asset Value of the Business" means (A) the Specified Intangible Assets as shown on the Latest Balance Sheet, plus (B) capital expenditures for software development made by Seller consistent with its past practices between September 30, 1998 and the Closing Date, minus (C) $3,000,000.

(c) The service, warranty and installation obligations being assumed by OmniCell pursuant to this Agreement shall be reflected on the Closing Balance Sheet as accrued liabilities in accordance with the methodology set forth in Schedule 2.1(c) hereto.

2.2 Purchase Price Adjustment

(a) As soon as possible, but in any event on or before the 60/th/ day following the Closing Date, the Seller and its independent accountants ("Seller's Accountants") shall prepare and distribute to the Buyer and Buyer's independent accountants ("Buyer's Accountants") an unaudited statement of assets and liabilities for the Business being acquired hereunder (which shall exclude Excluded Assets and Liabilities Not Assumed) as of the close of business on the Closing Date, including a calculation of Value of the Business (the "Draft Closing Balance Sheet"). The Seller will prepare the Draft Closing Balance Sheet on a basis consistent with the preparation of the Latest Balance Sheet. The Draft Closing Balance Sheet shall also contain a reconciliation to the Audited Carve-out Financial Statements for the year ended December 31, 1997.

(b) Within thirty (30) calendar days after receiving the Draft Closing Balance Sheet, Buyer will deliver to the Seller and Seller's Accountants a written statement specifying the amount in dispute and describing in reasonable detail the basis for such dispute. The parties shall use reasonable efforts to resolve any such objections in good faith, but if they do not obtain a final resolution within thirty (30) calendar days after the Buyer has delivered the statement of objections and if the items remaining in dispute are such that the Purchase Price would be adjusted by more than $50,000, then an independent accounting firm which shall be mutually acceptable to the parties shall be retained to resolve any remaining objections (the "Arbitrating Accountants") and shall within forty-five (45) calendar days after submission determine and report to the parties upon such remaining disputed items. The parties shall bear the fees and disbursements of the Arbitrating Accountants in the same proportion that their respective positions are confirmed or rejected by the Arbitrating Accountants. The determination of the

5.


Arbitrating Accountants will be conclusive and binding on the parties. The statement setting forth the final determinations pursuant to this Section 2.2(b) is referred to herein as the "Closing Balance Sheet." Notwithstanding anything contained in this Section 2.2 to the contrary, if the items successfully disputed by the Buyer are such that the Purchase Price would be adjusted by less than $50,000, no adjustment to the Purchase Price shall be made and the amount of any adjustment that would otherwise be made shall be counted towards the $300,000 threshold of Buyer Indemnifiable Losses specified in Section 11.3(b). Any item disputed by Buyer that is resolved pursuant to this Section 2.2 may not be asserted as a basis for a claim for indemnity by Seller under Article 11.

(c) If the Value of the Business calculated from the Closing Balance Sheet exceeds the Preliminary Purchase Price, then the principal amount of the Purchase Note shall be increased by an amount equal to such excess. If the Value of the Business calculated from the Closing Balance Sheet is less than the Preliminary Purchase Price, then the principal amount of the Purchase Note shall be reduced by an amount equal to such difference. In either case, the interest due under the Purchase Note shall be adjusted retroactively to the Closing Date based on the final Purchase Price. The Preliminary Purchase Price, as adjusted pursuant to this Section 2.2, shall be referred to herein as the "Purchase Price." Promptly following the determination of the Purchase Price pursuant to this Section 2.2, Buyer shall execute and deliver to the Seller in exchange for the return of the original Purchase Note an amended and restated Purchase Note reflecting such increase or reduction, as the case may be.

2.3 Assumption of Liabilities.

(a) As additional consideration for the Purchased Assets, the Buyer shall, pursuant to an assumption agreement to be executed and delivered at Closing in the form attached hereto as Exhibit C (the "Assumption Agreement"), assume the following liabilities and obligations of the Seller relating to the Business (the "Assumed Liabilities"):

(i) those obligations and Liabilities arising under the Assigned Contracts;

(ii) all Liabilities arising out of the operation of the Business after the Closing Date;

(iii) all repair, maintenance and product warranty claims arising with respect to products of the Business sold before, on or after the date of the Closing, including without limitation, with respect to products leased under the Excluded Leases;

(iv) the Liabilities of the Seller to the Business Employees (as defined in Section 3.14) to the extent set forth in Section 5.9;

(v) all Liabilities of the Business that are reflected on the face of the Latest Balance Sheet and Liabilities of the same type which arise out of the operation of the Business through and including the Closing Date in the Ordinary Course of Business and which are reflected on the Closing Balance Sheet;

6.


(vi) all Liabilities, obligations and commitments related to the Intellectual Property included as part of the Purchased Assets;

(vii) all Liabilities and obligations with respect to product return claims arising with respect to products of the Business sold before, on or after the Closing Date; and

(viii) all Liabilities and obligations to continue Seller's program for attaining Year 2000 compliance of the software and other systems included as part of the Purchased Assets.

(b) Except for the Assumed Liabilities, the Buyer shall not assume any other Liabilities of the Seller, whether due or to become due, absolute or contingent, direct or indirect (the "Liabilities Not Assumed"), including but not limited to the following:

(i) any liability or obligation arising from any third party product liability claim which claim is based upon an occurrence on or prior to the Closing Date;

(ii) any liability for Taxes arising from the operation of the Business arising on or prior to the Closing Date; and

(iii) any obligation or liability arising out of or relating to any employee grievance relating to periods on or prior to the Closing Date.

2.4 Non-Assignable Contracts.

(i) Contracts Not Assigned. To the extent that any rights under any Assigned Contracts may not be assigned without the prior consent of any other Person and such consent has not been obtained on or prior to the Closing Date, and if the failure to obtain such consent or such assignment would constitute a material breach of or cause a loss of material benefits under such Contract or result in the imposition of any material liability upon the Buyer or the Business, then, unless and until such consent has been obtained, such Contract shall be deemed not to have been assigned to Buyer and, subject to
Section 2.4(b), neither this Agreement nor any document executed in connection herewith shall constitute an assignment of such Contract.

(b) Further Assurances Concerning Contracts. The Seller and the Buyer shall use reasonable efforts in good faith to obtain all required third-party consents and approvals necessary to assign to the Buyer, and for the Buyer to assume all of the benefits and Liabilities under, the Assigned Contracts.

2.5 Allocation of Purchase Price. For Tax purposes with respect to the sale of the Purchased Assets, the Seller and the Buyer shall each report that the Purchase Price and the value of the Assumed Liabilities in accordance with the Schedule of Asset Allocation set forth on Schedule 2.5 attached hereto.

7.


ARTICLE 3

REPRESENTATIONS AND WARRANTIES OF THE SELLER

The Seller hereby represents and warrants to the Buyer that all of the statements contained in this Article 3 are true and correct as of the date of this Agreement, except as set forth in the disclosure schedule prepared by the Seller and delivered herewith (the "Seller Disclosure Schedule"). The Seller Disclosure Schedule will be organized in parts corresponding to the numbered and lettered sections in this Article 3; provided, that an item disclosed on one part of the Seller Disclosure Schedule as an exception to one particular representation or warranty shall be deemed adequately disclosed on all other parts of the Seller Disclosure Schedule as an exception to the representations and warranties corresponding thereto to the extent that it is reasonably apparent that such disclosure is also an exception to such other representations and warranties.

3.1 Organization, Qualification and Corporate Power. The Seller is a corporation duly incorporated and organized, validly existing and in good standing under the laws of the State of Delaware. The Seller has all requisite corporate power and authority to carry on the Business and to own and use the Purchased Assets. The Seller is qualified to conduct business and is in good standing under the laws of each jurisdiction wherein the Seller's operation of the Business or its ownership of the Purchased Assets requires the Seller to be so qualified, except where the failure to be so qualified would not, individually or in the aggregate, have a Material Adverse Effect.

3.2 Authorization of Transaction. The Seller has all requisite corporate power and authority to execute and deliver this Agreement and each of the other agreements contemplated hereby to which it may become a party and to perform its obligations hereunder and thereunder. Without limiting the generality of the foregoing, the Board of Directors of the Seller has duly authorized the execution, delivery and performance of this Agreement. This Agreement constitutes the valid and legally binding obligation of the Seller enforceable against it in accordance with its terms. Upon the execution of each of the other agreements contemplated hereby at Closing, each of such other agreements to which the Seller is a party will constitute the valid and legally binding obligation of the Seller enforceable against it in accordance with its terms.

3.3 Noncontravention. Except as set forth in Part 3.3 of the Seller Disclosure Schedule, neither the execution and the delivery of this Agreement, nor the consummation of the transactions contemplated hereby will (a) violate or conflict with any statute, regulation, law, rule, ordinance or common law doctrine to which the Seller is subject, the violation of which would result in a Material Adverse Effect (but no representation is made hereby with respect to the effect of any bulk sales laws or any Federal or State antitrust or similar laws or regulations), (b) violate or conflict in any material respect with any judgment, order, decree, stipulation, injunction, charge or other restriction of any government, governmental agency or court to which the Seller is subject, in connection with the Business, or any provision of the Certificate of Incorporation or By-Laws of the Seller, or (c) conflict with, result in a breach or default under or require any notice, consent or approval under, any contract, agreement, license, franchise, permit, or other arrangement to which the Seller is a party in connection with the Business or to

8.


which any of the Purchased Assets are subject, except for such violations, conflicts, breaches, defaults or other events would not result in a Material Adverse Effect or materially and adversely affect the consummation of the transactions contemplated hereby.

3.4 No Material Consents. Except for any consents which may need to be obtained in connection with the assignment of the Assigned Contracts to the Buyer and the other consents and approvals contemplated by this Agreement, no authorization, consent or approval of, any government, governmental agency or court, or any other Person is required to be made or obtained, in order for the parties hereto to consummate the transactions contemplated hereby, except where the failure to obtain any such consent or approval would not have a material adverse effect upon the assets, business, financial condition or results of operations of the Business.

3.5 Latest Balance Sheet. Set forth in Part 3.5 of the Seller Disclosure Schedule is a copy of the unaudited statement of assets and liabilities of the Business being acquired hereunder (which shall exclude Excluded Assets and Liabilities Not Assumed) as of September 30, 1998 (the "Latest Balance Sheet"). The Latest Balance Sheet was prepared in accordance with GAAP.

3.6 Recent Events. Except as reflected on the unaudited Carve-out Financial Statements or in Part 3.6 of the Seller Disclosure Schedule, since September 30, 1998 the Seller has not, in connection with the Business:

(a) sold, leased, transferred or assigned any material Purchased Asset, other than the sale of inventory in the Ordinary Course of Business;

(b) accelerated, terminated, modified, canceled, or committed any material breach of any Assigned Contract involving more than $50,000.

(c) granted any license or sublicense of any rights under or with respect to any Intellectual Property other than in the Ordinary Course of Business;

(d) changed in any material and adverse respect the manner in which the Business has been conducted;

(e) made or committed to make any capital expenditures or entered into any other material transaction outside the Ordinary Course of Business and involving any single expenditure in excess of $50,000;

(f) experienced any work interruptions, labor grievances or claims, or any event or condition which would result in a Material Adverse Affect;

(g) consummated any material transaction or entered into any material Assigned Contract outside of the Ordinary Course of Business;

(h) established, adopted or altered any employee benefit plan or changed the compensation of any employee;

9.


(i) incurred, assumed or otherwise become subject to any liability, other than accounts payable or other liabilities which are not material to the Business incurred by the Seller in transactions entered into in the Ordinary Course of Business except as reflected on the Latest Balance Sheet (or, solely for purposes of determining whether this Section 3.6(i) is true and correct as of the Closing Date pursuant to Section 6.2, as reflected on the Closing Balance Sheet);

(j) the Seller has not, with respect to the Business, changed any of its methods of accounting or accounting practices, or changed any of the prices of any of its products or any of its pricing policies, in any respect; or

(k) committed (orally or in writing) to any of the foregoing.

3.7 Tax Matters The Seller has withheld and paid when due all Taxes required to have been withheld and paid in connection with amounts paid or owing to any employee and independent contractor in connection with work and services performed for the Business.

3.8 Title and Condition of Properties

(a) No Real Property. The Seller does not lease any real property in connection with the Business except for the office space located in Grayslake, Illinois, and Seller does not own any real property which is used exclusively in connection with the Business.

(b) Title to Assets. The Seller owns marketable title, free and clear of Security Interests, to all of the Purchased Assets, except for (i) leased assets which the Seller has the right to use under valid leases identified in Part 3.8 of the Seller Disclosure Schedule, (ii) licensed assets which the Seller has the right to use under valid licenses identified in Section 3.9 or 3.10 of the Seller Disclosure Schedule, (iii) Security Interests which secure Liabilities set forth on the Latest Balance Sheet, (iv) imperfections of title which are not material in character, amount or extent and which do not materially detract from the value or materially interfere with the present use of the assets affected thereby, and (v) Security Interests for current Taxes not yet due and payable.

3.9 Intellectual Property

(a) Part 3.9 of the Seller Disclosure Schedule contains a list and brief description of the following: (i) registered and unregistered trademarks, patents, patent applications, continuations or continuations in part and registered copyrights that are owned by the Seller and used primarily in connection with the conduct of the Business as conducted and (ii) each license providing the Seller with the right to use the intellectual property of other Persons used primarily in connection with the Business ("Licenses-In").

(b) Except as set forth in Part 3.9(b) of the Seller Disclosure Schedule, none of the Intellectual Property is subject to any outstanding judgment, order, decree, stipulation, injunction or charge. No charge, complaint, action, suit, proceeding, hearing, investigation, claim, or demand is pending or, to the knowledge of the Seller, threatened, which challenges the legality, validity, enforceability, use or ownership of any of the Intellectual Property. Except pursuant to customer agreements, the Seller has never agreed to indemnify any Person for or

10.


against any interference, infringement, misappropriation, or other conflict with respect to the Intellectual Property.

(c) No breach or default by the Seller exists or has occurred under any License-In and the consummation of the transactions contemplated by this Agreement will not violate or conflict with or constitute a default (or an event which, with notice or lapse of time or both, would constitute a default) or result in a forfeiture under, or constitute a basis for termination of, any such License-In.

(d) The Seller has the unrestricted right to use, and is transferring to the Buyer, all the Intellectual Property, subject in each case to the Licenses-In; and the Intellectual Property covers all patents, trademarks, trade names, service marks and copyrights which are necessary to operate the Business as presently conducted.

(e) None of the Intellectual Property, and no product or service licensed or sold by the Business, infringes any trademark, trade name, copyright, trade secret, patent, or other intellectual property or proprietary right of any Person or would give rise to an obligation to render an accounting to any Person as a result of co-authorship, co-invention or an express or implied contract for any use or transfer. The Seller has not received notice of any adversely held patent, invention, trademark, copyright, service mark, trade name or trade secret of any other Person alleging or threatening to assert that the Seller's use of any of the Intellectual Property or conduct of the Business infringes upon or is in conflict with any intellectual property or proprietary rights of any third party.

(f) Seller has taken measures and precautions to protect and maintain the confidentiality and secrecy of all the Intellectual Property (except Intellectual Property whose value would be unimpaired by public disclosure) and otherwise to maintain and protect the value of all the Intellectual Property that are consistent with the measures and precautions taken by Seller to protect its other similar Intellectual Property.

3.10 Contracts

(a) Part 3.10 of the Seller Disclosure Schedule lists each of the contracts, agreements, licenses, and other documents and instruments of the following types to which the Seller is a party which relates primarily to the Business:

(i) any written arrangement (or group of related written arrangements) for the lease of personal property from or to third parties with annual payments exceeding $50,000 or with a term exceeding one year (other than the Excluded Leases);

(ii) any written arrangement concerning a partnership or joint venture;

(iii) any written arrangement (or group of related written arrangements) under which the Seller has granted a Security Interest on any of the Purchased Assets;

(iv) any written arrangement imposing an obligation of confidentiality or non-competition on the part of Seller;

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(v) any license or royalty agreement or other Contract relating to the Intellectual Property (other than those disclosed in Part 3.9 of the Seller Disclosure Schedule) involving annual payments to the Seller in excess of $50,000;

(vi) any contract or group of related contracts with the same Person (or group of related persons) for or relating to the purchase, sale or lease of products or services, either (A) which differs in any material respect from the Seller's standard forms of purchase and lease agreements which the Seller has delivered to the Buyer and its counsel or (B) which has a term of more than five years.

(vii) any contract or agreement relating to the acquisition or disposal of assets outside of the Ordinary Course of Business;

(viii) any manufacturer's or supplier's warranty or indemnity relating to any fixed assets included in the Purchased Assets with a net book value in excess of $5,000; and

(ix) any enforceable oral agreement which modifies any of the foregoing.

(b) The Seller has delivered or otherwise made available to the Buyer a copy of each written Contract listed in Part 3.10 of the Seller Disclosure Schedule and a summary of the terms of any such Contract that is not written. With respect to each Contract so listed: (i) to the knowledge of Seller, the Contract is legal, valid, binding, enforceable, and in full force and effect;
(ii) neither the Seller nor, to the knowledge of the Seller, any other party to such Contract, is in material breach or default under such Contract; (iii) the Seller has not and, to the knowledge of Seller, no other party has repudiated any material provision of any such Contract; and (iv) to the knowledge of Seller, no event has occurred and no event has occurred, and no circumstance or condition exists, that could reasonably be expected to (with or without notice or lapse of time) (A) result in a violation or breach of any of the provisions of any Contract by the Seller, (B) give any Person the right to declare a default or exercise any remedy under any Contract, (C) give any Person the right to accelerate the maturity or performance of any Contract, or (D) give any Person the right to cancel, terminate or modify any Contract. Copies of the general forms of customer invoices, contracts and license agreements used by the Seller primarily in connection with the Business have been delivered to the Buyer.

3.11 Inventory. All inventory and supplies reflected on the Latest Balance Sheet Inventory consists of (i) items of a quantity and quality useable and/or saleable in all material respects in the Ordinary Course of Business and has a commercial value at least equal to the value shown on the Latest Balance Sheet net of reserves, or (ii) used, damaged or obsolete equipment and components that are not capable of being refurbished and equipment and components that Seller does not reasonably expect to be sold during calendar year 1999 based on market demand for such equipment or components over the twelve months ended on the date of this Agreement, all of which have been written down on the Latest Balance Sheet to estimated realizable market value.

3.12 Litigation. The Seller is not, in connection with the Business, (a) subject to any unsatisfied judgment, order, decree, stipulation, injunction, or charge or (b) a party or, to the

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knowledge of the Seller, threatened to be made a party to, any charge, complaint, action, suit, proceeding, hearing, or investigation.

3.13 Employment Matters.

(a) The Seller is not, in connection with the Business, a party to or bound by any collective bargaining agreement, and the Seller has not experienced any strikes, grievances, other collective bargaining disputes or, to the knowledge of the Seller, material claims of unfair labor practices. The Seller has no knowledge of any organizational effort presently being made or threatened by or on behalf of any labor union with respect to employees of the Business.

(b) The Seller, in connection with the Business, has complied in all material respects with all applicable laws relating to labor and employment, including any provisions thereof relating to wages, termination pay, vacation pay, fringe benefits, collective bargaining and the payment and/or accrual of the same and all Taxes, insurance and all other costs and expenses applicable thereto; to the Seller's knowledge the Seller is not liable for any arrearage, or has Taxes, costs or penalties for failure to comply with any of the foregoing.

3.14 Employees and Executive Compensation.

(a) Part 3.14 of the Seller Disclosure Schedule sets forth a complete list of all full-time and part-time employees of Seller conducting the Business (the "Business Employees"), their salaries and wage rates, amounts payable under the Seller's Management Incentive Compensation Plan bonus arrangement, vacation pay schedule as of the date hereof, benefits, positions, and length of service. Set forth in Part 3.14 of the Seller Disclosure Schedule is a description of the Seller's vacation pay, sick pay and paid time off policies.

(b) Except as set forth in Part 3.14 of the Seller Disclosure Schedule, no Business Employee has any agreement as to length of notice required to terminate his or her employment, other than such as results by law from the employment of an employee without agreement as to such notice or as to length of employment.

(c) To the knowledge of the Seller, except as set forth in Part 3.14 of the Seller Disclosure Schedule, (i) no Business Employee is a party to or is bound by any confidentiality agreement, noncompetition agreement or other Contract (with any Person) that may have any material adverse effect on (A) the performance by such employee of any of his duties or responsibilities as an employee of the Seller or as an employee of the Buyer, or (B) the business of the Seller or the Buyer and (ii) as of the date of this Agreement, no Business Employee has tendered a resignation that will take effect after the date hereof.

(d) The Seller does not contribute, and is not obligated to contribute, to any multiemployer plan (within the meaning of section 4001 of ERISA) with respect to the Business Employees.

3.15 Licenses, Permits and Approvals. Part 3.15 of the Seller Disclosure Schedule lists all governmental and regulatory licenses, authorizations, franchises, certificates, permits and approvals, and all quality, safety and other industry group certifications necessary to the conduct of the Business and as currently conducted ("Permits"). All such Permits are in full force and

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effect to the Seller's knowledge. There are no violations by the Seller of, or any claims or proceedings pending or, to the knowledge of the Seller, threatened, challenging the validity of or seeking to discontinue, any such Permits. The Seller has conducted the Business in compliance in all material respects with the requirements, standards, criteria and conditions set forth in the Permits, and the Seller is not in violation of any of the foregoing where such non-compliance or violation would result in the revocation of such Permit.

3.16 Compliance with Laws. The Seller, in connection with the Business, is, and has been for the last three years, in compliance in all material respects with all applicable laws, rules, regulations or orders (including, without limitation, health and safety laws and consumer product safety laws), and no notice, claim, charge, complaint, action, suit, proceeding, investigation or hearing has been received by the Seller or, to the knowledge of the Seller, threatened, against the Seller, alleging any such violation.

3.17 Product Warranty. Except as set forth in Part 3.17 of the Seller Disclosure Schedule, each product sold, leased, or delivered by the Business has been in material conformity with all applicable contractual commitments, and the Seller has no Liability for replacement or repair thereof or other damages in connection therewith beyond scope of the warranties set forth in the Assigned Contracts.

3.18 Installation.

(a) Part 3.18(a) of the Seller Disclosure Schedule sets forth all equipment which has been shipped but is unbilled and uninstalled as of the date hereof. All equipment set forth in Part 3.18(a) of the Seller Disclosure Schedule is capable of being installed using commercially reasonable efforts by September 30, 1999.

(b) Part 3.18(b) of the Seller Disclosure Schedule sets forth in reasonable detail a list of products shipped prior to the date hereof and products that the Seller reasonably expects to ship prior to January 15, 1999 that the Seller does not reasonably expect to have been delivered and installed prior to January 15, 1999 and additionally sets forth the amount reserved on Seller's balance sheet as of the Closing Date for such delivery and installation.

3.19 Brokers' Fees. Except as set forth in Part 3.19 of the Seller Disclosure Schedule, the Seller has no Liability or obligation to pay any fees or commissions to any broker, finder, or agent with respect to the transactions contemplated by this Agreement for which Buyer could become liable or otherwise obligated.

3.20 Accounting for Returns. To the knowledge of Seller, there are no liabilities and obligations with respect to product return claims arising with respect to products of the Business sold prior to the date hereof for which the Seller has not established adequate reserves in accordance with customary accounting procedures.

3.21 Year 2000 Compliance Obligations. Part 3.21 of the Seller Disclosure Schedule sets forth the Seller's program for attaining Year 2000 compliance of the software and other systems included as part of the Purchased Assets and the obligations of which Seller has knowledge to continue such program.

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ARTICLE 4

REPRESENTATIONS AND WARRANTIES OF THE BUYER

The Buyer hereby represents and warrants to the Seller that all of the statements contained in this Article 4 are true and correct as of the date of this Agreement.

4.1 Corporate Status. The Buyer is a corporation duly incorporated and organized, validly existing and in good standing under the laws of State of California.

4.2 Authority for Transaction. The Buyer has all requisite corporate power and authority to enter into this Agreement and the other agreements contemplated hereby (including without limitation the Purchase Note) and to perform its obligations hereunder and thereunder. The execution, delivery and performance of this Agreement and the other agreements contemplated thereby have been duly authorized by all necessary corporate action on the part of the Buyer. This Agreement constitutes, and on the Closing Date the Purchase Note will constitute, valid and legally binding agreements of the Buyer enforceable against the Buyer in accordance with their respective terms.

4.3 No Breach or Default. Neither the execution and delivery of this Agreement or the Purchase Note, nor the consummation of the transactions contemplated hereby or thereby, will: (i) violate or conflict in any way with any applicable statute, regulation, law, rule or common law doctrine, or with any judgment, order, decree, stipulation, injunction, charge or other restriction of any governmental body, governmental agency or court, to which the Buyer is bound or affected, or with any provision of the Articles of Incorporation or By-Laws of the Buyer, or (ii) conflict with, result in a breach of, constitute a default under (with or without notice or lapse of time, or both), result in the acceleration of, create in any party the right to accelerate, terminate, modify or cancel, or require any notice or consent under any contract, agreement, lease, sublease, license, sublicense, franchise, permit, indenture, agreement for borrowed money, instrument of indebtedness, Security Interest or other arrangement to which the Buyer is a party or by which any of its property or assets are subject. Except as disclosed in Part 4.3 of the Buyer Disclosure Schedule, or as otherwise expressly contemplated hereby, the Buyer is not required to give any notice to, make any filing with, or obtain any authorization, consent, or approval of any government, governmental agency or court, or any other Person in order for the parties to consummate the transactions contemplated by this Agreement and in order that such transactions not constitute a breach or violation of, or result in a right of termination or acceleration or any encumbrance on any of the Buyer's assets pursuant to the provisions of any of the agreements referenced in the preceding sentence.

4.4 Financial Statements; Books and Records

(a) The Buyer has provided the Seller with the following financial statements (collectively the "Buyer Financial Statements"), copies of which are set forth as schedules to Part 4.4 of Buyer Disclosure Schedule: (A) audited balance sheets and related statements of income, changes in stockholders' equity and cash flows for the Buyer as of and for the fiscal year ended December 31, 1997, and (B) unaudited balance sheets and related statements of income for the nine-month period ended September 30,, 1998 (the "Most Recent Period End") (the

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"Buyer Balance Sheet"). The Buyer Financial Statements are correct and complete, have been prepared in accordance with GAAP and fairly present the financial condition and results of operations of the Buyer as of the times and for the periods referred to therein, subject, in the case of the Buyer Balance Sheet, to normal year-end adjustments (none of which will be materially adverse) and the absence of certain footnote information.

4.5 Recent Events. Since the Most Recent Period End, the Buyer has conducted its business only in the ordinary course of business and has not experienced or suffered any material adverse impact upon its business, assets, operations, financial condition or business prospects.

4.6 Brokerage. There are no claims for brokerage commissions, finder's fees or similar compensation in connection with the transactions contemplated by this Agreement or the Purchase Note based on any arrangement or agreement made by or on behalf of the Buyer or any of its Affiliates for which the Seller may be held liable.

4.7 Litigation. There are no actions, suits, proceedings, orders or investigations pending or, to the Buyer's knowledge, threatened against or affecting Buyer, at law or in equity, or before or by any Federal, state, municipal or other governmental department, commission, board, bureau, agency or instrumentality, domestic or foreign, which would prevent or otherwise adversely affect the Buyer's performance under this Agreement or the Purchase Note or the Purchase Note or the consummation of the transactions contemplated hereby and thereby.

ARTICLE 5

COVENANTS PRIOR TO CLOSING

5.1 Conduct of Operations. During the period from the date of this Agreement through the Closing Date, the Seller shall operate the Business solely in the Ordinary Course of Business and in compliance with the terms of this Agreement, and all additions, substitutions and changes of form of the Purchased Assets occurring from and after the date hereof shall be deemed to constitute Purchased Assets hereunder. Without limiting the generality of the foregoing, the Seller will use commercially reasonable efforts from the date hereof through the Closing Date, to (a) perform all of its material obligations under all material agreements relating to or affecting the Business or the Purchased Assets; (b) keep in full force and effect all permits, franchises and other rights material to the Business; (c) maintain the books, accounts and records of the Business in all material respects in accordance with past custom and practice as used in connection with the preparation of the unaudited Carve-out Financial Statements; and (d) maintain in full force and effect the existence of all material Intellectual Property.

5.2 Buyer Access to Seller's Records and Premises. From and after the date hereof through the Closing Date, the Seller shall give to the Buyer and the Buyer's counsel and accountants, all reasonable access during normal business hours and upon reasonable notice to all documents, books, records, properties of the Business, so that the Buyer may, at its sole expense, investigate and inspect them, and the Seller will furnish to the Buyer copies of all such documents and information concerning the Purchased Assets and the Business as Buyer may reasonably request; provided, that Buyer shall have no access to the Seller's employees, customers, suppliers or other third parties without Seller's express prior consent, which shall not

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be unreasonably withheld. All information obtained or provided to the Buyer in connection with its investigation of the Seller shall be held subject to Section 5.4.

5.3 Seller Access to Buyer's Records and Premises. From and after the date hereof through the Closing Date, Seller shall have the right to discuss the finances and accounts of the Buyer with its officers at reasonable times and as often as may be reasonably required.

5.4 Buyer Confidentiality. Prior to the Closing, the Buyer will treat and hold as confidential all of the confidential information relating to the Business disclosed to the Buyer in the course of the Buyer's investigation of the Business (the "Seller Confidential Information"), and shall refrain from using or disclosing any of the Seller Confidential Information, except (a) to authorized representatives of the Seller expressly in connection with the transactions contemplated hereby, or (b) to counsel or other advisers for such purpose (provided such advisers agree to comply with the confidentiality provisions of this Section 5.4), unless disclosure is required by law or order of any governmental authority under color of law. In the event that, prior to the Closing the Buyer is requested or required (by written request for information or documents in any legal proceeding, interrogatory, subpoena, civil investigative demand, or similar legal process) to disclose any Seller Confidential Information, the Buyer will notify the Seller promptly of the request or requirement so that the Seller may seek an appropriate protective order or waive compliance with the provisions of this Section 5.4. If, in the absence of a protective order or the receipt of a waiver hereunder, the Buyer is, based on an opinion of counsel, compelled to disclose any Seller Confidential Information to any tribunal or else stand liable for contempt, the Buyer may disclose the Seller Confidential Information to the tribunal; provided, however, that the Buyer shall, upon the request of the Seller, exert all reasonable efforts to obtain, at the reasonable request of the Seller, an order or other assurance that confidential treatment will be accorded to such portion of the Seller Confidential Information required to be disclosed as the Seller shall reasonably designate.

5.5 Seller Confidentiality. Until the third anniversary of the Closing (or, with respect to information relating to any Assigned Contract, until the termination date of such contract, if later), the Seller will treat and hold as confidential all of the confidential information relating to the Buyer disclosed to the Seller in the course of the Seller's investigation of the Buyer and all of the confidential information relating to the Purchased Assets previously treated by Seller as confidential (the "Buyer Confidential Information"), and shall refrain from using or disclosing any of the Buyer Confidential Information, except (a) to authorized representatives of the Seller expressly in connection with the transactions contemplated hereby, or (b) to counsel or other advisers for such purpose (provided such advisers agree to comply with the confidentiality provisions of this Section 5.5), unless disclosure is required by law or order of any governmental authority under color of law. In the event that the Seller is requested or required (by written request for information or documents in any legal proceeding, interrogatory, subpoena, civil investigative demand, or similar legal process) to disclose any Buyer Confidential Information, the Seller will notify the Buyer promptly of the request or requirement so that the Buyer may seek an appropriate protective order or waive compliance with the provisions of this Section 5.5. If, in the absence of a protective order or the receipt of a waiver hereunder, the Seller is, based on an opinion of counsel, compelled to disclose any Buyer Confidential Information to any tribunal or else stand liable for contempt, the Seller may disclose the Buyer Confidential Information to the tribunal; provided, however, that the Seller shall, upon

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the request of the Buyer, exert all reasonable efforts to obtain, at the reasonable request of the Buyer, an order or other assurance that confidential treatment will be accorded to such portion of the Buyer Confidential Information required to be disclosed as the Buyer shall reasonably designate.

5.6 Cooperation. Each party will use commercially reasonable efforts to take all action and to do all things necessary, proper or advisable to consummate and make effective the transactions contemplated by this Agreement, including satisfying the closing conditions set forth in Articles 6 and 7.

5.7 HSR Approval. As promptly as practicable after the date hereof, Buyer and Seller shall file with the Federal Trade Commission and the Antitrust Division of the United States Department of Justice the notifications and other information required to be filed under the HSR Act, or any rules and regulations promulgated thereunder, with respect to the transactions contemplated hereby. Each party warrants that all such filings by it will be, as of the date filed, true and accurate in all material respects and in material compliance with the requirements of the HSR Act and any such rules and regulations. Each of Buyer and Seller agrees to make available to the other such information as each of them may reasonably request relative to its business, assets and property as may be required of each of them to file any additional information requested by such agencies under the HSR Act and any such rules and regulations. Seller and Buyer will supply each other with copies of all correspondence, filings or communication (or memoranda setting forth the substance thereof) between either of them or their respective representatives and the Federal Trade Commission, the Antitrust Division of the United States Department of Justice or any other governmental agency of authority or members of their respective staffs with respect to this Agreement or the transactions contemplated hereby. Without limiting the generality of Section 5.6, each party will use all commercially reasonable efforts to obtain a waiver from the waiting period under the HSR Act, will respond to any governmental inquiries under the HSR Act, and will make any further filings pursuant to the HSR Act that may be necessary, proper, or advisable.

5.8 Notice of Developments. Prior to Closing, the Seller will give prompt written notice to the Buyer upon learning of any material development affecting the Purchased Assets or the financial condition of the Business taken as a whole. If, after such notice, the Buyer fails to terminate this Agreement pursuant to Section 8.1(b), then such notice shall be deemed to have amended the Seller Disclosure Schedule, to have qualified the representations and warranties contained in Article 3, and to have cured any misrepresentation or breach of warranty that otherwise might have existed hereunder by reason of such development.

5.9 Certain Employee and Employee Plan Matters.

(a) Offers of Employment. The Buyer shall make offers of employment on or prior to the Closing Date to the Business Employees on the list that Buyer shall provide to Seller at least 10 days prior to the Closing Date. Any Business Employee who accepts such an offer on or prior to the Closing Date (collectively, the "Transferred Employees") shall be considered to be an employee of the Buyer as of the Closing Date. The terms of employment offered to Business Employees shall be based on the Buyer's existing employment practices and policies and subject to applicable law, provided that it shall be a term of such offer that each such Business Employee

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be entitled to receive (a) cash compensation (including bonus) which is no less generous than that provided by the Seller to such employee immediately prior to the Closing Date, (b) employee benefits consistent with the Buyer's plans, programs and policies, and (c) severance benefits equivalent to, and subject to the same terms and conditions as, those under the Seller's severance pay policies in effect immediately prior to the Closing as set forth on the Seller Disclosure Schedule (the "Severance Pay Policies"), which obligations with respect to cash compensation (including bonus) and severance benefits shall expire no sooner than one (1) year following the Closing Date.

(b) Remaining Employees; Reimbursement of Severance Payments. The Buyer shall have no obligation to employ Business Employees other than the Transferred Employees (Business Employees other than the Transferred Employees being hereinafter referred to as the "Remaining Employees") following the Closing Date. The eligibility of any Remaining Employee whose employment with the Seller is terminated after the Closing Date to receive severance benefits shall be determined under the terms of the Severance Pay Policies, if any, in effect as of the date of such employee's termination. With respect to all Transferred Employees who become entitled to severance benefits within one (1) year following the Closing Date pursuant to subsection (a) above and all Remaining Employees who become entitled to severance benefits on account of termination of employment occurring on or after the Closing Date and on or before the ninetieth (90/th/) day following the Closing Date, the Buyer and the Seller shall share the costs of such benefits as follows: (i) the Buyer shall be responsible for severance benefits in the amount of one (1) week's base salary for each year of service with the Seller in the case of each Remaining Employee, and, in the case of each Transferred Employee, one (1) week's base salary for each year of such Transferred Employee's aggregate service with Seller and with Buyer and (ii) the Seller and the Buyer shall each be responsible for 50% of the cost of severance benefits payable in excess of the amount set forth in (i). For purposes of the foregoing allocation of severance benefit costs, (i) "base salary" shall have a meaning analogous to "Monthly Compensation," as defined in the Baxter International Inc. and Subsidiaries Severance Pay Plan, but expressed on an annual basis; and (ii) severance benefits which the Buyer and the Seller are obligated to pay to Transferred Employees or Remaining Employees, respectively, on account of the requirements of any state, local or foreign country statute shall be considered as having been paid in accordance with the Severance Pay Policies. The Seller shall make payment of the severance benefits described above to the Remaining Employees eligible to receive such payments, and the Buyer shall make payments of the severance benefits described above to the Transferred Employees eligible to receive such payments. The Buyer or the Seller, as applicable, shall make a reimbursement payment to the other in an amount necessary to allocate the financial responsibility for such payment as set forth above, on the one (1) year anniversary date of the Closing Date; provided, however, that if the Buyer owes a reimbursement payment to the Seller under this Section 5.9(b), the Buyer may set such reimbursement payment off against the Distribution Payable and the Credit Amount pursuant to Section 9.4 hereof. Notwithstanding the foregoing, Seller shall pay the cost of any increased amount of severance benefits attributable to the period of time following the Closing Date during which a Remaining Employee remains in the Seller's employ in order to comply with the Worker Adjustment and Retraining Notification Act ("WARN").

(c) Buyer's Assumption of Employee Liability and Indemnity. The Buyer shall assume responsibility for all accrued liabilities of the Seller relating to accrued vacation pay

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and bonuses of Transferred Employees, including the responsibility to make immediate cash payments for such accrued amounts at any time on or after the Closing Date to the extent required under applicable law.

(d) Benefit Plans and Pension Plans. Except to the extent otherwise provided herein, the Buyer shall not assume any obligations arising under any "employee benefit plan" (as such term is defined in Section 3(3) of ERISA) which the Seller maintains relating to any Business Employee (collectively the "Plans"). The active participation of the Transferred Employees in the Plans shall terminate as of the Closing Date, in each case except to the extent that any rights under the Plans shall have vested, or may vest upon fulfillment of certain conditions, in accordance with the terms contained therein; provided, however, that Transferred Employees shall be 100% vested in their account balances under the Seller's Savings Plan and in their accrued benefits under the Baxter International Inc. and Subsidiaries Pension Plan.

(e) Savings Plans. As soon as practicable after the Closing Date, the Seller shall take any action necessary to distribute to the Transferred Employees their account balances (including loans) under the Seller's Savings Plan, as permitted by Section 401(k)(2)(B)(i)(II) of the Code.

(f) Buyer's Plans. The Buyer shall provide for the participation, commencing on the Closing Date, by such of the Transferred Employees who participated in the Plans prior to the Closing Date in the Buyer's employee benefit plans, provided that for purposes of eligibility to participate and vesting under the Buyer's plans (but not for purposes of benefit accruals), the Buyer shall take any and all action necessary (including amendment of the Buyer's plans) to recognize each Transferred Employee's service with the Seller. The Buyer shall recognize each Transferred Employee's years of service with the Seller for all purposes under the Buyer's sick and disability pay plan. No Transferred Employee's participation in any of the Buyer's employee benefit plans shall be limited or restricted due to a preexisting condition limitation in any such plan.

(g) Continuation Coverage. The Seller shall retain liability for employees (and their qualified beneficiaries) receiving or eligible to receive continuation coverage under Part 6 of Title 1 of ERISA and Section 4980B of the Code as of the Closing Date under the Seller's group health plans. All group health plans established or maintained by the Buyer or its Affiliates on or after the Closing Date and for the benefit of Transferred Employees shall comply with all obligations under Part 6 of Title I of ERISA and Section 4980B of the Code applicable to those plans.

(h) WARN. The Buyer shall comply with all notice and other requirements under WARN and any similar state, local, or foreign country statute with respect to all Transferred Employees and all other employees of the Buyer. The Seller shall comply with all notice and any other requirements under WARN and any similar state, local, or foreign country statute with respect to all Remaining Employees and all other employees of the Seller. As soon as administratively practicable following the date of this Agreement, Seller shall provide WARN notice to all Business Employees and shall continue to employ all Remaining Employees until the date that is at least 60 days following the date of delivery of such notice to each such employee.

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(i) Conduct of the Seller Prior to Closing. From the date hereof to the Closing, the Seller shall not change the compensation or benefits provided to any Business Employee other than in the Ordinary Course of Business. The Seller shall promptly provide written notice to the Buyer of any change to the compensation or benefits provided to any Business Employee regardless of whether such change was made in the Ordinary Course of Business.

(j) Canadian Transferred Employees. Notwithstanding any other provision herein to the contrary, the provisions of this Section 5.9(j) shall apply in the case of all Transferred Employees who are persons employed in the Business in Canada (the "Canadian Transferred Employees"). To the extent required under applicable law, the Seller shall offer continued employment as of and following the Closing Date to all Canadian Transferred Employees on substantially the same terms and conditions of employment as in effect with respect to such employees immediately prior to the Closing Date and shall credit each such employee with such employee's prior service with the Seller for all applicable purposes, including a later occurring termination of employment. Subject to Section 5.9(b), the Buyer shall indemnify and save harmless the Seller from any and all claims, liabilities and losses together with all penalties, interest and reasonable legal fees, arising out of or relating to, directly or indirectly, any matters pertaining to any Canadian Transferred Employee for periods on and after the Closing Date.

5.10 Service and Installation. The Buyer shall perform its service and installation obligations under the Service and Installation Agreement attached as Exhibit G hereto (the "Service and Installation Agreement"). If any equipment is returned to the Seller due to the Buyer's failure to perform under the Service and Installation Agreement, the Buyer agrees to purchase such equipment from Seller at inventory book value, with a reduction for any damage or wear and tear.

5.11 No Third-Party Beneficiaries. This Agreement is between the parties hereto only, and nothing herein shall establish any enforceable rights, legal or equitable, in any person other than the Buyer and the Seller, including any employee of the Business. Any claim, including claims for benefits asserted by any Person with respect to his or her employment with the Buyer after the date hereof, shall be governed solely by applicable employment policies and such benefit plans which the Buyer shall maintain for its employees, construed under applicable law.

5.12 No Negotiation. The Seller shall ensure that prior to the Closing, neither the Seller nor any of the Seller's representatives, directors, officers or managers directly or indirectly (a) solicits or encourages the initiation of any inquiry, proposal or offer from any Person (other than Buyer) relating to the Business or the Purchased Assets; (b) participates in any discussions or negotiations or provides any non-public information to, any Person (other than the buyer) relating to the Business or the Purchased Assets; or (c) considers the merits of any unsolicited inquiry, proposal or offer from any Person (other than the Buyer) relating to the Business or the Purchased Assets.

5.13 Use of Seller's Trademarks. Buyer agrees that neither it not any of its Affiliates shall use any trademark, service mark or trade name of Seller or any of its Affiliates. Buyer

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shall, promptly after the Closing Date, make such alterations to the Purchased Assets as may be necessary to, at the Buyer's option, either (i) remove, or (ii) permanently conceal, any markings (including, without limitation, trademarks, service marks and trade names) which reference or suggest any association of the Purchased Assets with Seller. Notwithstanding the inclusion of the packaging materials in the Purchased Assets, Buyer shall be solely responsible for labeling in accordance with all requirements of law, all products sold by it following the Closing Date, and it will indicate on such packaging that it is the manufacturer of such products.

5.14 Collection of Accounts Receivable.

(a) Seller shall be entitled to control all collection actions related to the accounts receivable retained by Seller pursuant to Section 1.2(a) or (c), including the determination of what actions are necessary or appropriate and when and how to take any such action. In furtherance thereof, Seller may, in its discretion, bring any action to recover the equipment or other products that are the subject of any such account receivable that may be overdue. In such event, Seller shall be entitled to retain any such recovered equipment or other products in full or partial satisfaction of the indebtedness to Seller represented by such account receivable, and Buyer agrees to deliver to Seller, upon request, Buyer's acknowledgement of Seller's right to retain such equipment and other products or an assignment to Seller of any rights or claims that Buyer may have in or to such equipment or products. In addition, upon request of Seller, Buyer shall purchase any recovered equipment or other products from Seller, on an "as is, where is" basis, at the lower of (i) cost less five year straight line depreciation or (ii) fair market value. Notwithstanding anything to the contrary in this Section 5.14(a) Seller and Buyer shall cooperate to collect such accounts receivable and avoid the recovery of equipment or products in satisfaction of receivables and subsequent required purchase of such recovered equipment by Buyer.

(b) If, after the Closing Date, Buyer shall receive any remittance from any account debtors with respect to the accounts receivable of Seller, including any accounts receivable included in the Excluded Assets, Buyer shall endorse such remittance to the order of Seller and forward it to Seller immediately upon receipt thereof. In connection with payments received by Buyer, if a payment is received from an account debtor who has not designated the invoice being paid thereby, such payment shall be applied to the earliest invoice outstanding with respect to indebtedness of such account debtor owing to either Buyer or Seller.

5.15 Purchase of Leased Equipment. In the event that the current term of any Excluded Lease retained by Seller pursuant to Section 1.2(c) shall expire without default by the lessee thereunder, Buyer shall upon request of Seller, purchase from Seller all equipment and other products that were the subject of such Excluded Lease. Such purchase shall be on an "as is, where is" basis, without warranties other than as to defects in title arising through Seller, and shall be for a purchase price of $1.00. Upon any such purchase, Seller shall delivery to Buyer any and all instruments and other documents as Buyer may reasonably request to evidence the transfer of such equipment and other products from Seller to Buyer.

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ARTICLE 6

CONDITIONS PRECEDENT TO THE BUYER'S OBLIGATIONS

The obligations of the Buyer to consummate the transactions contemplated by this Agreement are subject to the satisfaction or waiver of each of the following conditions precedent on or prior to the Closing Date:

6.1 The Seller's Closing Documents. The Seller shall have executed and delivered to the Buyer on or before the Closing Date all of the documents to be provided by the Seller pursuant to Section 9.2 hereof.

6.2 Representations and Warranties. All representations and warranties of the Seller contained in this Agreement shall have been true and correct as of the date hereof and shall be true and correct on the Closing Date as if made again on the Closing Date (unless such representations and warranties expressly speak as of a specific date other than the date hereof or thereof and in all cases, without giving effect to any standard, qualification or exception with respect to "materiality"), except as would not have a Material Adverse Effect and except for changes therein specifically permitted or contemplated by this Agreement or expressly consented to in writing by the Buyer or any transaction permitted by Section 5.1.

6.3 Obligations. The Seller shall have performed in all material respects all covenants and obligations required by this Agreement to be performed by the Seller prior to or on the Closing Date.

6.4 No Injunction or Restraint. No injunction or restraining order shall have been issued by any court of competent jurisdiction and be in effect which restrains or prohibits any material transaction contemplated hereby and no petition in bankruptcy, insolvency or similar proceeding shall have been instituted against Seller and Seller shall not have made a general assignment for the benefit of creditors.

6.5 Legal Opinion of Counsel for the Seller. The Buyer shall have received an opinion of counsel for the Seller, addressed to the Buyer and dated the Closing Date, in substantially the form of Exhibit D attached hereto.

6.6 Consents from Third Parties. All governmental consents, permissions and approvals, if any, necessary to consummate the transactions contemplated herein and to permit the continuation of the Business by the Buyer after the Closing shall have been received by Buyer on or prior to the Closing Date, except where the failure to obtain any such consent, permission or approval would not have a Material Adverse Effect.

6.7 HSR Clearance. All applicable waiting periods under the HSR Act shall have expired or otherwise been terminated with respect to the transactions contemplated hereby.

6.8 No Material Adverse Change. Since the date hereof, there shall have occurred no Material Adverse Effect.

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6.9 Audited Financials. The Buyer shall have received from the Seller financial statements relating to the Business for the years ended December 31, 1996 and 1997 meeting the requirements of Rules 3-01 and 3-02 of Regulation S-X (the "Carve-out Financial Statements") which have been audited by PricewaterhouseCoopers LLP, the Seller's independent auditors

6.10 Carve-Out Financials. The Buyer shall have received from Seller by January 25, 1999 a reconciliation of the Latest Balance Sheet to the unaudited Carve-out Financial Statements, prepared in accordance with GAAP.

Any conditions specified in this Article 6 may be waived only in writing by the Buyer.

ARTICLE 7

CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE SELLER

The obligations of the Seller to consummate the transactions contemplated by this Agreement are subject to the satisfaction or waiver, on or prior to the Closing Date, of each of the following conditions precedent:

7.1 Buyer' Closing Documents. The Buyer shall have executed (as appropriate) and delivered to the Seller on or before the Closing Date, all of the documents which are to be delivered to the Seller pursuant to Section 9.3 hereof.

7.2 Representations and Warranties. All representations and warranties of the Buyer contained in this Agreement and the Loan Agreement shall be true and correct as of the date hereof and on the Closing Date as if made again on and with respect to the Closing Date (unless such representations and warranties expressly speak as of a specific date other than the date hereof or thereof and in all cases, without giving effect to any standard, qualification or exception with respect to "materiality"), except as would not have a Material Adverse Effect and except for changes therein specifically permitted or contemplated by this Agreement or expressly consented to in writing by the Seller.

7.3 Obligations. The Buyer shall have tendered the Purchase Note and shall have performed in all material respects all covenants and obligations required by this Agreement and the Loan Agreement to be performed by Buyer prior to or on the Closing Date.

7.4 No Injunction or Restraint. No injunction or restraining order shall have been issued by any court of competent jurisdiction and be in effect which restrains or prohibits any material transaction contemplated hereby and no petition in bankruptcy, insolvency or similar proceeding shall have been instituted against Buyer and Buyer shall not have made a general assignment for the benefit of creditors.

7.5 No Material Adverse Change. Since the date hereof, there shall have been no material adverse effect or impact upon the assets, business, financial condition or results of operations of the Buyer other than (a) the assumption of debt in connection with the transactions contemplated hereby and by the Purchase Note or the Loan Agreement, (b) changes (i) relating

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to generally applicable economic conditions or the industry of the Buyer in general, (ii) resulting from the announcement by Buyer of its intention to purchase the Purchased Assets or (iii) resulting from the execution of this Agreement or the consummation of the transactions contemplated hereby.

7.6 HSR Approval. All applicable waiting periods under the HSR Act shall have expired or otherwise been terminated with respect to the transactions contemplated hereby.

7.7 Legal Opinion. The Seller shall have received an opinion of Cooley Godward LLP, counsel for Buyer, addressed to the Seller and dated the Closing Date, in substantially the form of Exhibit E

7.8 Consents and Approvals. All governmental consents, permissions and approvals, if any, necessary to consummate the transactions contemplated herein shall have been received on or prior to the Closing Date except where the failure to obtain any such consent, permission or approval would not have a material adverse effect upon the assets, business, financial condition or results of operations of the Seller.

7.9 Loan Agreement. No Event of Default under the Loan Agreement shall have occurred.

7.10 Companion Sale. Seller shall have executed an agreement to sell the assets of the Seller's ATC and Optifill businesses, on terms and conditions acceptable to Seller at the time of such execution, on or before December 31, 1998 and such agreement shall be in full force and effect on December 31, 1998.

Any conditions specified in this Article 7 may be waived only in writing by the Seller.

ARTICLE 8

TERMINATION

8.1 Termination. This Agreement may be terminated any time prior to the Closing:

(a) by the mutual written consent of Buyer and the Seller;

(b) by Buyer at any time after the close of business on December 31, 1998 if Seller shall not have delivered a written notice to Buyer by the close of business on December 31, 1998 that Section 7.10 has been satisfied or waived;

(c) by Buyer upon written notice to the Seller within fifteen (15) business days of the receipt by Buyer of any notice by Seller pursuant to
Section 5.8 if the development that is the subject of such notice has had or will have a Material Adverse Effect;

(d) by Buyer, upon written notice to the Seller at any time prior to the Closing, if (i) there has been a material misrepresentation, a material breach of warranty or material breach of a covenant on the part of the Seller which has not been cured to the Buyer's

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reasonable satisfaction within ten (10) business days after notice of such breach has been received by the Seller or (ii) at any time after March 31, 1999; or

(e) by the Seller upon written notice to the Buyer at any time prior to the Closing, if (i) there has been a material misrepresentation, a material breach of warranty or material breach of a covenant on the part of the Buyer which has not been cured to the Seller's reasonable satisfaction within ten (10) business days after notice of such breach has been received by the Buyer, or
(ii) at any time after March 31, 1999.

8.2 Effect of Termination. In the event of termination of this Agreement pursuant to Section 8.1, this Agreement will forthwith become void and there will be no further liability on the part of Buyer or the Seller hereunder, except liability of any party for breaches of this Agreement prior to the time of such termination, and except that the covenants and agreements set forth in Sections 5.4, 5.5, 12.7, 12.10, and this Section 8.2, shall survive such termination indefinitely.

ARTICLE 9

CLOSING

9.1 Time and Place of Closing. The consummation of the purchase and sale of the Purchased Assets and the related transactions contemplated hereby ("Closing") shall take place at 10:00 a.m., local time on the later of January 29, 1999 or the business day immediately following the satisfaction or waiver of the conditions set forth in Article 6 and Article 7, at the offices of Sidley & Austin, One First National Plaza, Chicago, Illinois, 60603 or at such other time, date or place as the parties hereto may mutually agree. The date and time of Closing are referred to herein as the "Closing Date."

9.2 Deliveries by the Seller. At the Closing the Seller shall deliver the following instruments and documents to the Buyer or their designees:

(a) the Bill of Sale as provided in Section 1.1;

(b) copies of resolutions of the Seller's Board of Directors authorizing the execution of this Agreement and the consummation of the transactions and conveyance of Purchased Assets contemplated herein, which resolutions shall have been certified as true, correct and in full force and effect as of the Closing Date by the Secretary of the Seller;

(c) Deliver possession to Buyer at the Round Lake, Illinois, location of the Business, all Seller's books, records, documents and other written materials included as part of the Purchased Assets;

(d) the opinion of counsel provided for in Section 6.5;

(e) an executed counterpart to the Assumption Agreement as provided in Section 2.3;

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(f) A certificate, dated as of the Closing Date ("Seller Closing Certificate") and executed by an officer of the Seller, certifying that (i) all representations and warranties of the Seller contained in this Agreement were true and accurate as of the date of this Agreement (unless such representations and warranties expressly speak as of a specific date other than the date hereof, and in any case, without giving effect to any standard, qualification or exception with respect to "materiality"), except as would not have a Material Adverse Effect and except for changes therein specifically permitted or contemplated by this Agreement or expressly consented to in writing by the Buyer; (ii) all of said representations and warranties are, by the execution and delivery of the Seller Closing Certificate, made again on and as of the Closing Date and are then true and accurate as though then made (unless such representations and warranties expressly speak as to a specific date other than the date thereof and, in any case, without giving effect to any standard, qualification or exception with respect to "materiality"), except as would not have a Material Adverse Effect and except for changes therein specifically permitted or contemplated by this Agreement or expressly consented to in writing by the Buyer); and (iii) the Seller has performed and complied in all material respects with all the covenants, agreements and conditions required by this Agreement to be performed or complied with by the Seller prior to or on the Closing Date;

(g) An executed counterpart to the Transition Services Agreement in the form attached hereto as Exhibit F (the "Transition Services Agreement"); and

(h) An executed counterpart to the Service and Installation Agreement.

9.3 Deliveries by the Buyer. At the Closing, the Buyer shall deliver the following instruments, documents and consideration:

(a) copies of resolutions of the Buyer's Board of Directors authorizing the execution of this Agreement, the Loan Agreement, the Purchase Note and the other agreements contemplated hereby and thereby and the consummation of the transactions contemplated herein and therein which resolutions are certified as true, correct and in full force and effect as of the Closing Date by the Secretary of the Buyer;

(b) $2,000,000 by wire transfer of immediately available funds;

(c) the executed original Loan Agreement;

(d) the executed original Purchase Note;

(e) an executed counterpart of the Assumption Agreement as provided in Section 2.3;

(f) the opinion of counsel provided for in Section 7.7;

(g) a certificate dated the Closing Date (the "Buyer's Closing Certificate"), executed by an officer of the Buyer and certifying that (i) all representations and warranties of the Buyer contained in this Agreement were true and accurate as of the date of this Agreement (unless such representations and warranties expressly speak as of a specific date other than the date hereof, and in any case, without giving effect to any standard, qualification or exception

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with respect to "materiality"), except as would not have a Material Adverse Effect and except for changes therein specifically permitted or contemplated by this Agreement or expressly consented to in writing by the Seller; (ii) all of said representations and warranties are, by the execution and delivery of the Buyer's Closing Certificate, made again on and as of the Closing Date and are then true and accurate as though then made (unless such representations and warranties expressly speaks as of a specific date other than the date thereof, and in any case, without giving effect to any standard, qualification or exception with respect to "materiality"), except as would not have a Material Adverse Effect and except for changes therein specifically permitted or contemplated by this Agreement or expressly consented to in writing by the Seller; and (iii) the Buyer has performed and complied in all material respects with all the covenants, agreements and conditions required by this Agreement to be performed or complied with by the Buyer prior to or on the Closing Date;

(h) an executed counterpart to the Transition Services Agreement; and

(i) an executed counterpart to the Service and Installation Agreement.

9.4 Termination of Distribution Agreement; Credit Against Reimburseable Expenses. Seller and Buyer hereby agree that the Distribution Agreement, dated as of the 13/th/ day of August, 1996 between Seller and Buyer (the "Distribution Agreement") shall automatically terminate as of the Closing notwithstanding any terms to the contrary set forth in such Distribution Agreement. The parties agree that $606,968 is due under the Distribution Agreement as of the date hereof and that the sum of such amount and any amounts due from Seller to Buyer pursuant to the Distribution Agreement which are incurred between the date hereof and the Closing, (such sum the "Distribution Payable") shall not be due and payable until the first anniversary of the Closing Date notwithstanding anything to the contrary in the Distribution Agreement. In addition, in consideration for $100,000 of the Purchase Price, Buyer shall also be entitled to a credit in the amount of $100,000 (the "Credit Amount") against its obligation to make a reimbursement payment under Section 5.9(b). To the extent that on the first anniversary of the Closing Date the sum of the Distribution Payable and the Credit Amount exceeds any amounts Buyer owes to Seller under
Section 5.9, Buyer may at its option set off any such excess amount (the "Setoff Amount") against the Purchase Note (as hereinafter described) or require Seller to pay in cash, such excess amount. Buyer shall provide notice to Seller, on the first anniversary of the Closing Date, of its election to setoff the Setoff Amount against the "Obligations" (as defined in the Loan Agreement) owed to Seller. The Setoff Amount shall be applied against the amount due on the first "Interest Payment Date" (as defined in the Loan Agreement) to occur after the first anniversary of the Closing Date. In the event the Setoff Amount exceeds the amount due on such Interest Payment Date, Buyer shall apply and Seller shall accept such excess against each Interest Payment thereafter until the Setoff Amount is reduced to $0. The Seller and Buyer hereby agree to amend such Loan Agreement to allow for the setoff contemplated above in the event Buyer makes such an election. Except as set forth herein, Seller and Buyer each release the other from any and all liabilities and obligations under or arising from the Distribution Agreement.

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ARTICLE 10

POST-CLOSING OBLIGATIONS OF THE PARTIES

10.1 Further Obligations of the Parties. On and after the Closing Date:

(a) Each party shall execute all certificates, instruments and other documents and take all actions reasonably requested by the other party to effectuate the purposes of this Agreement and to consummate and evidence the consummation of the transactions herein provided for including, without limitation, such documents as may be required to effectuate the assignment and transfer of the Intangible Assets, including the Intellectual Property. Without limiting the generality of the foregoing, the Seller and the Buyer, agree to cooperate with each other and to provide each other with all information and documentation reasonably necessary to permit the preparation and filing of all United States Federal, state, local, and other Tax returns and Tax elections with respect to the Business.

(b) The Seller shall take all action reasonably necessary or appropriate to put the Buyer in immediate actual possession and operating control of all of the Purchased Assets.

(c) The Buyer and the Seller each agree to deliver to the other party (or to such governmental or taxing authority as the other party reasonably directs) any form of document that may be required or reasonably requested in order to obtain an exemption with respect to any Federal, state municipal or other, sales, use or other transfer Taxes that may otherwise be required to be paid on the transfer of the Purchased Assets or that may otherwise be due with respect to such transfer, promptly upon the earlier of (i) reasonable demand by the other party or (ii) learning that such form or document is required.

(d) The Buyer shall preserve and keep the records of the Business existing on the Closing Date for a period of ten (10) years from the Closing Date, or for any longer period as may be required by any government agency or ongoing litigation, and shall make such records available to the Seller as may be reasonably required by the Seller in connection with any legal proceedings against or governmental investigations of the Seller with respect to the Business. The Buyer shall notify the Seller sixty days prior to destroying such records and shall afford the Seller the opportunity to have such records sent to the Seller at Seller's sole expense.

(e) The Buyer shall perform its obligations under the Services and Installation Agreement.

10.2 Taxes. The Buyer will assist the Seller with the preparation of the portion of the Seller's 1998 and 1999 consolidated federal income tax returns and state or local income tax returns relating to the operations of the Business during the period beginning on January 1, 1998 and ending on the Closing Date in a timely manner consistent with prior practices. The Buyer shall be responsible for filing all federal, state and local income Tax returns and other state and local Tax returns for the Business which are due (after taking into account any applicable extensions of time to file) after the Closing Date for periods beginning on or after the Closing Date and for making required payments due with such returns. Without limiting the generality of Section 10.1(a), the Seller and the Buyer agree to cooperate with each other in connection with

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any official Tax inquiry, Tax examination or Tax-related legal proceeding with respect to the Business.

10.3 Sales Taxes. The Seller shall bear and pay, and if assessed against or paid by the Buyer, shall (after receipt of appropriate documentation from the Buyer) reimburse the Buyer for sales taxes, use taxes, transfer taxes, documentary changes, recording fees or similar taxes, charges or fees that may properly become payable in connection with the sale of the Purchased Assets to the Buyer. Buyer shall provide Seller with a reasonable opportunity to review all tax returns relating to such taxes prior to filing such returns.

10.4 Delivery of 1998 Audited Financials. On or before March 15, 1999 the Seller shall deliver to Buyer financial statements relating to the Business for the year ended December 31, 1998 meeting the requirements of Rules 3-01 and 3-02 of Regulation S-X which have been audited by PricewaterhouseCoopers LLP, the Seller's independent auditors.

10.5 Seller Covenant Not to Compete. Seller agrees that for a period of three years after the Closing Date, neither it nor any of its Affiliates will, directly or indirectly, own, manage, operate, join, control or participate in the ownership, management, operation or control of, any business whether in corporate, proprietorship or partnership form or other wise as more than a five percent owner in such business where such business is engaged in the manufacture or sale of storage and dispensing cabinets for medication that include hardware and software designed to track the dispensing of medications ("Competitive Products") provided, however, that the foregoing shall not prohibit Seller or any of such Affiliates from acquiring an interest in an entity or business which manufactures or sells Competitive Products so long as Seller or any such Affiliate divests itself of the assets of such acquired entity or business which manufactures or sells Competitive Products within twelve months of such acquisition; and provided further that nothing in this Section 10.5 shall prevent the Seller from acquiring a passive investment of less than 5% of the outstanding shares of capital stock of such an entity or business so long as Seller does not have rights to hold a seat on the Board of Directors or otherwise have rights to exercise control over such an entity. The parties hereto specifically acknowledge and agree that the remedy at law for any breach of the foregoing will be inadequate and that Buyer, in addition to any other relief available to it, shall be entitled to temporary and permanent injunctive relief without the necessity of proving actual damage. In the event that the provisions of this Section 10.5 should ever be deemed to exceed the limitation provided by applicable law, then the parties hereto agree that such provisions shall be reformed to set forth the maximum limitations permitted.

ARTICLE 11

SURVIVAL OF WARRANTIES AND INDEMNIFICATION

11.1 Survival.

(a) Subject to Section 11.1(b), all of the representations and warranties of each party made in this Agreement shall survive (i) the Closing and the sale of the Purchased Assets to the Buyer; (ii) any sale or other disposition of any or all of the Purchased Assets by the Buyer, provided, however, that such representations and warranties shall not survive the sale or

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other disposition of all or substantially all of the Purchased Assets by the Buyer unless the Purchase Note shall have been paid in full; and (iii) the dissolution of any party to this Agreement. The representations, warranties, covenants and obligations of the Seller and the rights and remedies that may be exercised by the Buyer, shall not be limited or otherwise affected by or as a result of any information furnished to, or any investigation made by or any knowledge of, the Buyer or any of its Representatives to the extent that such knowledge was shared with the Seller.

(b) The representations and warranties set forth in Article 3 and Article 4 shall expire on the second anniversary of the Closing; provided, however, that if a Claim Notice relating to any such representation, warranty or rights set forth in Article 3 or Article 4 is given to the party from which indemnification is sought (the "Indemnifying Party") on or prior to the date such representation or warranty would otherwise expire, then, notwithstanding anything to the contrary contained in this Section 11.1(b), the indemnification obligations of the Indemnifying Party arising pursuant to such representation, warranty or rights shall not so expire with respect to matters relating to the subject matter described in such Claim Notice, but rather shall remain in full force and effect until such time as the liability of the Indemnifying Party with respect to matters relating to the subject matter described in such Claim Notice has been fully and finally resolved, either by means of a written settlement agreement executed on behalf of the Indemnifying Party and the party seeking indemnification, or by means of a final, non-appealable judgment issued by a court of competent jurisdiction.

(c) For purposes of this Agreement, a "Claim Notice" relating to a particular representation or warranty shall be deemed to have been given if the party seeking indemnification, acting in good faith, delivers to the Indemnifying Party a written notice stating that the party seeking indemnification believes that there is or has been a breach of such representation or warranty and containing a brief description of the circumstances supporting the such party's belief that there is or has been such a breach.

11.2 Indemnification by the Seller. Subject to Section 11.3, the Seller shall indemnify and hold the Buyer harmless from and against the entirety of any Adverse Consequences the Buyer may suffer, sustain or become subject to ("Buyer Indemnifiable Losses"), resulting from, arising out of or, relating to (i) any breach or inaccuracy of the representations and warranties of the Seller set forth in this Agreement other than the representation and warranties contained in Section 3.11; (ii) any nonfulfillment or breach of any covenant or agreement on the part of the Seller in this Agreement; (iii) any Liability relating to the Business on or prior to the Closing Date that is not an Assumed Liability; (iv) any claim made by any person who was an employee of Seller prior to Closing which arose out of facts or circumstances occurring or existing prior to Closing; and (v) any liability imposed under WARN with respect to Remaining Employees.

11.3 Limits on the Seller's Indemnification Obligation. The obligation of the Seller to indemnify the Buyer under Sections 11.2(i) and (ii) above shall be subject to the following limitations:

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(a) The aggregate liability of the Seller hereunder with respect to all Buyer Indemnifiable Losses under Sections 11.2(i) and (ii), other than in connection with its obligations under Sections 5.9 and 9.4, shall not exceed $7,000,000

(b) The Seller will not have any obligation to indemnify the Buyer with respect to any Buyer Indemnifiable Losses under Sections 11.2(i) and (ii) other than in connection with its obligations under Sections 5.9 and 9.4 until the Buyer shall first have suffered such aggregate Buyer Indemnifiable Losses in excess of $300,000 (at which point the Seller will be obligated to indemnify the Buyer only for Buyer Indemnifiable Losses exceeding such amount).

(c) Buyer Indemnifiable Losses shall be calculated net of any reserves set forth on the Closing Balance Sheet.

11.4 Indemnification by Buyer. Buyer shall indemnify and hold the Seller harmless from and against the entirety of any Adverse Consequences the Seller may suffer, sustain or become subject to ("Seller Indemnifiable Losses"), resulting from, arising out of or relating to (i) the Assumed Liabilities and any Liability relating to the Business after the Closing Date, (ii) any breach or inaccuracy of the representations and warranties of the Buyer set forth in this Agreement; (iii) any nonfulfillment or breach of any covenant or agreement on the part of Buyer in this Agreement; and (iv) any liability imposed under WARN with respect to Transferred Employees.

11.5 Limits on Buyer's Indemnification Obligations. The obligation of Buyer to indemnify the Seller under Sections 11.4(ii) and (iii) above shall be subject to the following limitations:

(a) The aggregate liability of the Buyer hereunder with respect to all Seller Indemnifiable Losses under Sections 11.4(ii) and (iii), other than in connection with its obligations under Section 5.9 shall not exceed $7,000,000.

(b) The Buyer will not have any obligation to indemnify the Seller with respect to any Seller Indemnifiable Losses under Sections 11.4(ii) and
(iii) other than in connection with its obligations under Section 5.9 until the Seller shall first have suffered such aggregate Seller Indemnifiable Losses in excess of $300,000 (at which point the Buyer will be obligated to indemnify the Seller only for Seller Indemnifiable Losses exceeding such amount).

11.6 Matters Involving Third Parties.

(a) If any third party shall notify any party to this Agreement (the "Indemnified Party") with respect to any matter (a "Third Party Claim") which may give rise to a claim for indemnification against any other party to this Agreement under this Article 11, then the Indemnified Party shall promptly notify each Indemnifying Party thereof in writing; and the failure to give such timely notice shall relieve the Indemnifying Party of its indemnification obligations under this Article 11 only to the extent such delay or failure materially and adversely affects the defense of such claim.

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(b) The Indemnifying Party will have the right, upon notification to the Indemnified Party at any time within fifteen (15) days after the Indemnified Party has given notice of the Third Party Claim, to assume the defense of the Third Party Claim with counsel of its choice reasonably satisfactory to the Indemnified Party; provided that the Indemnified Party may retain separate co- counsel at its own cost and expense and participate in the defense of the Third Party Claim, provided further, that if the Indemnified Party reasonably determines that (i) a conflict of interest between it and the Indemnifying Party will exist with respect to the Third Party Claim, or (ii) that the Third Party Claim will adversely affect it other than as a result of monetary damages for which it would be entitled to indemnification, it may, by notice to the Indemnifying Party, assume the exclusive right to defend such Third Party Claim. If the Indemnifying Party does not give such notice within 15 days, the Indemnified Party may proceed with the defense of such claim or proceeding on its own. If the Indemnified Party proceeds with the defense of such claim or proceeding on its own, the Indemnifying Party shall make available to the Indemnified Party any documents and materials in its control or possession that may be necessary to the defense of such claim.

(c) In connection with any Third Party Claim (i) the Indemnifying Party will not consent to the entry of any judgment or enter into any settlement with respect to the Third Party Claim without the prior written consent of the Indemnified Party (not to be unreasonably withheld, conditioned or delayed) unless the judgment or proposed settlement involves only the payment of money damages which will be paid by the Indemnifying Party and contains a release of the Indemnified Party from all Liability with respect to the matter and does not impose an injunction or other equitable relief upon the Indemnified Party and
(ii) the Indemnified Party will not consent to the entry of any judgment or enter into any settlement with respect to the Third Party Claim without the prior written consent of the Indemnifying Party (provided that, if the Indemnifying Party has not assumed and is not actively and diligently conducting the defense of such Third Party Claim, then such consent shall not be unreasonably withheld, conditioned or delayed).

11.7 Additional Limitations.

(a) In any case where an Indemnified Party recovers from third Persons any amount which in the aggregate equals or exceeds such Indemnified Party's Indemnifiable Losses in respect of a matter with respect to which an Indemnifying Party has indemnified it pursuant to this Article 11 such Indemnified Party shall promptly pay over to the Indemnifying Party the amount so recovered (after deducting therefrom the full amount of the expenses incurred by it in procuring such recovery), but not in excess of the sum of (i) any amount previously so paid by the Indemnifying Party to or on behalf of the Indemnified Party in respect of such matter and (ii) any amount expended by the Indemnifying Party in pursuing or defending any claim arising out of such matter.

(b) Except for remedies that cannot be waived as a matter of law and injunctive and provisional relief, if the Closing occurs, this Article 11 shall be the exclusive remedy for breaches of this Agreement (including any covenant, obligation, representation or warranty contained herein) or otherwise in respect of the sale of the Purchased Assets contemplated hereby. In furtherance of the foregoing, Buyer hereby waives, to the fullest extent permitted by law, any and all rights, claims and causes of action it may have against Seller or its

33.


Affiliates arising under or based upon any law (including any such rights, claims or causes of action arising under or based upon common law or otherwise); provided, however, nothing contained in this Agreement shall preclude the assertion by Buyer or its Affiliates of any cause of action that may exist, not based upon breach of contract, for fraud.

(c) Notwithstanding anything contained herein to the contrary, no party shall have any liability hereunder for any lost profits or any special, indirect, consequential, incidental, exemplary or punitive damages, each of which is hereby excluded by agreement of the parties regardless of whether or not any party has been advised of the possibility of such damages.

ARTICLE 12

MISCELLANEOUS PROVISIONS

12.1 Certain Definitions. Unless the context otherwise requires, capitalized terms used in this Agreement and not otherwise defined herein shall have the following meanings for all purposes of this Agreement:

"Adverse Consequences" means all charges, complaints, actions, suits, proceedings, hearings, investigations, claims, demands, judgments, orders, decrees, stipulations, injunctions, damages (but not consequential or incidental damages), dues, penalties, fines, costs, amounts paid in settlement, Liabilities, obligations, Taxes, liens, losses, expenses, and fees, including reasonable attorneys, consultants and experts fees and court costs.

"Affiliate" means, with respect to any particular Person, any Person controlling, controlled by or under common control with such Person.

"Agreement" shall have the meaning set forth in the Recitals.

"Arbitrating Accountants" has the meaning set forth in Section 2.2(b).

"Assigned Contracts" shall have the meaning set forth in Section 1.1(e).

"Assumed Liabilities" shall have the meaning set forth in Section 2.3(a).

"Assumption Agreements" shall have the meaning set forth in Section 2.3(a).

"Bill of Sale" shall have the meaning set forth in Section 1.1.

"Business" shall have the meaning set forth in the Recitals.

"Business Employees" shall have the meaning set forth in Section 3.14(a).

"Business Records" shall have the meaning set forth in Section 1.1(g).

"Buyer" shall have the meaning set forth in the Introduction.

"Buyer's Accountants" shall have the meaning set forth in Section 2.2(a).

34.


"Buyer Balance Sheet" shall have the meaning set forth in Section 4.4.

"Buyer's Closing Certificate" shall have the meaning set forth in Section 9.3(g).

"Buyer Confidential Information" shall have the meaning set forth in
Section 5.5.

"Buyer Financial Statements" shall have the meaning set forth in Section 4.4.

"Buyer Indemnifiable Losses" shall have the meaning set forth in Section 11.2.

"Carve-out Financial Statements" shall have the meaning set forth in
Section 6.9.

"Closing" shall have the meaning set forth in Section 9.1.

"Closing Balance Sheet" shall have the meaning set forth in Section 2.2(b).

"Closing Date" shall have the meaning set forth in Section 9.1.

"Code" means the Internal Revenue Code of 1986, as amended.

"Contracts" shall have the meaning set forth in Section 1.1(e).

"Credit Amount" shall have the meaning set forth in Section 9.4.

"Draft Closing Balance Sheet" shall have the meaning set forth in Section 2.2(a).

"Distribution Agreement" shall have the meaning set forth in Section 9.4.

"Distribution Payable" shall have the meaning set forth in Section 9.4.

"Equipment" shall have the meaning set forth in Section 1.1(a).

"ERISA" means the Employee Retirement Income Security Act of 1974, as amended.

"Excluded Assets" shall have the meaning set forth in Section 1.2.

"Excluded Contract" shall have the meaning set forth in Section 1.1(e).

"Excluded Leases" shall have the meaning set forth in Section 1.2(c).

"Foreign Customer Contracts" shall have the meaning set forth in Section 1.2(g).

"GAAP" means United States generally accepted accounting principles as in effect from time to time, applied consistently with the principles used in preparing the Financial Statements for the Most Recent Fiscal Year End.

"HSR Act" shall mean the Hart-Scott-Rodino Antitrust Improvements Act of 1976 and the rules promulgated thereunder.

35.


"Intellectual Property" means all of the following which is owned by, licensed by, licensed to, used or held for use by the Seller primarily in connection with the Business (including, without limitation, all intellectual property and proprietary rights listed in Part 3.9 of the Seller Disclosure Schedule): (i) all registered and unregistered trademarks, trade dress, service marks, logos and trade names (including the name "SureMed") and all applications to register the same (the "Trademarks"); (ii) all issued U.S. and foreign jurisdiction patents and pending patent applications, patent disclosures and improvements thereto (the "Patents"); (iii) all registered and unregistered copyrights and all applications to register the same (the "Copyrights"); (iv) all computer software and databases owned or used by the Seller (the "Software"); (v) all licenses and agreements pursuant to which the Seller has acquired rights in or to the Trademarks, Patents, Copyrights or Software (excluding software and databases licensed to the Seller under nonexclusive software licenses granted to end-user customers by third parties in the ordinary course of such third parties' business) ("Licenses-In"); and (vi) trade secrets, know-how, inventions (whether or not patentable and whether or not reduced to practice), processes, procedures, drawings, specifications, designs, plans, proposals, technical data and other, copyrightable works and proprietary information.

"Indemnified Party" shall have the meaning set forth in Section 11.6.

"Indemnifying Party" shall have the meaning set forth in Section 11.1(b).

"Intangible Assets" shall have the meaning set forth in Section 1.1(d).

"Intangible Asset Value of the Business" shall have the meaning set forth in Section 2.1(b)(iv).

"Inventory" shall have the meaning set forth in Section 1.1(b).

"Latest Balance Sheet" shall have the meaning set forth in Section 3.5.

"Licenses-In" shall have the meaning set forth in Section 3.9(a).

"Liabilities Not Assumed" shall have the meaning set forth in Section 2.3(b).

"Liability" means any liability (whether known or unknown, whether absolute or contingent, whether liquidated or unliquidated, and whether due or to become due) or indebtedness, including any liability for Taxes.

"Loan Agreement" shall have the meaning set forth in Section 2.1.

"Material Adverse Effect" means a material adverse effect or impact upon the assets, business, financial condition or results of operations of the Business, other than changes (a) relating to generally applicable economic conditions or the industry of the Business in general, (b) resulting from the announcement by Seller of its intention to sell the Purchased Assets or (c) resulting from the execution of this Agreement or the consummation of the transactions contemplated hereby..

"Most Recent Fiscal Year End" shall have the meaning set forth in Section 4.4.

36.


"Net Tangible Asset Value" shall have the meaning set forth in Section 2.1(b)(ii).

"Ordinary Course of Business" means the ordinary course of the day to day operations of the Business consistent with past custom and practice of the Business, and shall not include matters that must be specifically authorized by Seller's I.V. Systems Division.

"Permits" shall have the meaning set forth in Section 3.15.

"Person" means any individual, trust, corporation, partnership, limited liability company or other business association or entity, court, governmental body or governmental agency.

"Plans" shall have the meaning set forth in Section 5.9(d).

"Preliminary Purchase Price" shall have the meaning set forth in Section 2.1(a).

"Purchase Note" shall have the meaning set forth in Section 2.1(a).

"Purchase Price" shall have the meaning set forth in Section 2.2(c).

"Purchased Assets" shall have the meaning set forth in Section 1.1.

"Security Interest" means any mortgage, pledge, priority, security interest, charge, lien or other encumbrance, right or restriction of any kind, nature and description, of any third party.

"Seller" shall have the meaning set forth in the Introduction.

"Seller Closing Certificate" shall have the meaning set forth in Section 9.2(f).

"Seller Confidential Information" shall have the meaning set forth in
Section 5.4.

"Seller Disclosure Schedule" shall have the meaning set forth in Article 3.

"Seller Indemnifiable Losses" shall have the meaning set forth in Section 11.4.

"Seller's Accountants" shall have the meaning set forth in Section 2.2(a).

"Service and Installation Agreement" shall have the meaning set forth in
Section 5.10.

"Setoff Amount" shall have the meaning set forth in Section 9.4.

"Severance Pay Policies" shall have the meaning set forth in Section 5.9(a).

"Specified Intangible Assets" shall have the meaning set forth in Section 2.1(b)(iii).

"Subsidiary" means any corporation, limited liability company, or partnership with respect to which another specified Person has the power to vote or direct the voting of sufficient securities or interests to elect a majority of the directors or management committee or similar governing body.

37.


"Tax" or "Taxes" means any United States Federal, state, local, or foreign income, gross receipts, sales, license, payroll, employment, excise, severance, stamp, occupation, premium, windfall profits, environmental (including taxes under Section 59A of the Code), customs duties, capital stock, franchise, profits, withholding, social security (or similar), unemployment, disability, real or immovable property, personal or movable property, sales, use, transfer, value added, alternative or add-on minimum, goods and services, estimated, or other tax of any kind whatsoever, including any interest, penalty, or addition thereto, whether disputed or not.

"Tax Return" means any return, declaration, report, claim for refund, or information return or statement relating to Taxes, including any schedule or attachment thereto, and including any amendment thereof.

"Third Party Claim" shall have the meaning set forth in Section 11.6(a).

"Transferred Employees" shall have the meaning set forth in Section 5.9(a).

"Transition Services Agreement" shall have the meaning set forth in Section 9.2(g).

"Value of the Business" shall have the meaning set forth in Section 2.1(b)(i).

"WARN" shall have the meaning set forth in Section 5.9(b).

12.2 Notices. All notices, requests, demands or other communications hereunder (including notices of all asserted claims or liabilities) to be effective shall be in writing and shall be either delivered personally, sent by messenger service, sent by guaranteed over night delivery service, charges prepaid sent by fax (with hard copy to follow) or mailed by U.S. mail, certified or registered, with appropriate first class postage prepaid, to the addressees and/or fax numbers herein designated or such other address as may be designated in writing by notice given in the manner provided herein. Notices hereunder shall be effective upon (a) personal delivery thereof, if delivered personally or by messenger service, (b) one (1) business day after deposit for delivery by the overnight delivery service, if delivered by overnight delivery service, (c) when receipt is electronically confirmed, if sent by fax, or (d) three (3) business days following deposit in the mail, if sent by mail as aforesaid, whether or not delivery is accepted.

If to the Buyer:    OmniCell Technologies, Inc.
                    1101 E. Meadow Dr.
                    Palo Alto, California 94303
                    Attn:  Chief Financial Officer
                    Facsimile: 650-843-6277

with a copy to:     Cooley Godward LLP
                    Five Palo Alto Square
                    Palo Alto, CA
                    94306-2155
                    Attn:  Robert J. Brigham, Esq.
                    Facsimile: 650-857-0663

                       38.

If to Seller:       Baxter Healthcare Corporation
                    One Baxter Parkway
                    Deerfield, Illinois 60015
                    Attn:  General Counsel
                    Facsimile: 847-948-2025

With a copy to:     Sidley & Austin
                    One First National Plaza
                    Suite 2900
                    Chicago, Illinois 60603
                    Attn:  John M. O'Hare, Esq.
                    Facsimile: 312-853-7036

12.3 Assignability; Binding Effect. This Agreement shall be binding upon and inure to the benefit of the parties and their respective permitted assigns.

12.4 Governing Law; Venue. This Agreement shall be construed and governed in accordance with the internal laws (and not the law of conflicts) of the State of Illinois. The Buyer and the Seller hereby consent to service of process and to the jurisdiction of any appropriate Federal or State court located in Cook or Lake Counties, Illinois in any action to enforce the provisions of this Agreement, and hereby waive any objections they may have as to proper venue or forum non conveniens or similar claims with respect to the jurisdiction and venue of such courts.

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

12.6 Entire Agreement. Except as otherwise specifically provided herein, this Agreement, including the Exhibits and Schedules hereto, the Seller Disclosure Schedule and the Buyer Disclosure Schedule constitute the entire agreement among the parties hereto with respect to the subject matter hereof and supersedes all prior communications, writings and other documents with regard thereto. No modification, amendment or waiver of any provision hereof shall be binding upon any party hereto unless it is in writing and executed by all of the parties hereto or, in the case of a waiver, by the party waiving compliance.

12.7 Confidentiality. Prior to Closing, the terms and conditions of this Agreement and the transactions contemplated herein shall remain confidential shall and not be disclosed by any party except (a) to the extent that a party is advised by counsel that disclosure is required by law ("Legally Required Disclosure"), and (b) for disclosure to employees and agents of a party to the extent necessary to perform due diligence and perform such party's obligations hereunder (provided such employees and agents are made aware of and agree to comply with this provision and that each party is responsible for the violation of such party's employees and agents).

12.8 Number/Gender. All words and personal pronouns relating thereto shall be read and construed as the number and gender of the party or parties referred to in each case requires and the verb shall be construed as agreeing with the required word and/or pronoun.

39.


12.9 Captions. The division of this Agreement into articles, sections, subsections, Schedules and Exhibits is for convenience of reference only and shall not affect the interpretation or construction of this Agreement.

12.10 Allocation of Fees and Expenses. Except as otherwise expressly provided in this Agreement, Buyer and the Seller shall each be responsible for their own respective legal and accounting fees and other charges incurred in connection with the purchase and sale of the Purchased Assets, the completion of the transactions contemplated herein and any post-closing matters in connection with the transactions contemplated herein, except for any fees for filings related to the HSR Act which shall be borne by the Buyer.

12.11 Severability. In the event that one or more of the provisions, warranties, representations or covenants or any portion of them contained in this Agreement are unenforceable or are declared invalid for any reason whatsoever, such unenforceability or invalidity shall not affect the enforceability or the validity of the remaining terms or portions of this Agreement, and each such unenforceable or invalid provision, warranty, representation or covenant or portion thereof shall be severed from the remainder of this Agreement.

12.12 Construction. The parties hereto acknowledge that Buyer and the Seller and their counsel each have reviewed and revised this Agreement and that the rule of construction to the effect that any ambiguities are to be resolved against the drafting party, shall not be employed in the interpretation of this Agreement or any documents executed in connection herewith.

12.13 No Public Announcement. Neither Buyer nor Seller shall without the approval of the other, make any press release or other public announcement concerning the transactions contemplated by this Agreement, except as and to the extent that any such party shall be so obligated by law, in which case the other party shall be advised and the parties shall use their best efforts to cause a mutually agreeable release or announcement to be issued; provided however, that the foregoing shall not preclude communications or disclosures necessary to implement the provisions of this Agreement or to comply with the accounting and SEC disclosure obligations or the rules of any stock exchange.

* * * *

40.


In Witness Whereof, the parties hereto have executed this Agreement as of the date first above written.

Baxter Healthcare Corporation

  By: /s/ Jack McGinley
     ----------------------------------
  Its:
      ---------------------------------
  OmniCell Technologies Inc.

  By: /s/ Randall Lipps
     ----------------------------------
  Its: Chairman
      ---------------------------------
41.


LOAN AND SECURITY AGREEMENT

DATED AS OF JANUARY 29, 1999

BETWEEN

BAXTER HEALTHCARE CORPORATION

AND

OMNICELL TECHNOLOGIES INC.


TABLE OF CONTENTS

                                                                                                               PAGE
                                                                                                               ----
1.       DEFINITIONS AND TERMS....................................................................................1

         1.1      Definitions.....................................................................................1

         1.2      Accounting Terms................................................................................7

         1.3      Other Terms.....................................................................................7

         1.4      Computation of Time Periods.....................................................................7

2.       LOAN: GENERAL TERMS......................................................................................7

         2.1      The Loan........................................................................................7

         2.2      Interest Rate...................................................................................8

         2.3      Default Rate....................................................................................8

         2.4      Interest Payments...............................................................................8

         2.5      Computation of Interest.........................................................................8

         2.6      Maturity Date; Payment..........................................................................8

         2.7      Voluntary Prepayment Prior to Maturity Date.....................................................8

         2.8      Mandatory Principal Payments....................................................................8

         2.9      Method of Payment...............................................................................9

         2.10     Application of Payments and Collections.........................................................9

3.       COLLATERAL..............................................................................................10

         3.1      Grant of Security Interest; Agreement to Allow for Use of OmniCell Intellectual
                  Property.......................................................................................10

         3.2      Priority of Liens..............................................................................11

         3.3      Inspection of Collateral; Audit of Records.....................................................11

         3.4      Maintain Perfection; Supplemental Documentation................................................11

         3.5      Perfected Security Interest; Location of Collateral............................................12

         3.6      Payment of Claims..............................................................................12

4.       REPRESENTATIONS' WARRANTIES AND COVENANTS RELATING TO COLLATERAL........................................12

         4.1      Representations, Warranties and Covenants Relating to Inventory................................12

         4.2      Sale of Inventory by OmniCell..................................................................13

         4.3      Maintenance of Equipment.......................................................................13

         4.4      Liens on and Sale of Equipment.................................................................13

         4.5      Schedule of Equipment..........................................................................14

                                      i.

                                                                                                               PAGE
                                                                                                               ----
         4.6      Title to Equipment.............................................................................14

5.       GENERAL WARRANTIES, REPRESENTATIONS AND COVENANTS.......................................................14

         5.1      General Representations, Warranties and Covenants..............................................14

         5.2      Survival of Warranties and Representations.....................................................17

6.       COVENANTS AND CONTINUING AGREEMENTS.....................................................................17

         6.1      Affirmative Covenants..........................................................................17

         6.2      Negative Covenants.............................................................................19

         6.3      Required Notices...............................................................................21

7.       DEFAULT.................................................................................................22

         7.1      Events of Default..............................................................................22

         7.2      Acceleration...................................................................................23

         7.3      Remedies.......................................................................................23

         7.4      Assemble Collateral............................................................................24

         7.5      Notice of Sale.................................................................................24

         7.6      Postponement of Sale...........................................................................24

         7.7      Waiver of Bond.................................................................................24

         7.8      Appointment of Baxter As Attorney-In-Fact After Default........................................24

         7.9      Consent Does Not Create Custom.................................................................25

8.       CONDITIONS TO LOAN......................................................................................25

9.       GENERAL.................................................................................................25

         9.1      Attorneys' Fees and Expenses; Baxter's Expenses................................................25

         9.2      Modification...................................................................................25

         9.3      Strict Compliance..............................................................................25

         9.4      Severability...................................................................................26

         9.5      Successors and Assigns.........................................................................26

         9.6      Loan Agreement Controls........................................................................26

         9.7      Liability Prior to Termination.................................................................26

         9.8      Waiver.........................................................................................26

         9.9      Indemnification................................................................................27

         9.10     Notice.........................................................................................27

                                      ii.

                                                                                                               PAGE
                                                                                                               ----
         9.11     Section Titles, etc............................................................................28

         9.12     Waiver by OmniCell.............................................................................28

         9.13     Governing Law..................................................................................29

         9.14     Representation by Counsel......................................................................29

         9.15     Waiver of Trial by Jury........................................................................29

         9.16     Intercreditor Agreement........................................................................30

iii.


LOAN AND SECURITY AGREEMENT

THIS LOAN AND SECURITY AGREEMENT (this "AGREEMENT"), dated as of January 29, 1999 by and between Baxter Healthcare Corporation, a Delaware corporation ("BAXTER"), with its principal place of business at One Baxter Parkway, Deerfield, Illinois 60015, and OmniCell Technologies Inc., a California corporation ("OMNICELL"), with its principal place of business at 1101 East Meadow Drive, Palo Alto, California 94303.

RECITALS:

A. OmniCell has entered into an Asset Purchase Agreement, dated as of December 18, 1998, as amended on January 25, 1999, between Baxter and OmniCell (the "ASSET PURCHASE AGREEMENT") pursuant to which OmniCell will purchase certain property of Baxter, comprising substantially all of the assets of the SureMed System product line of the Productivity Systems business unit of Baxter's I.V. Systems Division (the "SUREMED BUSINESS").

B. Pursuant to the Asset Purchase Agreement, OmniCell is hereby executing and delivering to Baxter a promissory note pursuant to the terms and provisions of this Agreement and in the form attached as EXHIBIT A hereto, in the original principal amount of $17,386,000 (the "NOTE").

C. This Agreement, together with the Note, sets forth the agreement of the parties with respect to the loan evidenced by the Note.

NOW THEREFORE, in consideration of the transactions contemplated by the Asset Purchase Agreement, and in consideration of the foregoing recitals, which are hereby incorporated herein, and of the mutual promises set forth herein, the parties hereto agree as follows:

1. DEFINITIONS AND TERMS

1.1 DEFINITIONS. Capitalized terms used herein and not otherwise defined herein have the meaning given them in the Asset Purchase Agreement. As used herein:

"ACCOUNT DEBTOR" means the account debtor on any Account.

"ACCOUNTS" means all of OmniCell's now owned or hereafter acquired or arising accounts, contract rights, and any other rights to payment for the sale or lease of goods or rendition of services, whether or not they have been earned by performance.

"AFFILIATE" means any Person which directly or indirectly through one or more intermediaries controls or is controlled by, or is under common control with OmniCell. For purposes of this definition, "CONTROL" shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of stock, by contract or otherwise.

1.


"APPLICABLE RATE" has the meaning specified in SECTION 2.2.

"BANKRUPTCY CODE" means Title 11 of the United States Code (11 U.S.C. Section 101 ET SEQ.).

"BUSINESS DAY" means any day, other than a Saturday, Sunday, or any other day on which lending institutions located in Chicago, Illinois are authorized or required by law or other governmental action to close.

"CAPITAL EXPENDITURE" means, for any period, the aggregate of all expenditures (whether paid in cash or accrued as liabilities and including capitalized leases and purchase money indebtedness) by OmniCell that are required under generally accepted accounting principles to be included or reflected in the property, plant, equipment, or similar fixed asset accounts reflected in the balance sheet of the Borrower.

"CHANGE OF CONTROL" means any of the following: (i) any Person or group of Persons (within the meaning of Section 13 or 14 of the Securities Exchange Act of 1934) who are not as of the date hereof stockholders of OmniCell shall acquire at any time beneficial ownership of more than 35% of the fully diluted common stock of OmniCell (other than as a result of a registered underwritten public offering by OmniCell for cash); (ii) individuals who as of the date hereof constitute OmniCell's Board of Directors (together with any new director whose election by OmniCell's stockholders was approved by a vote of at least two-thirds of the directors then still in office who either were directors at the beginning of such period or whose election or nomination for election was previously so approved), for any reason, cease to constitute a majority of the directors at any time then in office; or (iii) any two of the following individuals cease to hold their current positions with OmniCell: Shelly Asher, chief executive officer; Randy Lipps, chairman; Earl Fry, chief financial officer.

"CHARGES" means all national, federal, state, county, city, municipal and/or other governmental (or any instrumentality, division, agency, body or department thereof, including without limitation the Pension Benefit Guaranty Corporation) taxes, levies, assessments or charges.

"CLOSING DATE" means the Closing Date under and as defined in the Asset Purchase Agreement.

"COLLATERAL" has the meaning specified in SECTION 3.1.

"DEBT SERVICE RATIO" means, with respect to any period, the ratio of
(i) OmniCell's earnings before interest, taxes, depreciation and amortization minus capital expenditures (net of increases in long term debt to finance such capital expenditures) for such period, calculated in accordance with GAAP, to (ii) the sum of all scheduled principal and interest payable on Indebtedness during such period, plus all taxes and dividends to shareholders payable or paid during such period.

"DEFAULT" means any event or condition which, with the passage of time or the giving of notice or both, would constitute an Event of Default.

"DEFAULT RATE" means a rate of three percent (3%) per annum PLUS the Applicable Rate.

2.


"EQUIPMENT" means all of OmniCell's now owned and hereafter acquired machinery, equipment, furniture, furnishings, fixtures, and other tangible personal property (except Inventory), including, without limitation, motor vehicles, aircraft, dies, tools, jigs, and office equipment as well as all of such types of property leased by OmniCell and all of OmniCell's rights and interests with respect thereto under such leases (including, without limitation, options to purchase); together with all present and future additions and accessions thereto, replacements therefor, component and auxiliary parts and supplies used or to be used in connection therewith, and all substitutes for any of the foregoing, and all manuals, drawings, instructions, warranties and rights with respect thereto; wherever any of the foregoing is located.

"EVENT OF DEFAULT" has the meaning specified in SECTION 7.1.

"FINANCIALS" means those financial statements of OmniCell delivered by or on behalf of OmniCell to Baxter pursuant to SECTION 6.1(b).

"GAAP" means generally accepted accounting principles, consistently applied.

"GENERAL INTANGIBLES" means all of OmniCell's now owned or hereafter acquired general intangibles, choses in action and causes of action and all other intangible personal property of OmniCell of every kind and nature (other than Accounts), including, without limitation, all Intellectual Property Rights, corporate or other business records, inventions, designs, blueprints, plans, specifications, trade secrets, goodwill, computer software, customer lists, registrations, licenses, franchises, tax refund claims, any funds which may become due to OmniCell in connection with the termination of any employee benefit plan or any rights thereto and any other amounts payable to OmniCell from any employee benefit plan, rights and claims against carriers and shippers, rights to indemnification, business interruption insurance and proceeds thereof, property, casualty or any similar type of insurance and any proceeds thereof, proceeds of insurance covering the lives of key employees on which OmniCell is beneficiary, and any letter of credit, guarantee, claim, security interest or other security held by or granted to OmniCell to secure payment by an account debtor of any of the Accounts.

"INDEBTEDNESS" means with respect to any Person, (i) indebtedness for borrowed money or for the deferred purchase price of property or services in respect of which such Person is liable, contingently or otherwise, as obligor, guarantor or otherwise or any commitment by which such Person assures a creditor against loss, (ii) obligations under leases which shall have been or should be, in accordance with GAAP, recorded as capital leases in respect of which obligations such Person is liable, contingently or otherwise, as obligor, guarantor or otherwise, or in respect of which obligations such Person assures a creditor against loss, (iii) all obligations and liabilities with respect to unfunded vested benefits under any "EMPLOYEE BENEFIT PLAN" or with respect to withdrawal liabilities incurred under ERISA by OmniCell or any ERISA affiliate of OmniCell to a "MULTIEMPLOYER PLAN," as such terms are defined under the ERISA, and (iv) any and all accounts payable, accruals and other items characterized as Indebtedness in accordance with GAAP.

"INTELLECTUAL PROPERTY RIGHTS" means all United States and foreign patents, trademarks, tradenames, service marks, copyrights, applications, any of the foregoing, now or hereafter owned and or used by OmniCell, including, without limitation the Specified Rights, and all

3.


licenses that allow for the use any patents, trademarks, tradenames, service marks, copyrights, or applications of others.

"INVENTORY" means all of OmniCell's now owned and hereafter acquired inventory, goods, and merchandise, wherever located, to be furnished under any contract of service or held for sale or lease, all returned goods, raw materials, other materials and supplies of any kind, nature or description which are or might be consumed in OmniCell's business or used in connection with the packing, shipping, advertising, selling or finishing of such goods, merchandise and such other personal property, and all documents of title or other documents representing them.

"LIEN" means: (a) any interest in property securing an obligation owed to, or a claim by, a Person other than the owner of the property, whether such interest is based on the common law, statute, or contract, and including without limitation, a security interest, charge, claim, or lien arising from a mortgage, deed of trust, encumbrance, pledge, hypothecation, assignment, deposit arrangement, agreement, security agreement, conditional sale or trust receipt or a lease, consignment or bailment for security purposes; and (b) to the extent not included under clause (a), any reservation, exception, encroachment, easement, right-of-way, covenant, condition, restriction, lease or other title exception or encumbrance affecting property.

"LOAN DOCUMENTS" means this Agreement and the Other Agreements.

"MATURITY DATE" means December 31, 2003 or such earlier date as all Obligations shall be due and payable by acceleration or otherwise.

"OBLIGATIONS" means all obligations and liabilities of OmniCell to Baxter (including, without limitation, all debts, claims and indebtedness) whether primary, secondary, direct, contingent, fixed or otherwise, now and from time to time hereafter owing, due or payable, however evidenced, created, incurred, acquired or owing as arising under this Agreement or the Other Agreements, including without limitation, all principal and interest payable with respect to the Note.

"OMNICELL INTELLECTUAL PROPERTY RIGHTS" means all Intellectual Property Rights other than the SureMed Intellectual Property Rights.

"OTHER AGREEMENTS" means all agreements, instruments and documents, including, without limitation, pledges, powers of attorney, consents, assignments, contracts, notices, leases, financing statements and all other written matter now or from time to time hereafter executed by or on behalf of OmniCell and delivered to Baxter in connection herewith, including, without limitation, the Note, but excluding the Asset Purchase Agreement and any documents executed in connection therewith.

"NET EQUITY" means as of any date, the consolidated stockholders' equity of OmniCell and its Subsidiaries as of such date determined in accordance with GAAP.

"NOTE" has the meaning specified in the Recitals.

"PERMITTED LIENS" means:

4.


(A) Liens for taxes not yet payable or statutory Liens for taxes in an amount not to exceed $250,000 provided that the payment of such taxes which are due and payable is being contested in good faith and by proper proceedings diligently pursued, and that reserves or other appropriate provision, if any, as shall be required by GAAP shall have been made therefor and that a stay of enforcement of any such Lien is in effect;

(B) Liens in favor of Baxter;

(C) Liens upon Equipment granted in connection with the acquisition of such Equipment by OmniCell after the Closing Date (including, without limitation, pursuant to capital leases), PROVIDED that (i) the cost of each such acquisition constitutes a capital expenditure permitted by this Agreement and (ii) each such Lien attaches only to the Equipment acquired with the Indebtedness secured thereby;

(D) The interest or title of a lessor in property subject to an operating lease entered into by OmniCell as lessee with such lessor in the ordinary course of business;

(E) deposits under worker's compensation, unemployment insurance, social security and other similar laws, or to secure the performance of bids, tenders or contracts (other than for the repayment of borrowed money) or to secure indemnity, performance or other similar bonds for the performance of bids, tenders or contracts (other than for the repayment of borrowed money) or to secure statutory obligations (other than liens arising under ERISA or under Environmental laws) or surety or appeal bonds, or to secure indemnity, performance or other similar bonds in the ordinary course of business;

(F) Liens which arise by operation of law under Article 2 of the UCC in favor of unpaid sellers of goods or prepaying buyers of goods, or liens in items of any accompanying documents or proceeds of either arising by operation of law under Article 4 of the UCC in favor of a collecting bank;

(G) Liens securing the claims or demands of materialmen, mechanics, carriers, warehousemen, landlords and other like Persons, PROVIDED that if any such Lien arises from the nonpayment of such claims or demands when due, such claims or demands do not exceed $100,000 in the aggregate;

(H) Reservations, exceptions, encroachments, easements, rights of way, covenants running with the land, and other similar title exceptions or encumbrances affecting any real estate of OmniCell; PROVIDED that they do not in the aggregate materially detract from the value of the real estate or materially interfere with its use in the ordinary conduct of OmniCell's business; and

(I) Judgment Liens to the extent that the attachment or enforcement of such liens would not result in an Event of Default hereunder; and

(J) Liens in existence on the Closing Date and reflected on
SCHEDULE 3.2.

"PERMITTED SENIOR DEBT" means the Indebtedness of OmniCell in an aggregate principal amount of not more than $10,000,000 outstanding at any time pursuant to an agreement and

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terms reasonably acceptable to Baxter between OmniCell and a bank or other financial institution; PROVIDED, that such bank or other financial institution has entered into an intercreditor agreement with Baxter reasonably acceptable to Baxter. Baxter agrees that the terms of the proposed financing of OmniCell by Silicon Valley Bank ("SVB") set forth in the Letter of Interest dated January 11, 1999, a copy of which is attached hereto as EXHIBIT D, would be acceptable to Baxter provided that the representations, warranties, covenants and defaults set forth in the definitive credit agreement between SVB and OmniCell and any other documents executed in connection therewith shall in no way impede or restrict OmniCell's ability to perform and pay the Obligations required under this Agreement.

"PERMITTED SENIOR LIENS" means liens on assets of OmniCell securing any Permitted Senior Debt; provided, however, that any liens on SureMed Assets securing Permitted Senior Debt shall be junior in priority to Baxter's first priority perfected security interest in such SureMed Assets.

"PERSON" means any individual, sole proprietorship, partnership, joint venture, trust, unincorporated organization, association, corporation, institution, entity, party or government (whether national, federal, state, county, city, municipal or otherwise, including without limitation any instrumentality, division, agency, body or department thereof).

"PRELIMINARY PURCHASE PRICE" has the meaning specified in the Asset Purchase Agreement.

"PURCHASED ASSETS" has the meaning specified in the Asset Purchase Agreement.

"RECORDS" has the meaning specified in SECTION 3.1(g).

"REPLACEMENT EQUIPMENT" means any Equipment which (i) is purchased with the proceeds from a sale or disposition of existing Equipment, (ii) replaces such sold or disposed of Equipment, and (iii) is used primarily by the same business division as used such sold or disposed of Equipment.

"REPORT" means any financial statement or report delivered to Baxter in accordance with SECTION 6.1.

"SPECIFIED RIGHTS" has the meaning set forth in SECTION 5.l(g).

"SUBSIDIARY" means any Person at least a majority of whose issued and outstanding stock or other ownership interests now or at any time hereafter is owned by OmniCell and/or one or more Subsidiaries.

"SUPPLEMENTAL DOCUMENTATION" means any and all financing statements, notices, disclosures, agreements, instruments, documents or other written matter, which Baxter may from time to time deem necessary or desirable to maintain or create a valid and perfected security interest in the Collateral.

"SUREMED ASSETS" means (a) all of the Purchased Assets and all proceeds and products thereof, (b) all Accounts and/or General Intangibles created by the sale or lease of any SureMed

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Product, (c) all Inventory consisting of SureMed Products or raw materials, work in process or materials used or consumed in the production of SureMed Products, and (d) all Equipment and General Intangibles and all other properties and assets used primarily in connection with the manufacture, distribution and sale of SureMed Products, but only to the extent used therewith.

"SUREMED BUSINESS" has the meaning specified in the Recitals.

"SUREMED INTELLECTUAL PROPERTY RIGHTS" means all Intellectual Property Rights which are part of the SureMed Assets.

"SUREMED PRODUCTS" means those products consisting of the SureMed System product line as it exists on the date hereof and any extensions of such product line.

"UCC" means the Uniform Commercial Code (or any successor statute) of the State of Illinois or of any other state the laws of which are required by Section 9-103 thereof to be applied in connection with the issue of perfection of security interests.

1.2 ACCOUNTING TERMS. Any accounting term used in this Agreement shall have, unless otherwise specifically provided herein, the meaning customarily given in accordance with GAAP, and all financial computations hereunder shall be computed, unless otherwise specifically provided herein, in accordance with GAAP as consistently applied and using the same method for inventory valuation as used in the preparation of the Financial Statements for the period ended December 31, 1997.

1.3 OTHER TERMS. All other undefined terms contained in this Agreement shall, unless the context indicates otherwise, have the meanings provided for by the UCC to the extent the same are used or defined therein. Any references herein to exhibits, schedules, sections or articles are references to exhibits, schedules, sections or articles of this Agreement, unless otherwise specified. Wherever appropriate in the context, terms used herein in the singular also include the plural, and vice versa, and each masculine, feminine, or neuter pronoun shall also include the other genders.

1.4 COMPUTATION OF TIME PERIODS. In this Agreement, in the computation of periods of time from a specified date to a later specified date, the word "from" shall mean "from and including" and the words "to" and "until" shall each mean "to but excluding". Periods of days referred to in this Agreement shall be counted in calendar days unless Business Days are expressly prescribed and references in this Agreement to months and years shall be to calendar months and calendar years unless otherwise specified.

2. LOAN: GENERAL TERMS

2.1 THE LOAN. Subject to the satisfaction of the conditions precedent set forth in ARTICLE VIII, on the Closing Date, Baxter shall loan to OmniCell and OmniCell shall accept from Baxter a loan in the amount of $17,386,000 (the Preliminary Purchase Price MINUS $2,000,000) (the "LOAN") under the terms and conditions of this Agreement. To further evidence the Loan, OmniCell shall execute and deliver the Note to Baxter on the Closing Date. The principal amount of the Loan shall be adjusted upon determination of the Purchase Price in accordance with Section 2.2 of the Asset Purchase Agreement. Upon such adjustment of the principal

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amount of the Loan, if any, the interest due under the Note shall be proportionately adjusted retroactively to the Closing Date based on the final Purchase Price. Promptly following the determination of the Purchase Price pursuant to Section 2.2 of the Asset Purchase Agreement, Baxter and OmniCell shall execute and deliver an amendment to this Agreement, amending SECTIONS 2.6 hereof, if applicable, and OmniCell shall deliver to Baxter, in exchange for return of the original Note, an amended and restated Note reflecting such increase or reduction, as the case may be.

2.2 INTEREST RATE. The unpaid principal balance of the Loan shall bear interest the fixed rate of eight percent (8%) per annum from the Closing Date through and including January 31, 2001 and thereafter at the fixed rate of thirteen percent (13%) per annum until the Loan has been paid in full (such rate as in effect from time to time being referred to herein as the "APPLICABLE RATE").

2.3 DEFAULT RATE. After the earlier of (i) the Maturity Date, whether by acceleration or otherwise, or (ii) the occurrence of an Event of Default, the Obligations shall bear interest at the Default Rate.

2.4 INTEREST PAYMENTS. OmniCell shall make payments of interest quarterly in arrears, on the last day each of March, June September and December of each year, beginning on March 31, 1999, until such time as no amounts are outstanding under this Agreement.

2.5 COMPUTATION OF INTEREST. Interest shall be computed on the basis of a 360 day year and charged for the actual number of days elapsed.

2.6 MATURITY DATE; PAYMENT.

Subject to the provisions relating to adjustment of the Note set forth in SECTION 2.1, the principal balance of the Loan shall be payable in twelve equal installments equal to one-twelfth of the original principal amount of the Note, beginning on the last day of March, 2001 and on the last day of each June, September, December and March thereafter. The unpaid principal balance plus all accrued but unpaid interest, fees, charges and costs shall be due and payable on the Maturity Date or on such earlier date on which said amount shall become due and payable on account of acceleration by Baxter.

2.7 VOLUNTARY PREPAYMENT PRIOR TO MATURITY DATE. The Loan may be prepaid in whole or in part, without premium or penalty.

2.8 MANDATORY PRINCIPAL PAYMENTS. Upon the occurrence of any of the following OmniCell shall repay to Baxter, to the extent required below, the outstanding principal amount of the Loan along with any accrued and unpaid interest or other amounts then due and owing in respect of the Loan (a "MANDATORY PREPAYMENT"):

(A) Upon the issuance or sale by OmniCell or any subsidiary of OmniCell of any shares of capital stock or other equity securities of OmniCell, or any obligations convertible into or exchangeable therefor, or giving any Person a right, option or warrant to acquire such securities or convertible or exchangeable obligations, including, without limitation, an initial public offering or private placement of the capital stock (an "EQUITY ISSUANCE"), OnmiCell shall

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make a Mandatory Prepayment to the extent of fifty percent (50%) of the net proceeds of such Equity Issuance on the day of the closing of any such Equity Issuance; PROVIDED that (x) sales or issuances of common stock or options, which common stock and options, in the aggregate, shall not exceed two million (2,000,000) shares, to employees, officers, directors or consultants under OmniCell's employee stock option plan and stock purchase plans, or as otherwise approved by OmniCell's Board of Directors or (y) private placements in any single year of equity securities in an amount not exceeding 10% of OmniCell's outstanding paid-in capital as of its most recently completed fiscal year, shall not require any Mandatory Prepayment under this SECTION 2.8;

(B) Upon (i) the sale of all or substantially all of the assets of OmniCell in any single or series of related transactions; (ii) the sale of all or substantially all of the assets comprising the SureMed Business in any single or series of related transactions; or (iii) the occurrence of any Change in Control, the entire principal balance plus all accrued interest on the Note and other Obligations shall become immediately due and payable; or

(C) OmniCell, pursuant to SECTION 4.4, shall make a Mandatory Prepayment of 100% of any proceeds of a sale or other disposition of Equipment unless such proceeds are used to acquire Replacement Equipment; PROVIDED, HOWEVER, that OmniCell shall not be required to make a Mandatory Prepayment as a result of any sale of Equipment consisting of non-SureMed Assets unless the Permitted Senior Lender, if any, consents to such prepayment.

2.9 METHOD OF PAYMENT. All payments to Baxter hereunder and under the Other Agreements shall be payable in lawful money of the United States of America in same day funds at Baxter's principal place of business specified at the beginning of this Agreement or at such other place or places as Baxter may designate in writing to OmniCell.

2.10 APPLICATION OF PAYMENTS AND COLLECTIONS.

(A) Prior to an Event of Default, Baxter shall allocate any and all payments received from OmniCell or any other Person with respect to the Obligations, as follows: (i) to the payment of any costs and expenses reasonably incurred by Baxter to enforce any rights hereunder or under the Other Agreements or to preserve or protect the Collateral; (ii) to accrued but unpaid interest, fees and expenses, including, but not limited to, legal fees and expenses; and (iii) to principal. Upon the occurrence of an Event of Default and during the continuation thereof, Baxter may apply any and all payments received from OmniCell or any other Person with respect to the Obligations in such order or priority to the Obligations as Baxter shall elect, in its sole and exclusive discretion and OmniCell (y) irrevocably waives the right to direct the application of payments and collections received by Baxter from or on behalf of OmniCell, and (z) agrees that Baxter shall have the continuing exclusive right to apply and reapply any and all such payments and collections against the Obligations then due and payable in such manner as Baxter may deem appropriate, notwithstanding any entry by Baxter upon any of its books and records.

(B) To the extent that Baxter receives any payment on account of the Obligations or any proceeds of Collateral are applied on account of the Obligations, and any such payment(s) and/or proceeds or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside, subordinated and/or required to be repaid to a trustee,

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receiver or any other Person under any bankruptcy act, state or federal law, common law or equitable cause, then, to the extent of such payment(s) or proceeds received, the Obligations or part thereof intended to be satisfied shall be revived and continue in full force and effect, as if such payment(s) and/or proceeds had not been received by Baxter and applied on account of the Obligations.

3. COLLATERAL

3.1 GRANT OF SECURITY INTEREST; AGREEMENT TO ALLOW FOR USE OF OMNICELL INTELLECTUAL PROPERTY. (i) To secure the prompt payment and performance to Baxter of all Obligations, OmniCell hereby grants to Baxter a security interest in and rights of set-off against, and hereby mortgages, conveys, transfers, assigns and pledges to Baxter, all of OmniCell's now existing and hereafter arising or acquired interest in and to the following:

(A) Accounts;

(B) General Intangibles, other than the OmniCell Intellectual Property Rights;

(C) Inventory;

(D) Equipment;

(E) all chattel paper, instruments, notes, documents, documents of title and investment property;

(F) all moneys, investment property, securities and other property of any kind of OmniCell in the possession or under the control of Baxter, any assignee of or participant in the Obligations, or a bailee of any such party or such party's affiliates;

(G) all books, records, computer records, ledger cards, programs and other computer materials, customer and supplier lists, invoices, orders and other property evidencing or relating to any of the foregoing items ("RECORDS");

(H) all accessions to any of the foregoing items and all substitutions, renewals, improvements and replacements of and additions thereto; and

(I) all products and proceeds of the foregoing.

All of the foregoing is referred to herein individually and collectively as the "COLLATERAL." It is the intent of the parties that the Collateral shall include all of the property of OmniCell, real, personal or intangible, whether now existing or hereafter acquired or arising, whether specifically enumerated herein or not, and that the broadest possible interpretation should be given to the term Collateral, to the fullest extent permitted by applicable law; provided, however, that in no event shall the Collateral include any OmniCell Intellectual Property Rights.

(II) For the purpose of enabling Baxter to exercise rights and remedies under the Loan Documents (including, without limiting the terms and conditions set forth herein, in order to take possession of, hold, preserve, process, assemble, prepare for sale, market for sale,

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sell or otherwise dispose of Inventory) at such time as Baxter shall be entitled to exercise such rights and remedies, OmniCell shall enter into on the date hereof a license agreement, substantially in the form of EXHIBIT F; such license agreement to grant to Baxter an irrevocable, non-exclusive, and fully paid-up license (exercisable without payment of royalty or other compensation to OmniCell) to use, license or sublicense any OmniCell Intellectual Property Rights wherever the same may be located, and including in such license access to all media in which any of the licensed items may be recorded or stored and to all computer software and programs used for the compilation or printout thereof; provided, however, that each customer for the Inventory is made subject to a written agreement that is consistent with and no less protective of the OmniCell Intellectual Property Rights than the terms of OmniCell's standard forms of Master Purchase Agreement and Master Rental Agreement.

3.2 PRIORITY OF LIENS. OmniCell hereby covenants and agrees that the Liens granted pursuant to SECTION 3.1 are and shall hereafter at all times be
(a) with respect to those items of Collateral consisting of SureMed Assets, perfected, first priority liens and security interests, subject only to Permitted Liens set forth on SCHEDULE 3.2, if any, and (b) with respect to those items of Collateral that do not consist of SureMed Assets, perfected liens and security interests, subject only to (i) Permitted Senior Liens, if any, with respect to which Baxter agrees that its Liens against non-SureMed Assets shall be second in priority, and (ii) Permitted Liens, if any. Baxter hereby acknowledges that OmniCell may grant Permitted Senior Liens against SureMed Assets so long as such Permitted Senior Liens are junior in priority to Baxter's liens and security interests in SureMed Assets.

3.3 INSPECTION OF COLLATERAL; AUDIT OF RECORDS.

(A) Baxter (by any of its officers, accountants, employees and/or agents) shall have the right, at any time or times during OmniCell's usual business hours, after not less than two Business Days prior notice during normal business hours (unless a Default or Event of Default then exists, in which event no notice shall be required) to inspect the Collateral (and the premises upon which it is located) and all related Records and to verify the amount and condition of or any other matter relating to the Collateral.

(B) In addition to the right to inspect set forth herein, Baxter (by any of its officers, accountants, employees and/or agents) shall have the right to audit the books and Records of OmniCell. All reasonable costs, fees and expenses incurred by Baxter, or for which Baxter becomes obligated, in connection with such inspection, verification or audit shall constitute part of the Obligations, payable by OmniCell to Baxter within five
(5) Business Days after demand therefor; PROVIDED, HOWEVER, that unless an Event of Default is outstanding, OmniCell's annual responsibility for such costs, fees and expenses shall be limited to the cost of no more than round-trip coach class airline tickets and one (1) night's accommodations for no more than two (2) auditors sent by Baxter on an inspection, verification and audit.

3.4 MAINTAIN PERFECTION; SUPPLEMENTAL DOCUMENTATION. OmniCell shall perform all the acts requested by Baxter which are necessary or desirable to maintain a valid, perfected security interest in the Collateral, including but not limited to, executing and/or delivering to Baxter, at any time and from time to time hereafter, any and all Supplemental Documentation that Baxter may request, in form and substance reasonably acceptable to Baxter, to perfect and

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maintain perfected Baxter's security interest, lien and/or encumbrance in and/or assignment and pledge of the Collateral, and to consummate the transactions contemplated in or by this Agreement and/or the Other Agreements. OmniCell agrees that Baxter, to the extent permitted by then prevailing applicable law, may execute, on behalf and in the name of OmniCell, any supplemental documentation covering all or any of the Collateral and file the same in each and every appropriate jurisdiction. To the extent permitted by applicable law, Baxter may file, without OmniCell's signature, one or more financing statements disclosing Baxter's Liens, including, limitation, by electronic means with or without a signature as permitted or required by applicable law or filing procedures. OmniCell agrees that a carbon, photographic, photostatic, or other reproduction of this Agreement or of a financing statement is sufficient as a financing statement.

3.5 PERFECTED SECURITY INTEREST; LOCATION OF COLLATERAL. OmniCell hereby warrants and represents to and covenants with Baxter that: (a) Baxter's security interest in the Collateral is now and at all times hereafter shall be perfected and, except as set forth in SECTION 3.2, shall have a first priority; (b) the offices and/or locations where OmniCell keeps the Collateral and the Records are at the locations specified on SCHEDULE
3.5. OmniCell has no other offices or locations and OmniCell shall not remove such Records and/or the Collateral therefrom and shall not keep any such Records and/or the Collateral at any other office or location unless OmniCell gives Baxter notice thereof at least thirty (30) days prior thereto and the same is within the continental United States of America. OmniCell, by written notice delivered to Baxter at least thirty (30) days prior thereto, shall advise Baxter of OmniCell's opening or acquisition of any new office, place of business or place where any of the Collateral is to be stored or kept, or its closing of any then existing office, place of business or place where any of the Collateral is to be stored or kept and any new office or place of business shall be within the continental United States of America.

3.6 PAYMENT OF CLAIMS. Baxter, in its sole and absolute discretion, without waiving or releasing any of the Obligations or any Event of Default, may at any time or times hereafter, but shall be under no obligation to, pay, acquire and/or accept an assignment of any security interest, lien, encumbrance or claim asserted by any Person against the Collateral. All sums paid by Baxter in respect thereof and all reasonable costs, fees and expenses, including reasonable attorneys' fees, court costs, expenses and other charges relating thereto incurred by Baxter or for which Baxter becomes obligated on account thereof shall be part of the Obligations payable by OmniCell to Baxter on demand.

4. REPRESENTATIONS' WARRANTIES AND COVENANTS RELATING TO COLLATERAL

4.1 REPRESENTATIONS, WARRANTIES AND COVENANTS RELATING TO INVENTORY. OmniCell hereby represents, and warrants and covenants as follows:

(A) OmniCell shall keep correct and accurate Records itemizing and describing the kind, type, quality and quantity of Inventory, OmniCell's cost therefor and selling price thereof and the withdrawals therefrom and additions thereto, all of which Records shall be available (during OmniCell's usual business hours), upon notice in accordance with the terms of SECTION 3.3, to any of Baxter's officers, employees or agents for inspection and copying thereof.

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(B) Inventory shall be kept only at the locations set forth on SCHEDULE 4.l(b). Except as disclosed on SCHEDULE 4.l(b), Inventory is not now and shall not at any time or times hereafter be stored with a prospective purchaser, bailee, warehouseman or similar party without Baxter's prior written consent. In the event any Inventory is so stored with a bailee, warehouseman or similar party, OmniCell will concurrently therewith cause the prospective purchaser, warehouseman, bailee or similar party to acknowledge in writing OmniCell's ownership of and Baxter's security interest in such Inventory and to cause its records to reflect such security interest, and, in the case of a bailee, warehouseman or similar party, which issues warehouse receipts covering bailed goods shall cause any such bailee, warehouseman or similar party to issue and deliver non-negotiable warehouse receipts or non-negotiable bills of lading in OmniCell's name, and in the case of a prospective purchaser or a bailee or other third party other than a warehouseman, shall cause such prospective purchaser, bailee or other third party to execute a UCC-1 financing statement in favor of OmniCell, with such financing statement assigned to Baxter.

(C) Inventory is not now and shall not be at any time or times hereafter be consigned to third parties, without Baxter's prior written consent and, in any such event, OmniCell will cause such consignment to be properly perfected to ensure the priority of Baxter's security interest in such Inventory and will cause the consignee to issue and deliver, in form and substance satisfactory to Baxter, a written agreement recognizing Baxter's prior rights in the Inventory. All reasonable out of pocket costs, fees and expenses incurred by Baxter in connection therewith (or which Baxter becomes obligated to pay) shall be part of the Obligations, payable by OmniCell to Baxter on demand.

4.2 SALE OF INVENTORY BY OMNICELL. OmniCell may sell Inventory only in the ordinary course of its business (which does not include a transfer in partial or total satisfaction of Indebtedness, sales in bulk, sales on consignment, sales on approval or sale on a return basis, except system validation and approval arrangements with potential customers in the ordinary course of business). Sales in the ordinary course do include sales of Inventory consisting of system validations and demonstration materials for less than cost.

4.3 MAINTENANCE OF EQUIPMENT. OmniCell shall keep and maintain the Equipment in good operating condition and repair in all material respects and shall make all necessary replacements thereof and renewals thereto so that the value and operating efficiency thereof shall at all times be maintained and preserved in all material respects. OmniCell shall not permit any such items to become a fixture to real estate or an accession to other personal property.

4.4 LIENS ON AND SALE OF EQUIPMENT. OmniCell shall not grant or permit to exist a security interest in or other Lien upon the Equipment (other than a Permitted Lien or, in the case of Equipment not consisting of SureMed Assets, at any time that any Permitted Senior Debt is outstanding, the Permitted Senior Lien). OmniCell will not sell, lease or otherwise dispose of the Equipment or any part thereof to any Person, without Baxter's prior written consent, which may be withheld in the sole discretion of Baxter; PROVIDED THAT OmniCell may sell Equipment (i) reasonably determined by OmniCell not to be necessary for the efficient and effective conduct of its business in arms-length transactions for the fair market value thereof in an amount not to exceed $50,000 in any single fiscal year or (ii) so long as the proceeds of such sale are (a) used to purchase Replacement Equipment, (b) used to prepay the Loan or (c) if such assets are non-

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SureMed Assets, used for such purposes as are permitted under the Permitted Senior Debt. In the event any Equipment is sold, transferred or otherwise disposed of as permitted in this SECTION 4.4, OmniCell shall notify Baxter of such fact and deliver all of the cash proceeds of such sale, transfer or disposition that are not used in accordance with clause (a) or (c) above to Baxter, which proceeds shall be applied to the repayment of the Obligations in accordance with SECTION 2.8.

4.5 SCHEDULE OF EQUIPMENT. SCHEDULE 4.5 sets forth all material Equipment owned by OmniCell as of the date hereof, including the location of each item of Equipment listed thereon. For purposes of this SECTION 4.5 only, material Equipment shall mean any single piece of Equipment (including all component parts thereof) having a fair market value in excess of $50,000. OmniCell shall deliver notice to Baxter amending SCHEDULE 4.5 on a quarterly basis.

4.6 TITLE TO EQUIPMENT. OmniCell, subject to Baxter's representations and warranties in Section 3.8 (b) of the Asset Purchase Agreement, represents and warrants to Baxter that OmniCell has good, indefeasible, and merchantable title, free and clear of all liens, claims and encumbrances (other than the Permitted Liens and Permitted Senior Liens, provided that such Permitted Senior Liens are junior in priority to any lien and security interest granted to Baxter hereunder), to and ownership of the Equipment described and/or listed on SCHEDULE 4.5 and that all Equipment is and shall be kept only at the locations set forth on SCHEDULE 3.5. OmniCell, immediately on demand by Baxter, shall deliver to Baxter any and all evidence of ownership of, including without limitation, certificates of title and any applications for title to, any Equipment.

5. GENERAL WARRANTIES, REPRESENTATIONS AND COVENANTS

5.1 GENERAL REPRESENTATIONS, WARRANTIES AND COVENANTS. OmniCell warrants and represents to and covenants with Baxter as follows:

(A) OmniCell is and at all times hereafter shall be a corporation duly organized and existing and in good standing under the laws of the State of California and is qualified or licensed to do business and in good standing in all states in which the failure to be so qualified or licensed would have a material adverse effect upon OmniCell or its ability to perform and pay its Obligations under this Agreement and the Other Agreements.

(B) OmniCell has the right, power and capacity and is duly authorized and empowered to enter into, execute, deliver and perform this Agreement and the Other Agreements.

(C) Each of the names, if any, used by OmniCell in the United States during the five (5) year period preceding the date of this Agreement are set forth on SCHEDULE 5.1(C) attached hereto and none of such names are registered tradenames with the U.S. Patent and Trademark Office except as disclosed on SCHEDULE 5.1(C).

(D) The execution, delivery and/or performance by OmniCell of this Agreement and the Other Agreements shall not, by the lapse of time, the giving of notice or otherwise, constitute a violation of any applicable law or a breach of any provision contained in OmniCell's Articles of Incorporation or By-Laws, or contained in any agreement, instrument or document to which OmniCell is now or hereafter a party or by which it or any of its assets are or

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may become bound, or result in or require the creation of any lien, security interest, charge or other encumbrance upon or with respect to any now-owned or hereafter arising or acquired properties of OmniCell, except for the liens contemplated by this Agreement and/or created hereby.

(E) This Agreement and the Other Agreements are and will be the legal, valid and binding agreements of OmniCell enforceable in accordance with the their terms, except as enforcement thereof may be subject to the effect of applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors' rights generally, and to general principles of equity (regardless of whether such enforcement is sought in a proceeding in equity or at law).

(F) OmniCell has and at all times hereafter shall have good and valid title to and ownership of the Collateral, free and clear of all liens, claims, security interests and encumbrances, except as, and to the extent contemplated by SECTION 3.2.

(G) Attached hereto as SCHEDULE 5.1(G) is a true, accurate and complete list of all United States and foreign patents, registered trademarks, tradenames and service marks, registered copyrights and applications therefor owned or used by OmniCell as of the Closing Date (the "SPECIFIED RIGHTS"). Except as set forth on SCHEDULE 5.1(G), the Specified Rights are (or after the Closing Date) will be owned by OmniCell or OmniCell will own or possess the licenses or other rights to use all Specified Rights. To the best of OmniCell's knowledge, none of the products or processes of OmniCell conflicts with or infringes or has infringed upon any United States patents, registered trademarks, trade names or service marks or registered copyrights of any other person or entity; and to the best of OmniCell's knowledge, OmniCell has the full right to conduct its business as heretofore conducted by OmniCell, as applicable, without incurring license fees or royalty or other payment obligations to any person or entity in respect of the Specified Rights, except as may be set forth in the agreement(s) pursuant to which OmniCell has obtained its rights to such Specified Rights. This paragraph shall not apply with respect to the SureMed Assets acquired by OmniCell pursuant to the Asset Purchase Agreement as of the date hereof, but will apply with respect to the effect of any changes arising out of the conduct of the SureMed Business by OmniCell.

(H) OmniCell is now, and at all times hereafter shall be, solvent and generally able to pay its debts as they mature; OmniCell now owns, and shall at all times hereafter own, property which, at a fair valuation, is greater than the sum of its debts; and OmniCell now has, and shall have at all times hereafter, capital sufficient to carry on its business and transactions and all businesses and transactions in which it is about to engage.

(I) Except as disclosed on SCHEDULE 5.l(I), there are no actions or proceedings which are pending or threatened against OmniCell which might result in any material adverse change in its financial condition or materially affect OmniCell's assets or the Collateral or OmniCell's ability to fully perform the Obligations.

(J) OmniCell has obtained and is in good standing with respect to all material governmental permits, certificates, consents and franchises necessary to continue to conduct its

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business as previously conducted prior to the date hereof and to own or lease and operate its properties as now owned or leased by it.

(K) No authorization, approval or other action by, and no notice to or filing with, any governmental authority is or will be necessary
(a) for the grant by OmniCell of the security interest in the Collateral hereunder or for the execution, delivery or performance of this Agreement by OmniCell; (b) to ensure the validity, perfection or priority of the security interest in the Collateral granted hereunder, or (c) for the exercise by Baxter of any of its rights or remedies hereunder, except for the filing of financing statements and continuation statements in the jurisdictions set forth in SCHEDULE 5.1(K) pursuant to the UCC as in effect in such jurisdictions.

(L) OmniCell is not a party to any contract or agreement or subject to any charge, restriction, judgment, decree or order materially and adversely affecting its business, property, assets, operations or condition, financial or otherwise.

(M) OmniCell is not in violation of any applicable statute, regulation or ordinance of the United States of America, of any state, city, town, municipality, county or of any other jurisdiction, or of any agency thereof (including, but not limited to any environmental law) in any respect which might materially and adversely affect its business, property, assets, operations or condition, financial or otherwise.

(N) OmniCell has filed or caused to be filed all tax returns which are required to be filed; and OmniCell has paid all Charges shown to be due and payable on said returns or on any assessments made against it or any of its property, and all other Charges imposed on it or any of its properties by any governmental authority; PROVIDED, HOWEVER, that OmniCell need not if it is contesting the foregoing in good faith and by proper proceedings diligently pursued and that reserves or other appropriate provisions, if any, as shall be required by GAAP shall have been made therefor, and any Lien asserted in connection with such charges is a Permitted Lien.

(O) Except as set forth on SCHEDULE 5.1(O), OmniCell has no Indebtedness (except for trade payables arising in the ordinary course of its business since September 30, 1998), has not guaranteed (other than as a result of the endorsement of any instrument or items of payment for deposit or collection in the ordinary course of business or as otherwise expressly permitted pursuant to the terms hereof) the obligations of any Person, and there are no actions or proceedings which are pending or, to OmniCell's knowledge, threatened against OmniCell which, in any of the foregoing cases, are reasonably likely to result in any material adverse change in its financial condition or materially adversely affect its assets or the Collateral or its ability to fully perform and satisfy the Obligations hereunder.

(P) OmniCell is not in default with respect to any indenture, loan agreement, mortgage, deed or other similar agreement relating to the borrowing of money to which it is a party, by which it or any of its property is bound.

(Q) The audited financial statements of OmniCell as of December 31, 1997 and for the fiscal year then ended, fairly and accurately present the assets, liabilities and financial conditions and results of operations of OmniCell as of and for the periods ending on such dates

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set forth therein and have been prepared in accordance with GAAP, applied on a basis consistently followed in all material respects throughout the periods involved.

(R) There has been no material adverse change in the assets, liabilities or financial condition of OmniCell since September 30, 1998, other than changes resulting from the consummation of the transactions contemplated hereby and by the Asset Purchase Agreement.

(S) Attached hereto as SCHEDULE 5.l(S) is a true, accurate and complete schedule of all Subsidiaries and Affiliates of OmniCell.

5.2 SURVIVAL OF WARRANTIES AND REPRESENTATIONS. OmniCell covenants, warrants and represents to Baxter that all representations and warranties of OmniCell contained in this Agreement and the Other Agreements shall be true at the time of date hereof, and shall survive the execution, delivery and acceptance hereof and thereof by the parties thereto and the closing of the transactions described herein and therein or related hereto or thereto.

6. COVENANTS AND CONTINUING AGREEMENTS.

6.1 AFFIRMATIVE COVENANTS. OmniCell shall, unless Baxter otherwise consents thereto in writing, do all of the following during the term hereof:

(A) INSURANCE. OmniCell will at all times maintain or cause to be maintained insurance in such amounts, on such terms and conditions and insuring against such risks as are ordinarily insured against by other Persons in similar businesses similarly situated and in any event, including property casualty insurance, comprehensive commercial general liability insurance (including products liability coverage), worker's compensation insurance and business interruption insurance.

All policies of insurance on the Collateral or otherwise required hereunder shall be in form, amount and terms, and shall be issued by companies reasonably satisfactory to Baxter. OmniCell shall deliver to Baxter a certificate of insurance and evidence of payment of all premiums therefor and shall deliver renewals of all such policies to Baxter at least thirty
(30) days prior to their expiration dates. Such policies of insurance shall contain an endorsement, in form and substance reasonably acceptable to Baxter, showing all losses payable to Baxter or, in Baxter's reasonable discretion, OmniCell shall execute a separate assignment thereof, in form and substance reasonably acceptable to Baxter. Baxter shall be named as loss payee, mortgagee and secured party in all policies of property insurance and as an additional insured in all policies of liability insurance. Such endorsement shall provide that the insurance companies will give Baxter at least thirty (30) days' prior notice before any such policy shall be materially modified or canceled and that no act or default of OmniCell or any other Person (other than Baxter) shall affect the right of Baxter to recover under such policy in case of loss or damage. OmniCell hereby directs all insurers under such policies to pay all proceeds payable thereunder directly to Baxter. During such times that an Event of Default has occurred and is continuing, OmniCell irrevocably makes, constitutes and appoints Baxter (and all officers, employees or agents designated by Baxter) as OmniCell's true and lawful attorney and agent-in-fact for the purpose of making, settling and adjusting claims under such policies, endorsing the name of OmniCell in writing or by stamp on any check, draft, instrument or other item of payment for the proceeds of

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such policies and for making all determinations and decisions with respect to such policies, in each such case.

(B) FINANCIAL REPORTS. OmniCell shall keep books of account and prepare financial statements and furnish to Baxter the following (all of the foregoing and following to be kept and prepared in accordance with GAAP, in each case consistent with the audited financial statements for the fiscal year ended December 31, 1997 previously delivered by OmniCell to Baxter, unless OmniCell's independent certified public accountants concur in any changes therein and such changes are disclosed in writing to Baxter):

(I) ANNUAL. As soon as available, but not later than ninety
(90) days after the close of each fiscal year of OmniCell, financial statements of OmniCell (including a balance sheet, statement of cash flow and statement of changes in financial position, with supporting footnotes) as at the end of such year and for the year then ended all in form and detail as reasonably required by Baxter, prepared by a firm of independent certified public accountants selected by OmniCell and reasonably acceptable to Baxter and containing the unqualified opinion of such independent certified public accountants with respect to the financial statements and accompanied by a statement by such accountant that, as of the date thereof, there are no Events of Default under this Agreement.

(II) QUARTERLY REPORT. As soon as practicable, but in no event later than forty-five (45) days after the end of each fiscal quarter, financial statements of OmniCell (including a statement of cash flow, a balance sheet and profit and loss statement with supporting footnotes) as at the end of such quarter and for the prior quarters in such fiscal year, all in form and detail as reasonably required by Baxter, prepared by the chief financial officer of OmniCell.

(III) OTHER INFORMATION. Such other data and information (financial and otherwise) as Baxter, from time to time, may reasonably request bearing upon or related to the Collateral, OmniCell's financial condition and/or result of operations.

(C) CERTIFICATE WITH ANNUAL AND QUARTERLY REPORT. Concurrently with the delivery of the financial statements described in SECTION 6.1(B), a certificate of the president or chief financial officer of OmniCell certifying to Baxter that: (i) such officer is not aware of the occurrence or existence of any Default or Event of Default or, if such officer is aware thereof, the nature thereof and the steps OmniCell has proposed to cure the same; and (ii) OmniCell is in compliance with the covenants set forth in
SECTION 6.1 and setting forth the detail required to determine OmniCell's compliance with said covenants, in such form and detail as Baxter shall reasonably require.

(D) WAREHOUSE AGREEMENTS. OmniCell shall deliver to Baxter copies of all agreements between OmniCell and any warehouse or other third party location at which any Inventory may, from time to time, be kept and all similar agreements between OmniCell and any Person relating thereto promptly after entering into the same and shall take such actions as are necessary, in Baxter's reasonable discretion, to insure the continuous perfection of Baxter's security interest in Collateral stored in such warehouses.

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(E) RECORDS. OmniCell shall keep accurate and complete records relating to the Collateral and the operation of OmniCell's business which records shall be made available to Baxter in accordance with SECTION 3.3 for Baxter's inspection, copying, verification or otherwise. Upon the request of Baxter, OmniCell shall furnish with respect to any Account identified on any schedule, certificate or report provided pursuant to this Agreement (i) a true and correct copy of the invoice evidencing such Account and (ii) evidence of shipment or performance. OmniCell shall also deliver to Baxter, upon demand, a copy of all documents, including, without limitation, repayment histories, present status reports and shipment reports, relating to the Accounts and such other matters and information relating to the status of then existing Accounts as Baxter shall reasonably request.

(F) PAY DEBTS. OmniCell shall pay or discharge or otherwise satisfy all Indebtedness at or before maturity or before the same becomes delinquent, PROVIDED THAT OmniCell shall not be required to pay any Indebtedness which is unsecured while the same is being contested by it in good faith and by appropriate proceedings so long as OmniCell shall have set aside on its books reserves in accordance with GAAP with respect thereto.

(G) PAYMENT OF CHARGES. OmniCell shall pay promptly when due all of the Charges. Notwithstanding the foregoing, OmniCell may dispute, without prior payment thereof, the Charges; PROVIDED that (A) OmniCell, in good faith, shall be contesting the same in an appropriate proceeding, (B) enforcement thereof against any assets of OmniCell shall be stayed and (C) appropriate reserves therefor shall have been established on the Records of OmniCell in accordance with GAAP. In the event OmniCell, at any time or times hereafter, shall fail to pay the Charges required herein, OmniCell shall so advise Baxter thereof in writing; Baxter may, without waiving or releasing any of OmniCell's Obligations or any Event of Default hereunder, in its sole and absolute discretion, at any time or times thereafter, make such payment, or any part thereof, and take any other action with respect thereto which Baxter deems advisable. All sums so paid by Baxter and any expenses, including reasonable attorneys' fees, court costs, expenses and other charges relating thereto, shall be part of the Obligations, payable by OmniCell to Baxter on demand.

(H) COMPLIANCE WITH LAWS. OmniCell shall comply in all material respects with all laws, rules, regulations and governmental orders (federal, state and local), including all environmental laws, having applicability to it or to the business or businesses at any time conducted by it.

6.2 NEGATIVE COVENANTS. OmniCell shall not do any of the following:

(A) ATTACHMENT. Permit or suffer any levy, attachment or restraint to be made affecting any of its assets or the Collateral.

(B) SUBSIDIARIES. Create or acquire any subsidiaries unless (i) such subsidiary shall have executed and filed UCC financing statements or amendments, substantially in the form of EXHIBIT E, granting Baxter a first priority (except as otherwise provided under SECTION 3.2) perfected security interest in the Collateral, and (ii) such subsidiary shall have guaranteed, in a manner reasonably acceptable to Baxter, the repayment of all of the Obligations hereunder.

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(C) RECEIVERS. Permit or suffer any receiver, trustee or assignee for the benefit of creditors, or any other custodian to be appointed to take possession of all or any of OmniCell's assets or any of the Collateral.

(D) ADVERSE TRANSACTIONS. Enter into any transaction not in the ordinary course of business which materially and adversely affects OmniCell's ability to repay the Obligations, or materially and adversely affects the Collateral.

(E) GUARANTY DEBT. Guaranty or otherwise, in any way, become liable with respect to the obligations or liabilities of any other Person, including, without limitation, by any agreement to (i) maintain net worth or working capital, other than pursuant to any Permitted Senior Debt, (ii) purchase the obligations or property of any such Person, or to furnish funds to any such Person, directly or indirectly, through the purchase of goods, supplies or services, in any such case with the intent to provide such a guaranty or otherwise become so liable, other than the making of loans to employees, so long as the aggregate amount of such loans does not exceed $100,000 per employee or $500,000 in the aggregate outstanding at any time, or (iii) obtain upon its credit the issuance of any letter or letters of credit for the obligations of any such Person; PROVIDED THAT the foregoing limitations shall not apply to (x) endorsement of instruments or items of payment for deposit or collection in the ordinary course of business or (y) guaranties outside the ordinary course of business in an aggregate amount not to exceed $2,000,000 outstanding at any time MINUS the amount of Indebtedness outstanding under SECTION 6.2(G)(VI) at such time.

(F) TRANSACTIONS WITH AFFILIATES. Enter into any transactions with any Affiliate, except a transaction which is in the ordinary course of business, is otherwise permitted by this Agreement and is upon fair and reasonable terms, consistent with prior practices, no less favorable than would be obtained in a comparable arms-length transaction with a Person not an Affiliate.

(G) INCUR INDEBTEDNESS. Incur or become liable in respect of any Indebtedness, other than (i) the Obligations; (ii) Permitted Senior Debt;
(iii) obligations or liabilities created or arising under trade payables arising in the ordinary course of business; (iv) obligations as a lessee under operating leases; (v) Indebtedness to fund Capital Expenditures so long as such Capital Expenditures do not exceed $5,000,000 in the aggregate in any calendar year, and (vi) other Indebtedness in the aggregate principal amount outstanding at any time not to exceed $2,000,000 MINUS the dollar amount of any obligation guaranteed outside the ordinary course pursuant to clause (y) of the proviso set forth in SECTION 6.2(E).

(H) SALE OF ASSETS. Sell, lease or otherwise dispose of or transfer, whether by sale, merger, consolidation or otherwise, any of OmniCell's assets or the Collateral, except (i) sales or leases of inventory in the ordinary course of business; (ii) sale or disposal of unused or obsolete assets in the ordinary course of business pursuant to SECTION 4.4.

(I) DIVIDENDS; PAYMENT OF FEES, ETC. Any time during the term hereof
(i) make any distributions or pay any dividends or make any distributions of property or assets with respect to its capital stock, (ii) redeem or repurchase any of its capital stock, other than redemptions of (x) Series J Preferred Stock according to the terms of such Series J Preferred

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Stock in existence on December 16, 1998 and (y) the stock of terminated employees pursuant to the terms of the agreements under which such stock was issued, and (iii) pay any director's fees or any salaries to any director or shareholder unless such shareholder or director is directly and actively employed by OmniCell, and (iv) make any loans, advances and/or extensions of credit to any Affiliate, except as permitted in SECTION 6.2(E) or (F).

(J) ENCUMBRANCES. Create or suffer to exist any lien, mortgage or encumbrance or security interest to exist with respect to any of the Collateral, except (i) Permitted Liens, (ii) second priority Permitted Senior Liens on Collateral consisting of SureMed Assets and first priority Permitted Senior Liens on Collateral consisting of non-SureMed Assets, and (iii) liens securing purchase money Indebtedness.

(K) ACQUISITIONS. Purchase any assets outside of the ordinary course of business, or acquire any business (whether by purchase of stock, merger or purchase of assets or otherwise) unless (i) no Indebtedness shall be assumed in connection therewith which would not be permitted by SECTION 6.2(G); (ii) no Default or Event of Default shall have occurred and be continuing or shall result from such acquisition; (iii) OmniCell shall have first delivered to Baxter a PRO FORMA compliance certificate dated as of the last day of the most recent fiscal quarter for which Baxter has delivered to the Agent the Financial Statements pursuant to Section 6.1, demonstrating that if such acquisition had occurred on the last day of such fiscal quarter, no Default or Event of Default would have resulted therefrom; and (iv) in connection with the acquisition of a future subsidiary, OmniCell has complied with
SECTION 6.2(B).

6.3 REQUIRED NOTICES. In addition to those notices required elsewhere in this Agreement, OmniCell shall notify Baxter promptly after obtaining knowledge of:

(A) except as otherwise previously disclosed, any event or occurrence which OmniCell has determined has caused a material loss or decline in value of the Collateral due to casualty or any other adverse occurrence and the estimated (or actual, if available) amount of such loss or decline;

(B) the institution of any suit or administrative proceeding which, if determined adversely to OmniCell, could reasonably be expected to materially and adversely affect the operations, financial condition or business of OmniCell or which is reasonably likely to materially and adversely affect Baxter's security interest in the Collateral;

(C) OmniCell's becoming subject to any Charge, restriction, judgment, decree or order which materially and adversely affects its business operations, property, assets or financial condition;

(D) the commencement of any lockout, strike or walkout relating to any labor contract to which OmniCell is a party;

(E) any material default under any material lease or other contract or the occurrence of any event which constitutes or, with the giving of notice of the passage of time, or both, would constitute an event of default under the terms of any such lease or other contract; and

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(F) the occurrence of a Default or Event of Default, such notice to include the written statement of the chief financial officer of OmniCell setting forth the details of such event and the action which OmniCell proposes to take with respect thereto.

7. DEFAULT

7.1 EVENTS OF DEFAULT. The occurrence of any one of the following events shall constitute a default ("EVENT OF DEFAULT") under this Agreement:

(A) if OmniCell fails to pay the Obligations, or any part thereof, on the due date thereof.

(B) OmniCell breaches any of the covenants set forth in SECTIONS 6.1(F) through 6.1(H), inclusive, or 6.2.

(C) OmniCell shall default in the performance or observance of any other of OmniCell's covenants or agreements in this Agreement or any of the Other Agreements and such default shall continue unremedied for a period of thirty (30) days after the first to occur of (i) Baxter having delivered written notice of such default to OmniCell; or (ii) OmniCell obtaining actual knowledge of such default.

(D) any representation or warranty on the part of OmniCell contained in this Agreement or any of the Other Agreements shall have been incorrect in any material respect when made or deemed made.

(E) all of the Collateral, or a material portion thereof, is attached, seized, subjected to a writ of distress, warrant, or is levied upon, or comes within the possession of any receiver, trustee, custodian or assignee for the benefit of creditors.

(F) a petition under the Bankruptcy Code, or any similar law or regulation shall be filed by OmniCell or OmniCell shall make an assignment for the benefit of its creditors, or any case or proceeding is filed by OmniCell for its dissolution or liquidation, or OmniCell shall take any corporate action to authorize or effect any of the foregoing.

(G) OmniCell is enjoined, restrained or in any way prevented by court order from conducting all or any material part of its business affairs, or a petition under the Bankruptcy Code, or any similar law or regulation is filed against OmniCell, or any case or proceeding is filed against OmniCell for its dissolution or liquidation, and such injunction, restraint or petition is not dismissed or stayed within sixty (60) days after the entry or filing thereof, or an order for relief is entered in any case commenced against OmniCell under the Bankruptcy Code or any similar law.

(H) a proceeding is commenced for the appointment of a receiver, trustee, or custodian for any material portion of OmniCell's assets and such proceeding is not dismissed or stayed within sixty (60) days after its commencement.

(I) one or more judgments or decrees shall be entered against OmniCell, involving, individually, or in the aggregate, a liability of $250,000 or more and either (i)

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enforcement action shall have been commenced by any creditor upon any such judgment or decree, or (ii) such judgment or decree shall not have been vacated, discharged or stayed pending appeal within thirty (30) days after the entry thereof.

(J) this Agreement or any of the Other Agreements shall cease for any reason to be in full force and effect (other than by reason of the payment in full of all of the Obligations or voluntary release by Baxter of any Other Agreement) or OmniCell or any other Person (other than Baxter) shall disavow its obligations thereunder, or shall contest the validity or enforceability of any thereof.

(K) Baxter's lien or security interest in any Collateral, the value of which exceeds $250,000 in the aggregate shall for any reason cease to be a legal, valid, perfected or enforceable lien on and security interest in such Collateral, in the respective priorities contemplated by this Agreement (other than by reason of the payment in full of all of the Obligations or voluntary release by Baxter of such Collateral).

(L) OmniCell is in default in the payment of any Indebtedness for borrowed money in an aggregate principal amount outstanding in excess of $250,000 (other than the Obligations), or is in breach of any agreement evidencing such Indebtedness (other than any Loan Document), and the effect of such default or breach, as the case may be, is to enable the holder thereof then to accelerate the maturity of such Indebtedness, unless the same is waived or otherwise ceases to exist.

7.2 ACCELERATION. Upon an Event of Default, Baxter may declare all of the Obligations be immediately due and payable; PROVIDED, HOWEVER, that upon the occurrence of an Event of Default described in SECTIONS 7.1(F) or
7.l(G), all Obligations shall automatically become due and payable, without notice or demand of any kind.

7.3 REMEDIES. Upon the occurrence of an Event of Default and the continuation thereof, Baxter, in its sole and absolute discretion may:

(A) exercise any one or more of the rights and remedies of a secured party under the UCC of the relevant state or states and any other applicable law upon default by a debtor;

(B) enter, with or without process of law and without breach of the peace, any premises where the Collateral is or may be located, and without charge or liability to Baxter therefor seize and remove the Collateral from said premises and/or remain upon said premises and use the same for the purpose of collecting, preparing and disposing of the Collateral;

(C) sell or otherwise dispose of the Collateral at public or private sale for cash or credit, PROVIDED, HOWEVER, that OmniCell shall be credited with the net proceeds of such sale only when such proceeds are actually received by Baxter; and

(D) exercise any or all rights or remedies under any of the Other Agreements.

All of Baxter's rights and remedies under this Agreement and the Other Agreements are cumulative and non-exclusive.

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7.4 ASSEMBLE COLLATERAL. Upon the occurrence of an Event of Default and the continuation thereof, OmniCell, immediately upon demand by Baxter, shall assemble the Collateral and make it available to Baxter at a place or places to be designated by Baxter which are reasonably convenient to Baxter and OmniCell.

7.5 NOTICE OF SALE. Any notice required to be given by Baxter of a sale, lease, other disposition of the Collateral or any other intended action by Baxter, deposited in the United States mail, postage prepaid and duly addressed to OmniCell at its principal place of business specified in SECTION 8.10 not less than ten (10) days prior to such proposed action, shall constitute commercially reasonable and fair notice to OmniCell thereof.

7.6 POSTPONEMENT OF SALE. Upon the occurrence of an Event of Default and the continuation thereof, OmniCell agrees that Baxter may, if Baxter deems it reasonable, postpone or adjourn any such sale of the Collateral from time to time by an announcement at the time and place of sale or by announcement at the time and place of such postponed or adjourned sale, without being required to give a new notice of sale. OmniCell agrees that Baxter has no obligation to preserve rights against prior parties to the Collateral. Further, OmniCell waives and releases any cause of action and claim against Baxter as a result of Baxter's possession, collection or sale of the Collateral, any liability or penalty for failure of Baxter to comply with any requirement imposed on Baxter relating to notice of sale, holding of sale or reporting of sale of the Collateral, and, to the extent permitted by law, any right of redemption from such sale.

7.7 WAIVER OF BOND. In the event Baxter seeks possession of the Collateral through replevin or other court process, OmniCell hereby irrevocably waives (a) any bond, surety or security required as an incident to such possession, and (b) any demand for possession of the Collateral prior to commencement of any suit or action to recover possession thereof.

7.8 APPOINTMENT OF BAXTER AS ATTORNEY-IN-FACT AFTER DEFAULT. OmniCell, hereby irrevocably designates, makes, constitutes and appoints Baxter (and all Persons designated by Baxter) as OmniCell's true and lawful agent and attorney-in-fact from and after an Event of Default and during the continuation thereof, with power, without notice to OmniCell and at such time or times hereafter as Baxter, in its sole and absolute discretion, may determine, in OmniCell's or Baxter's name: (a) to demand payment of the Accounts; (b) to enforce payment of the Accounts by legal proceedings or otherwise; (c) to exercise all of OmniCell's rights and remedies with respect to the collection of the Accounts; (d) to settle, adjust, compromise, extend or renew the Accounts; (e) to settle, adjust or compromise any legal proceedings brought to collect the Accounts; (f) to sell or assign the Accounts upon such terms, for such amounts and at such time or times as Baxter deems advisable; (g) to discharge and release the Accounts; (h) to take control, in any manner, of any item of payment related to or proceeds of, any Account; (i) to prepare, file and sign OmniCell's name on any notice of lien, assignment or satisfaction of lien or similar document in connection with the Accounts; (j) to prepare, file and sign OmniCell's name on any proof of claim in bankruptcy or similar document against any account debtor; (k) to do all acts and things necessary, in Baxter's sole discretion, to fulfill OmniCell's Obligations under this Agreement; and (I) to prepare, file and sign OmniCell's name on any notice of lien, assignment or satisfaction of lien or similar document in connection with the Accounts.

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7.9 CONSENT DOES NOT CREATE CUSTOM. No authorization given by Baxter pursuant to this Agreement or the Other Agreements to sell any specified portion of Collateral or any items thereof, and no waiver by Baxter in connection therewith shall establish a custom or constitute a waiver of the prohibition contained in this Agreement against such sales, with respect to any portion of the Collateral or any item thereof not covered by said authorization.

8. CONDITIONS TO LOAN

The obligation of Baxter to make the Loan hereunder shall be subject to the satisfaction of the following conditions precedent:

(A) The conditions precedent to the Closing under the Asset Purchase Agreement shall have been satisfied and Closing under the Asset Purchase Agreement shall have taken place, or the shall take place simultaneously with the making of the Loan; and

(B) Baxter shall have received all items on the List of Closing Documents attached hereto as EXHIBIT B, such items to be in form and substance satisfactory to Baxter and to be executed by all parties thereto when the nature of the item so requires.

9. GENERAL

9.1 ATTORNEYS' FEES AND EXPENSES; BAXTER'S EXPENSES. OmniCell hereby agrees that it shall reimburse Baxter, as part of the Obligations, for any and all costs and expenses (including, without limitation, the reasonable fees and expenses of any counsel, accountants, appraisers or other professionals) reasonably incurred by Baxter at any time, in connection with:
(a) the preparation, negotiation and execution of any amendment of or modification of this Agreement or the Other Agreements; (b) any intercreditor agreement with a Permitted Senior Lender, other than the initial intercreditor agreement to be negotiated between Baxter, OmniCell and the initial Permitted Senior Lender, and any litigation, contest, dispute, suit, proceeding or action (whether instituted by Baxter, OmniCell or any other Person) in any way relating to the Collateral, this Agreement, or the Other Agreements; (c) any attempt to enforce any rights of Baxter against OmniCell or any other Person which may be obligated to Baxter by virtue of this Agreement or the Other Agreements, including, without limitation, the Account Debtors; (d) subject to the terms of SECTION 3.3(b), any inspection, verification or audit of any of the Collateral in accordance with this Agreement; (e) any action to protect, collect, sell, liquidate or otherwise dispose of the Collateral; and (f) performing any of the obligations relating to or payment of the Obligations hereunder in accordance with the terms hereof.

9.2 MODIFICATION. This Agreement and the Other Agreements may not be modified, altered or amended except by an agreement in writing signed by OmniCell and Baxter.

9.3 STRICT COMPLIANCE. Baxter's failure at any time or times hereafter to require strict performance by OmniCell of any provision of this Agreement shall not waive, affect or diminish any right of Baxter thereafter to demand strict compliance and performance therewith. Any suspension or waiver by Baxter of a Default or Event of Default under this Agreement or the Other Agreements shall not suspend, waive or affect any other Default or Event of Default under this Agreement or the Other Agreements, whether the same is prior or subsequent thereto and whether of the same or of a different type. None of the undertakings, agreements, warranties,

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covenants and representations of OmniCell contained in this Agreement or the Other Agreements and no Default or Event of Default by under this Agreement or the Other Agreements shall be deemed to have been suspended or waived by Baxter unless such suspension or waiver is by an instrument in writing signed by an officer of Baxter and directed to OmniCell specifying such suspension or waiver.

9.4 SEVERABILITY. If any provision of this Agreement or the Other Agreements or the application thereof to any Person or circumstance is held invalid or unenforceable, the remainder of this Agreement and the Other Agreements and the application of such provision to other Persons or circumstances will not be affected thereby and the provisions of this Agreement and the Other Agreements shall be severable in any such instance.

9.5 SUCCESSORS AND ASSIGNS. This Agreement and the Other Agreements shall be binding upon and inure to the benefit of the successors and assigns of OmniCell and Baxter; PROVIDED that this Agreement and any interest or right hereunder may not be assigned by OmniCell without prior written consent which may be withheld in Baxter's sole and exclusive discretion. OmniCell hereby consents to the flee and unrestricted sale, assignment, transfer or other disposition by Baxter, at any time and from time to time hereafter, of this Agreement or the Other Agreements, or of any portion thereof, including, without limitation, Baxter's rights, titles, interests, remedies, powers and/or duties thereunder and hereunder; PROVIDED, HOWEVER, that Baxter shall not sell, assign, transfer or dispose of its rights, titles, interests, remedies, powers and/or duties hereunder to any Person engaged in the same line of business as OmniCell's business.

9.6 LOAN AGREEMENT CONTROLS. The provisions of the Other Agreements are incorporated in this Agreement by this reference thereto. Except as otherwise provided in this Agreement and except as otherwise provided in the Other Agreements by specific reference to the applicable provision of this Agreement, if any provision contained in this Agreement is in conflict with, or inconsistent with, any provision in the Other Agreements, the provision contained in this Agreement shall govern and control.

9.7 LIABILITY PRIOR TO TERMINATION. Except to the extent provided to the contrary in this Agreement and in the Other Agreements, no termination or cancellation (regardless of cause or procedure) of this Agreement or any of the Other Agreements shall in any way affect or impair the powers, obligations, duties, rights and liabilities of OnmiCell or Baxter in any way or respect relating to any transaction or event occurring prior to such termination or cancellation with respect to Collateral and/or any of the undertakings, agreements, covenants, warranties and representations of OmniCell or Baxter contained in this Agreement or any of the Other Agreements.

9.8 WAIVER.

(A) OmniCell, for itself and for its successors, transferees and assigns hereby irrevocably (i) waives diligence, presentment and demand for payment, protest, notice, notice of protest and nonpayment, dishonor and notice of dishonor and all other demands or notices of any and every kind whatsoever; (ii) agrees that this Agreement and the Note and any or all payments coming due hereunder or under any of the Other Agreements may be extended from time to time

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in the sole discretion of Baxter without in any way affecting or diminishing OmniCell's liability hereunder; and (iii) waives any rights, remedies or defenses arising at law or in equity relating to guarantees or suretyships.

(B) No extension of the time for any payment due hereunder or under any of the Other Agreements made by agreement with any Person now or hereafter liable for payment hereunder or under the Note or any of the Other Agreements shall operate to release, discharge, modify, change or affect the original liability under this Loan or the Note or any Other Agreement, either in whole or in part.

(C) No delay in the exercise of any right or remedy hereunder by Baxter shall be deemed to be a waiver of such right or remedy, nor shall the exercise of any right or remedy hereunder by Baxter be deemed an election of remedies or a waiver of any other right or remedy. Without limiting the generality of the foregoing, the failure of Baxter promptly after the occurrence of any default hereunder to exercise its right to declare the indebtedness remaining unmatured hereunder to be immediately due and payable shall not constitute a waiver of such right while such default continues nor a waiver of such right in connection with any future default.

(D) No waiver or limitation of any right or remedy hereunder by Baxter shall be effective unless (and any such waiver or limitation shall be effective only to the extent) expressly set forth in a writing, signed and delivered by Baxter to OmniCell. No notice to or demand on OmniCell in any case shall entitle OmniCell to any other notice or demand in similar or other circumstances, nor shall such notice or demand constitute a waiver of any rights or remedy of Baxter to any other or further actions. In its sole discretion, Baxter may, at any time and from time to time, waive any one or more of the rights or remedies contained herein, but such waiver in any instance or under any particular circumstance shall not be deemed to be a waiver of such rights or remedies in any other instance or under any other circumstance.

9.9 INDEMNIFICATION. OmniCell shall indemnify, defend, and hold Baxter harmless from and against any and all losses, costs, liabilities, damages, and expenses (including legal and other expenses incident thereto) of every kind, nature and description, other than those caused by Baxter's gross negligence or willful misconduct, that result from or arise out of (a) the breach of any representation or warranty of OmniCell set forth in this Agreement or in any certificate, schedule, or other instrument by OmniCell pursuant hereto, (b) the breach of any of the covenants of OmniCell contained in or arising out of this Agreement or the transactions contemplated hereby, or (c) any third party claims relating to Baxter's capacity as a lender under this Agreement.

9.10 NOTICE. Any and all notices given in connection with this Agreement shall be deemed adequately given only if in writing and addressed to the party for whom such notices are intended at the address set forth below. All notices shall be sent by personal delivery, Federal Express or other overnight messenger service, or by telecopy. A written notice shall be deemed to have been given to the recipient party on the earlier of (a) the date it shall be delivered to the address required by this Agreement; (b) the date delivery shall have been refused at the address required by this Agreement; or (c) with respect to notices sent by mail, the date as of which the

27.


postal service shall have indicated such notice to be undeliverable at the address required by this Agreement. Any and all notices referred to in this Agreement, or which either party desires to give to the other, shall be addressed as follows:

(A) If to Baxter, at:

                          Baxter Healthcare Corporation
                          One Baxter Parkway
                          Deerfield, Illinois 60015
                          Attn: General Counsel and Treasurer
                          Facsimile: 847/948-2025

       with a copy to:    Sidley & Austin
                          One First National Plaza
                          Chicago, Illinois 60603
                          Attn: John M. O'Hare
                          Facsimile: 312/853-7036

(B) If to OmniCell, at:

                          OmniCell Technologies, Inc.
                          1101 East Meadow Drive
                          Palo Alto, California 94303
                          Attn: Chief Financial Officer
                          Facsimile: 650/843-6277

        with a copy to:   Cooley Godward LLP
                          Five Palo Alto Square
                          Palo Alto, California 94306-2155
                          Attn: Robert J. Brigham, Esq.
                          Facsimile: 650/857-0663

The above addresses may be changed by notice of such change, mailed as provided herein, to the last address designated.

9.11 SECTION TITLES, ETC. The Section titles and table of contents, if any, contained in this Agreement are and shall be without substantive meaning or content of any kind whatsoever and are not a part of the agreement between the parties hereto.

9.12 WAIVER BY OMNICELL. EXCEPT AS OTHERWISE PROVIDED FOR IN THIS AGREEMENT OR REQUIRED BY LAW, OMNICELL WAIVES (a) PRESENTMENT, DEMAND AND PROTEST, NOTICE OF PROTEST, NOTICE OF PRESENTMENT, DEFAULT, NON-PAYMENT, MATURITY, RELEASE, COMPROMISE, SETTLEMENT, EXTENSION OR RENEWAL OF ANY OR ALL COMMERCIAL PAPER, ACCOUNTS, CONTRACT RIGHTS, DOCUMENTS, INSTRUMENTS, CHATTEL PAPER AND GUARANTIES AT ANY TIME HELD BY BAXTER ON WHICH OMNICELL MAY IN ANY WAY BE LIABLE AND HEREBY RATIFIES AND CONFIRMS WHATEVER BAXTER MAY DO IN THIS REGARD; (b) ALL RIGHTS TO NOTICE AND A HEARING PRIOR TO

28.


BAXTER'S TAKING POSSESSION OR CONTROL OF, OR TO BAXTER'S REPLEVY, ATTACHMENT OR LEVY UPON THE COLLATERAL OR ANY BOND OR SECURITY WHICH MIGHT BE REQUIRED BY ANY COURT PRIOR TO ALLOWING BAXTER TO EXERCISE ANY OF BAXTER'S REMEDIES; AND (c) THE BENEFIT OF ALL VALUATION, APPRAISEMENT, EXTENSION AND EXEMPTION LAWS.

9.13 GOVERNING LAW. THIS AGREEMENT HAS BEEN DELIVERED FOR ACCEPTANCE BY BAXTER IN CHICAGO, ILLINOIS AND SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS (AS OPPOSED TO THE CONFLICTS OF LAW PROVISIONS) OF THE STATE OF ILLINOIS. OMNICELL HEREBY (a) IRREVOCABLY SUBMITS, TO THE EXTENT PERMITTED BY APPLICABLE LAW, TO THE JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED IN CHICAGO, ILLINOIS, OVER ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY MATTER ARISING FROM OR RELATED TO THIS AGREEMENT; (b) IRREVOCABLY WAIVES, TO THE FULLEST EXTENT OMNICELL MAY EFFECTIVELY DO SO, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF ANY SUCH ACTION OR PROCEEDING IN ANY SUCH COURT; (c) AGREES THAT, TO THE EXTENT PERMITTED BY APPLICABLE LAW, A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING IN ANY SUCH COURT SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN ANY OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW; AND (d) TO THE EXTENT PERMITTED BY APPLICABLE LAW, AGREES NOT TO INSTITUTE ANY LEGAL ACTION OR PROCEEDING AGAINST BAXTER OR ANY OF BAXTER'S DIRECTORS, OFFICERS, EMPLOYEES, AGENTS OR PROPERTY, CONCERNING ANY MATTER ARISING OUT OF OR RELATING TO THIS AGREEMENT IN ANY COURT OTHER THAN ONE LOCATED IN COOK COUNTY, ILLINOIS. NOTHING IN THIS SECTION SHALL AFFECT OR IMPAIR BAXTER'S RIGHT TO SERVE LEGAL PROCESS IN ANY MANNER PERMITTED BY LAW OR BAXTER'S RIGHT TO BRING ANY ACTION OR PROCEEDING AGAINST OMNICELL OR OMNICELL'S PROPERTY IN THE COURTS OF ANY OTHER JURISDICTION.

9.14 REPRESENTATION BY COUNSEL. OmniCell hereby represents that it has been represented by competent counsel of its choice in the negotiation and execution of this Agreement and the Other Agreements; that it has read and fully understood the terms hereof, OmniCell and its counsel have been afforded an opportunity to review, negotiate and modify, the terms of this Agreement, and that it intends to be bound hereby. In accordance with the foregoing, the general rule of construction to the effect that any ambiguities in a contract are to be resolved against the party drafting the contract shall not be employed in the construction and interpretation of this Agreement.

9.15 WAIVER OF TRIAL BY JURY. TO THE EXTENT PERMITTED BY LAW, OMNICELL AND BAXTER EACH HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES THE RIGHT TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR THE OTHER AGREEMENTS OR ANY COURSE OF CONDUCT, COURSE OF DEALINGS, STATEMENTS (WHETHER ORAL OR WRITTEN) OR ACTIONS OF EITHER PARTY IN CONNECTION HEREWITH. OMNICELL HEREBY

29.


EXPRESSLY ACKNOWLEDGES THAT THIS WAIVER IS A MATERIAL INDUCEMENT FOR BAXTER TO MAKE THE LOAN.

9.16 INTERCREDITOR AGREEMENT. Baxter hereby agrees that it shall act reasonably and cooperate with OmniCell and the Person who proposes to extend Permitted Senior Debt to negotiate and enter into an intercreditor agreement on terms reasonably satisfactory to Baxter and such Person.

* * * * * * * *

30.


IN WITNESS WHEREOF, this Agreement has been duly executed as of the day and year specified at the beginning hereof.

OMNICELL TECHNOLOGIES INC.

By:

Name:


Title:

BAXTER HEALTHCARE CORPORATION

By:      /s/ John F. Gaither, Jr.
   ------------------------------------
Name:    John F. Gaither, Jr.
Title:   Vice President

31.


OMNICELL TECHNOLOGIES INC. PROMISSORY NOTE

$17,386,000 Dated: January 29, 1999 Chicago, Illinois

FOR VALUE RECEIVED, OMNICELL TECHNOLOGIES INC., a California corporation ("BORROWER"), hereby promises to pay to the order of BAXTER HEALTHCARE CORPORATION, a Delaware corporation ("PAYEE"), the principal sum of SEVENTEEN MILLION, THREE-HUNDRED EIGHTY-SIX THOUSAND DOLLARS ($17,386,000) in installments on the dates set forth below, together with interest on the unpaid principal balance hereof at the rates set forth below.

This Note is the "Note" referred to in and was executed and delivered pursuant to that certain Loan and Security Agreement dated as of January 29, 1999 (as amended from time to time, the "LOAN AGREEMENT") between the Borrower and the Payee, to which reference is hereby made for a more complete statement of the terms and conditions under which the Loan evidenced hereby is made and is to be repaid. The Loan Agreement, among other things, contains certain provisions for acceleration of the maturity hereof, the prepayment of the principal balance hereof, and for changes in the interest rates hereof upon the terms and conditions specified therein. Capitalized terms used herein and otherwise undefined shall have the meanings given them in the Loan Agreement.

The Borrower shall the amount hereof in twelve (12) quarterly installments. Each repay principal installment shall be in an amount equal to $___________ and shall be payable on the last day of each March, June, September and December, commencing on March 31, 2001 and ending on December 31, 2003.

All amounts evidenced hereby shall bear interest at a rate of eight percent (8.00%) per annum from the date hereof through and including January 31, 2001, and thereafter at a rate of thirteen percent (13.00%) per annum; PROVIDED, HOWEVER, if any amounts evidenced hereby are not paid when due (whether by acceleration or otherwise), or after the occurrence of an Event of Default, then all amounts evidenced hereby shall bear interest at the Default Rate applicable thereto until so paid. Interest shall be calculated on the basis of a year of 360 days and actual days elapsed. Interest shall be payable quarterly in arrears on the last day of each March, June, September and December, commencing on March 31, 1999.

All payments of principal and interest in respect of this Note shall be made in lawful money of the United States of America in same day funds as set forth in Section 2.9 of the Loan Agreement. Until notified in writing of the transfer or assignment of this Note in accordance with the terms of the Loan Agreement, Borrower shall be entitled to deem Payee or any subsequent assignee of this Note as the owners and holder of this Note. Payee and any subsequent assignee of this Note agrees, by its acceptance hereof, that before disposing of this Note or any part hereof it will make a notation hereon of all principal payments previously made hereunder and of the date to which interest hereon has been paid; PROVIDED HOWEVER, that the failure to make a notation of any payment made on this Note shall not limit or otherwise affect

32.


the obligations of Borrower hereunder with respect to payments of principal or interest on this Note.

Whenever any payment on this Note shall be stated to be due on a day which is not a Business Day, such payment shall be made on the next succeeding Business Day and such extension of time shall be included in the computation of the payment of interest on this Note.

THIS NOTE SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF ILLINOIS, WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.

This Note is assignable by the Payee as provided in Section 9.5 of the Loan Agreement.

Borrower promises to pay all reasonable costs and expenses, including reasonable attorneys' fees, incurred in the collection and enforcement of this Note. Borrower and any endorser of this Note hereby consent to renewals and extensions of time at or after the maturity hereof, without notice, and hereby waive diligence, presentment, protest, demand and notice of every kind and, to the full extent permitted by law, the right to plead any statute of limitations as a defense to any demand hereunder.

The payment of this Note is secured as described in the Loan Agreement.

IN WITNESS WHEREOF, Borrower has caused this Note to be duly executed and delivered by its officer thereunto duly authorized as of the date and at the place first written above.

OMNICELL TECHNOLOGIES INC.

By:

Title:

33.


TRANSITION SERVICES AGREEMENT

TRANSITION SERVICES AGREEMENT, dated as of January 29, 1999 (this "Agreement"), by and between Baxter Healthcare Corporation, a Delaware corporation, ("Baxter"), and OmniCell Technologies Inc., a California corporation, (the "Purchaser").

WHEREAS, Baxter and the Purchaser have entered into an Asset Purchase Agreement, dated as of December 18, 1998, as amended January 25, 1999 (the "Purchase Agreement"; all capitalized terms used but not defined herein shall have the meanings ascribed to such terms in the Purchase Agreement), pursuant to which Baxter agreed to sell and the Purchaser agreed to purchase certain assets of Baxter relating to the Business (as defined in the Purchase Agreement), all as more particularly set forth in the Purchase Agreement;

WHEREAS, it is contemplated under the Purchase Agreement that following the Closing Date, Baxter will provide, or will cause to be provided, to the Purchaser, certain services set forth on Schedule A attached hereto which are currently provided by Baxter in connection with the operation of the Business; and

WHEREAS, Baxter is willing to provide, or cause to be provided, such services to the Purchaser, upon the terms and subject to the conditions set forth herein.

NOW, THEREFORE, in consideration of the premises and the mutual agreements and covenants set forth herein and in the Purchase Agreement, Baxter and the Purchaser hereby agree as follows:

1. PROVISION OF SERVICES; REIMBURSEMENT OF EXPENSES. (a) Baxter agrees to provide, or cause to be provided, to the Purchaser the services set forth on Schedule A hereto (the "Services"), for the period of time following the Closing set forth on Schedule A hereto with respect to each such Service (the "Term").

(B) Baxter shall cause the Services to be provided pursuant to this Agreement in a manner generally consistent with the manner and level of care with which such services were previously provided by Baxter in connection with the operation of the Business. Baxter shall use all reasonable efforts to assist the Purchaser in the transfer of responsibility for Services to the Purchaser.

(C) The Purchaser, shall promptly upon written request, pay to Baxter the fees for the Services set forth in Schedule A. Any payments pursuant to this Agreement shall be made in U.S. Dollars within thirty business days after the date of receipt by the Purchaser of Baxter's invoice. Baxter reserves the right to suspend performance under this Agreement upon failure of the Purchaser to make any payment pursuant to this Agreement when due except to the extent that such payment is being disposed of in good faith. Any payment required to be made under this Agreement that is not paid when due shall bear interest at an interest rate equal to the London Interbank Offered Rate for three-month Eurodollar deposits plus 5%.

(D) The Purchaser agrees to indemnify Baxter and its officers, directors, shareholders, employees, agents or other representatives, successors assigns and for and hold them harmless from any and all liabilities, losses, damages, costs and expenses (including


attorney's fees) incurred by them arising out of the provision by or on behalf of Baxter of the Services (except for any such liabilities, losses, damages, costs and expenses arising out of their gross negligence or willful misconduct in the performance of the Services).

2. FORCE MAJEURE. The obligations of Baxter to perform Services shall be suspended during the period and to the extent that Baxter or any of its Affiliates is prevented or hindered from complying therewith by any Requirements of Law or Court Order or by any cause beyond its control, including, without limitation, acts of God, strikes, lock outs and other labor and industrial disputes and disturbances, civil disturbances, accidents, acts of war or conditions arising out of or attributable to war (whether declared or undeclared), shortage of necessary equipment, materials or labor, or restrictions thereon or limitations upon the use thereof, and delays in transportation. In such event, Baxter shall give notice of suspension as soon as reasonably practicable to the Purchaser stating the date and extent of such suspension and the cause thereof, and Baxter shall resume the performance of such obligations as soon as reasonably practicable after the removal of the cause.

3. CONFIDENTIALITY. During the term of this Agreement and for one (1) year following termination each of Baxter and the Purchaser agrees to keep confidential the information which is disclosed to it by the other party hereto. The confidentiality obligations of this Agreement shall not apply to information which: (a) at the time of disclosure is reasonably available to the public; (b) becomes reasonably available to the public through no fault of the party required to keep information confidential; (c) is possessed by the party required to keep information confidential, as evidenced by written or other tangible evidence, prior to receipt of the information from the party providing information; or (d) becomes known to the party required to keep information confidential from a third party who has no obligation of confidentiality to the party providing information.

4. LIMITATION ON LIABILITY, ETC. Baxter shall not have any duties or responsibilities hereunder other than those specifically set forth herein and no implied obligations shall be read into this Agreement. Neither Baxter nor any of its Affiliates nor any of their respective officers, directors, shareholders, employees, agents or other representatives, successors or assigns shall be liable for any action taken or omitted to be taken by Baxter under or in connection with this Agreement, except for losses incurred by the Purchaser arising out of the gross negligence or willful misconduct of Baxter in the performance of the Services.

5. NOTICES. All notices, requests, demands, claims and other communications hereunder shall be in writing and shall be given or made (and shall be deemed to have been duly given or made upon receipt) by delivery in person, by courier service, by telecopy or by registered or certified mail (postage prepaid, return receipt requested) to the parties at the following addresses (or at such other address for a party as shall be specified by like notice):

(A) if to Baxter:

Baxter Healthcare Corporation 1 Baxter Parkway Deerfield, Illinois 60015-4633 Attention: General Counsel


Telecopy: 847-948-2450

with copy to:

Sidley & Austin One First National Plaza Chicago, Illinois 60603 Attention: John M. O'Hare, Esq.

Telecopy: 312-853-7036

(B) if to the Purchaser:

OmniCell Technologies Inc. 1101 E. Meadow Dr.

Palo Alto, California 94303
Attention: Chief Financial Officer
Telecopy: 650-843-6277

with a copy to:

Cooley Godward LLP
Five Palo Alto Square
Palo Alto, California 94306-2155
Attention: Robert J. Brigham, Esq.
Telecopy: 650-857-0663

6. HEADINGS. The headings contained in this Agreement are for reference purposes and shall not affect in any way the meaning of interpretation of this Agreement.

7. SEVERABILITY. If any term or other provision of this Agreement is invalid, illegal, or incapable of being enforced by any rule of law or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner adverse to any party. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in a mutually acceptable manner in order that the transactions contemplated hereby be consummated as originally contemplated to the greatest extent possible.

8. ENTIRE AGREEMENT. This Agreement and the Purchase Agreement constitute the entire agreement of the parties hereto with respect to the subject matter hereof and supersede all prior agreements and undertakings, both written and oral, with respect to the subject matter hereof.

9. ASSIGNMENT. This Agreement shall not be assigned without the express written consent of Baxter and the Purchaser (which consent may be granted or withheld in the sole discretion of Baxter and the Purchaser).


10. AMENDMENT. This Agreement may not be amended or modified except by an instrument in writing signed by Baxter and the Purchaser.

11. GOVERNING LAW; SUBMISSION TO JURISDICTION. This Agreement shall be construed and governed in accordance with the internal laws (and not the law of conflicts) of the State of Illinois. Baxter and Purchaser hereby consent to service of process and to the jurisdiction of any appropriate Federal or State court located in Cook or Lake Counties, Illinois in any action to enforce the provisions of this Agreement, and hereby waive any objections they may have as to proper venue or forum non conveniens or similar claims with respect to the jurisdiction and venue of such courts.

12. COUNTERPARTS. This Agreement may be executed in one or more counterparts, and by the different parties hereto in separate counterparts, each of which when executed shall be deemed to be an original but all of which taken together shall constitute one and the same agreement.


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

BAXTER HEALTHCARE CORPORATION

By:      /s/ John F. Gaither, Jr.
   -------------------------------
         John F. Gaither, Jr.
         Vice President

OMNICELL TECHNOLOGIES INC.

By:      /s/ Earl E. Fry
   -------------------------------
         Name:    Earl E. Fry
         Title:   VP & CFO


SCHEDULE A

SERVICES

DESCRIPTION OF SERVICES

1. Facilities and facilities management
2. Telephones and telephone services (excluding 800 and long distance service)
3. Computer
4. LAN access
5. Internet access
6. Postal service (excluding federal express and courier services)
7. Cafeteria access
8. Facsimile
9. Office supplies (excluding supplies exceeding $500 per item)
10. Copy machines and service
11. 800 telephone service
12. Long distance telephone service
13. Federal express and other courier services
14. Office supplies exceeding $500 per item
15. Batch/large volume copy services

In addition, Baxter will provide Purchaser such other corporate support services as may be requested by Purchaser (at Baxter's internally allocated costs), provided that Baxter is able and willing to perform such services at the time of the applicable request.

COSTS

Baxter shall be reimbursed for all of the above-referenced Services in accordance with the following:

1. With respect to the Services described in numbers 1 through 10 above, Baxter shall be reimbursed by Purchaser $32,500 per month, plus (if and to the extent there are more than 50 Transferred Employees) an amount equal to $650 per each Transferred Employee (over 50 Transferred Employees) per month.

2. With respect to Services described in numbers 11 through 15 above, Baxter shall be reimbursed by Purchaser Baxter's out-of-pocket expenses associated with providing such Services.

TERM

This Agreement shall commence on the date hereof and shall remain in full force and effect for a period of 90 days. This Agreement may be extended by Purchaser for up to 3 additional consecutive 30 day periods upon 30 days prior written notice to Baxter.


SERVICE AND INSTALLATION AGREEMENT

THIS SERVICE AND INSTALLATION AGREEMENT (this "Agreement"), made and entered into as of January 29, 1999, is by and between Baxter Healthcare Corporation, a Delaware corporation ("Baxter"), and OmniCell Technologies Inc., a California corporation ("OmniCell").

WHEREAS, concurrently with the execution of this Agreement, Baxter and OmniCell have entered into an Asset Purchase Agreement, dated as of December 18, 1998, as amended on January 25, 1999 (the "Purchase Agreement"), pursuant to which Baxter agreed to sell to OmniCell and OmniCell agreed to purchase from Baxter certain of the assets of Baxter associated with the Business, together with certain liabilities related thereto, all as more particularly set forth in the Purchase Agreement; all capitalized terms used but not defined herein shall have the meanings ascribed to such terms in the Purchase Agreement; and

WHEREAS, pursuant to the terms of the Purchase Agreement, Baxter has agreed to retain, among other things, (a) the leases between Baxter, or an Affiliate (as hereinafter defined) of Baxter, and a customer of the Business covering one or more products of the Business (the "Product Leases") and (b) all amounts billable or collectible under customer Contracts with respect to Products (as hereinafter defined) shipped but not invoiced as of the Closing Date (the "Shipped but Unbilled Accounts"); and

WHEREAS, as an inducement for Baxter to enter into the Purchase Agreement, OmniCell has agreed to enter into this Agreement to provide, or cause to be provided, certain services set forth on Exhibit A attached hereto with respect to the Product Leases and the Shipped but Unbilled Accounts, all on the terms and subject to the conditions contained herein;

NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, Baxter and OmniCell hereby agree as follows:

ARTICLE I

ENGAGEMENT

SECTION 1.1 GENERAL. OmniCell agrees to Service (as defined in
SECTION 3.1) the products, equipment, apparatus and instruments subject to the Product Leases or the Shipped but Unbilled Accounts ("Products") and all accessories for all Products, and Baxter agrees to retain OmniCell to Provide Service, or cause Service to be provided, with respect to the Products. OmniCell agrees to use commercially reasonable efforts in the performance of its service obligations and agrees to do so with the same degree of care, skill and prudence customarily exercised when engaged in similar activities for itself, its Affiliates and its other customers. In performing its obligations under this Agreement, OmniCell will accord Baxter the same priority under comparable circumstances as it provides itself and its Affiliates. Without limiting the generality of the foregoing, OmniCell will not discriminate against Baxter. Baxter and OmniCell will cooperate in planning the scope and timing of services provided hereunder in order to minimize or eliminate interference with the conduct of OmniCell's business activities.

1.


Notwithstanding any contrary indication herein, if such interference is unavoidable, OmniCell will apportion the available services in a fair and reasonable manner.

SECTION 1.2 "AFFILIATE" DEFINED. As used in this Agreement, the term "Affiliate" means any individual, corporation, partnership, joint venture, limited liability company, association, joint-stock company, trust, unincorporated organization or governmental authority which directly or indirectly controls, is controlled by or is under common control with a party. OmniCell agrees that its affiliates will, and that it will cause its affiliates to, observe, perform and refrain from taking action where the nonobservance, failure to perform or action, if by OmniCell, would result in a breach hereunder.

ARTICLE II

TRAINING

SECTION 2.1 OMNICELL TRAINING. OmniCell will be responsible for training its employees and any third party with whom OmniCell subcontracts or otherwise delegates any obligation of performance hereunder on how to service, repair, refurbish and conduct preventive maintenance on all Products, on all other matters and skills needed or appropriate for OmniCell to fulfill its obligations hereunder. OmniCell will maintain, or cause to -be maintained, records of such training sufficient for compliance with applicable laws and governmental regulations.

ARTICLE III

SERVICE TO BE PROVIDED

SECTION 3.1 "SERVICE" DEFINED. As used in this Agreement, the term "Service," when used in connection with the Products, means OmniCell's duty to Baxter to perform such in-warranty and out-of-warranty repair work with respect to the Products requested by a customer as Baxter may have agreed to provide, or cause to be provided, to a customer, such installation work as may be required by the complex nature of the Products, as listed on Exhibit B attached hereto, including but not limited to installing the Products listed in Part 3.18(a) of the Seller Disclosure Schedule by December 31, 1999, such preventive maintenance work as Baxter or any of its affiliates may have agreed to provide, or cause to be provided, to a customer and such refurbishment work as Baxter may request on a Product for its own account.

SECTION 3.2 SERVICE LOCATIONS. OmniCell will provide refurbishment work at a repair depot specified by Baxter. All other work will typically be provided at the site of the Product. In some cases it may be necessary to return a Product to OmniCell for Service.

SECTION 3.3 SERVICE LEVELS. OmniCell will provide Service in accordance with the service levels provided on Exhibit A attached hereto.

SECTION 3.4 BAXTER WARRANTIES TO CUSTOMERS. Baxter has provided the following information concerning such warranties including, without limitation, (a) the name, address and telephone number of each customer with a Product under warranty, showing as to each such customer the identity of each such Product and as to each such warranty the expiration date therefor and (b) a copy of each such warranty identified to each such Product.

2.


SECTION 3.5 BAXTER SERVICE AGREEMENTS WITH CUSTOMERS. Baxter has provided the following information concerning such service agreements including, without limitation, the name, address and telephone number of each customer with a Product for which Baxter or any of its affiliates has agreed to provide, or cause to be provided, out-of-warranty repair or preventive maintenance work, showing as to each such customer the identity of each such Product and a complete description or copy of each such agreement including, without limitation, the term and duration thereof and the nature and scope of the work to be provided; provided, however, that such description and such copy need not show the amount, if any, to be paid by such customer to Baxter for such work.

SECTION 3.6 TERM OF PRODUCT LEASES AND SERVICE AGREEMENTS. Baxter hereby agrees not to extend or renew the term of any of the Product Leases or service agreements covered by this Agreement (or allow for any extension or renewal thereof).

ARTICLE IV

PAYMENT FOR SERVICES

SECTION 4.1 PAYMENT RATES. OmniCell agrees to provide the Services performed hereunder for no charge, it being recognized that OmniCell is undertaking its obligations hereunder in consideration of the transaction contemplated by the Purchase Agreement.

ARTICLE V

MISCELLANEOUS PROVISIONS

SECTION 5.1 RETROFITS. The parties agree that changes, upgrades, retrofits, exchanges, recalls and similar events with respect to any Product are beyond the scope of this Agreement. Nonetheless, OmniCell agrees to advise Baxter, by notice, of each such matter and provide Baxter with full particulars and information with such advice.

SECTION 5.2 PARTS. OmniCell agrees to supply for the benefit of Baxter all parts necessary to ensure the commercially reasonable operation of any Product.

SECTION 5.3 EXHIBITS. Attached and incorporated herein by this reference are Exhibits A & B hereto which specify matters concerning (a) Products, (b) Services including, without limitation, additional services, if any, (c) Service Levels and (d) Utilized Parts.

SECTION 5.4 FAILURE TO PROVIDE SERVICE. In the event that OmniCell fails to provide Service to Baxter in accordance with the terms and conditions contained in this Agreement for any reason (other than an event of Force Majeure as described in Section 7.3 of this Agreement) , OmniCell shall reimburse Baxter the cost of obtaining substitute services from an alternative source, as described below:

(I) Baxter shall take all commercially reasonable steps to obtain services with respect to the Product from an alternative service provider at the lowest price available during any period in which OmniCell is unable to provide Service.

3.


(II) Along with any request for reimbursement by Baxter pursuant to this Section 5.5, Baxter will supply OmniCell with the invoice relating to services obtained pursuant to clause (i) above. OmniCell shall reimburse Baxter for the cost of obtaining alternate services within thirty (30) days of the date of receiving a copy of the invoice for services.

Nothing contained in this Section 5.5 shall preclude Baxter from enforcing its rights under this Agreement in a court of law or equity.

SECTION 5.5 INDEMNIFICATION. Each party agrees to protect, defend, hold harmless and indemnify the other party from and against any and all damages, claims, losses, liabilities ("Losses") , and to reimburse the other party for all expenses (including, without limitation, all fees and expenses of counsel, travel costs and other out-of-pocket costs) to the extent such Losses or expenses result from or are caused by any fault or negligence of the indemnifying party or any breach by such party hereunder.

SECTION 5.6 LIMITATION OF LIABILITY. NEITHER PARTY SHALL BE LIABLE TO THE OTHER PARTY, THE OTHER PARTY'S CUSTOMERS, OR ANY OTHER ENTITY CLAIMING THROUGH OR UNDER THE OTHER PARTY FOR ANY LOSS OF PROFITS, LOSS OF DATA OR FOR ANY OTHER CONSEQUENTIAL, INCIDENTAL, SPECIAL, PUNITIVE OR INDIRECT DAMAGES INCURRED BY SUCH PARTY (WHETHER IN AN ACTION IN CONTRACT OR TORT OR BASED ON A WARRANTY, OR UNDER ANY OTHER THEORY OF LIABILITY), EVEN IF SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES, ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT. The foregoing limitations on liability for damages shall apply notwithstanding any failure of essential purpose of any limited remedy.

SECTION 5.7 BASIS OF BARGAIN. The foregoing limitations on liability and limited remedies set forth in this Agreement, along with the execution of the Purchase Agreement form the essential part of the bargain between the parties, without which OmniCell would not enter into this Agreement.

ARTICLE VI

TERM, TERMINATION, WIND-UP, PRODUCT DELETION

SECTION 6.1 TERM . Except as otherwise provided herein, the term of this Agreement shall commence on the date hereof and, unless sooner terminated as provided herein, shall continue until November 30, 2004.

SECTION 6.2 BREACH. In the event either party materially breaches this Agreement and fails to cure such breach within ninety (90) days after notice thereof, the other party may, at any time within ninety (90) days thereafter, terminate this Agreement upon at least thirty (30) days prior written notice.

SECTION 6.3 INACCURATE REPRESENTATION. Either party may terminate this Agreement at any time upon at least thirty (30) days prior notice to the other party if a representation or warranty of the other party is or becomes materially inaccurate, false or misleading.

4.


SECTION 6.4 INSOLVENCY, ETC.. Either party may terminate this Agreement immediately upon notice to the other party (a) if the other party ceases to do business or otherwise terminates its business operations; (b) if the other party becomes insolvent or seeks protection under any insolvency, bankruptcy, receivership, creditors arrangement or reorganization, composition or comparable proceeding; or (c) if any such proceeding is instituted against the other party and is not dismissed or withdrawn within sixty (60) days.

ARTICLE VII

GENERAL PROVISIONS

SECTION 7.1 EFFECT OF TERMINATION. The termination of this Agreement shall not relieve the parties hereto of any rights or obligations respectively accrued by or vested in them hereunder prior to such termination, or as expressly provided herein.

SECTION 7.2 EXPENSES. The parties have considered the possibility that one or both of them will incur expenses in preparing for performance of this Agreement and that one or both of them will incur expenses and suffer losses as a result of termination, and the parties have nevertheless agreed that neither party shall be liable for any damages by reason of the termination of this Agreement pursuant to its terms.

SECTION 7.3 FORCE MAJEURE. Neither party shall be liable to the other party for failure or delay in the performance of any obligation under this Agreement during the time and to the extent such failure or delay is caused by reason of acts of God or other cause beyond its reasonable control, including but not limited to, acts of government, riots, war, interruption of transportation, strikes or other labor trouble, shortages of labor, fire, storm, flood, earthquake, inability to obtain suitable raw materials, products, parts, components, fuel or power or extraordinary price increases. The performance of obligations hereunder shall be suspended during the existence of such cause, and upon cessation of such cause, shall again be required.

SECTION 7.4 NONWAIVER. The failure of any party hereto to enforce at any time any provision of this Agreement, in case of breach by the other party of any provision of this Agreement, shall not constitute a waiver of any other provision of this Agreement nor of any subsequent breach of the same provision.

SECTION 7.5 ASSIGNMENT. This Agreement shall not be assigned by either of the parties to any third party without the prior written consent of the other party; provided, however, that OmniCell may subcontract or otherwise delegate to any third party any obligation or performance hereunder, in which case OmniCell shall remain primarily responsible hereunder for any such obligation or performance; provided further that Baxter may assign its rights hereunder to any party to which it assigns all or substantially all of the Product Leases.

SECTION 7.6 NOTICES. All notices, requests, demands or other communications hereunder (including notices of all asserted claims or liabilities) to be effective shall be in writing and shall be either delivered personally, sent by messenger service, sent by guaranteed overnight delivery service, charges prepaid, sent by fax (with hard copy to follow) or mailed by U.S. mail, certified or registered, with appropriate first class postage prepaid, to the addresses and/or fax

5.


numbers herein designated or such other address as may be designated in writing by notice given in the manner provided herein. Notices hereunder shall be effective upon (a) personal delivery thereof, if delivered personally or by messenger service, (b) one (1) business day after deposit for delivery by the overnight delivery service, if delivered by overnight delivery service, (c) when receipt is electronically confirmed, if sent by fax, or (d) three (3) business days following deposit in the mail, if sent by mail as aforesaid, whether or not delivery is accepted.

If to the Buyer:                OmniCell Technologies Inc.
                                1101 E. Meadow Drive
                                Palo Alto, California 94303
                                Attn: Chief Financial Officer
                                Facsimile: 650-843-6277

with a copy to:                 Cooley Godward LLP
                                Five Palo Alto Square
                                Palo Alto, California 94306-2155
                                Attn:  Robert J. Brigham, Esq.
                                Facsimile:  650-857-0663

If to Baxter:                   Baxter Healthcare Corporation
                                One Baxter Parkway
                                Deerfield, Illinois 60015-4633
                                Attn: General Counsel
                                Facsimile:  847-948-2450

with a copy to:                 Sidley & Austin
                                One First National Plaza
                                Chicago, IL 60603
                                Attn: John M. O'Hare, Esq.
                                Facsimile: 312-853-7036

SECTION 7.7 ENTIRE AGREEMENT. This Agreement, including the Exhibits hereto, and the Purchase Agreement constitute the entire understanding of the parties hereto with respect to the subject matter hereof and supersedes all prior communications, writings or other documents between the parties hereto, and neither party shall be bound by any condition, definition, warranty or representation otherwise than as expressly provided for in this Agreement or the Purchase Agreement.

SECTION 7.8 GOVERNING LAW. This Agreement shall be governed by and construed in accordance with the internal laws (as opposed to the conflicts of law provisions) of the State of Illinois.

SECTION 7.9 AMENDMENT. This Agreement shall not be amended, modified or supplemented except by a written instrument signed by an authorized representative of each of the parties hereto.

SECTION 7.10 SEVERABILITY. In the event that one or more provisions contained in this Agreement are unenforceable or are declared invalid for any reason whatsoever, such

6.


unenforceability or invalidity shall not affect the enforceability or the validity of the remaining terms or portions of this Agreement, and each such unenforceable or invalid provision shall be severed from the remainder of this Agreement.

SECTION 7.11 CONSTRUCTION. The parties hereto acknowledge that OmniCell and Baxter and their counsel have reviewed and revised this Agreement, and that the rule of construction to the effect that any ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of this Agreement or any documents executed in connection herewith.

SECTION 7.12 COUNTERPARTS. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same Agreement.

SECTION 7.13 CONFIDENTIALITY. During the term of this Agreement and for one (1) year following termination OmniCell agrees to keep confidential the information which is disclosed to it by Baxter pursuant to this Agreement and Baxter agrees to keep confidential information contained in reports provided by OmniCell to Baxter pursuant to this Agreement. OmniCell's use of Baxter's confidential information will be solely for the purpose of performing its obligations under this Agreement. The confidentiality obligations of this Agreement shall not apply to information which: (a) at the time of disclosure is reasonably available to the public; (b) becomes reasonably available to the public through no fault of the party required to keep information confidential; (c) is possessed by the party required to keep information confidential, as evidenced by written or other tangible evidence, prior to receipt of the information from the party providing information; or
(d) becomes known to the party required to keep information confidential from a third party who has no obligation of confidentiality to the party providing information. Each of OmniCell and Baxter hereby agrees to keep confidential the terms and conditions of this Agreement.

7.


IN WITNESS WHEREOF, the parties hereto have, by their duly authorized representatives, executed and delivered this Agreement as of the date first above written.

Baxter Healthcare Corporation OmniCell Technologies Inc.

By:      /s/ John F. Gaither, Jr.                  By:
    ------------------------------                     -----------------------
         John F. Gaither, Jr.                      Name:
         Vice President                            Title:

                                      8.


IN WITNESS WHEREOF, the parties hereto have, by their duly authorized representatives, executed and delivered this Agreement as of the date first above written.

Baxter Healthcare Corporation OmniCell Technologies Inc. IV Systems Division

By:                                                  By:      /s/ Earl E. Fry
    ------------------------------                     -----------------------
                                                     Name:    Earl E. Fry
                                                     Title:   VP & CFP

9.


EXHIBIT A

PRODUCTS

The Products are limited to the products, equipment, apparatus and instruments that are subject to the Product Leases and the Shipped but Unbilled Accounts.

TERRITORY

The Territory is the 50 states of the United States and the District of Columbia.

SERVICES

In addition to Product Service, OmniCell will provide a number of services at no additional charge to Baxter. A listing of these services is as follows.

- Call management center for the receiving of service requests and dispatching to Field Service Representatives
- Accumulation of mutually agreed upon failure data
- Generation of service bulletins, where and when appropriate
- Issuance of service repair bulletins within 45 days of issuance by Baxter
- Customer technical assistance hot lines
- Performance of any activities per part 820 of 21 CFR and the IV Systems Quality Manual
- Customer technical training (requested by customer)
- Parts order entry for purchasing customers
- Customer satisfaction surveying in coordination with Baxter, annual review of results and methods
- Marketing liaison
- Monthly listing of all significant component shortages and estimated dates to eliminate back orders
- Maintain inventory management to enhance customer satisfaction
- Maintain inventory segregation and control as required by GMPs
- Management of self-service customers
- Provide access to same level of information as exists prior to date of contract execution
- Provide customers with upgrades for the software and other systems related to the Products consistent with OmniCell's provision of such upgrades to itself, its Affiliates and its other customers pursuant to its obligations under the Purchase Agreement to continue Baxter's program for attaining year 2000 compliance

1.


OmniCell agrees to provide additional special services on an as needed basis for which Baxter agrees to pay a mutually agreed upon fee. Examples of these special services are listed below.

- Installations as requested by Baxter
- Inventory rework, inspection or reprocessing
- Out-of-box failure and PAL analysis/evaluation
- Off-site storage
- Product upgrades, only as requested
- Baxter-requested customer training
- Trade show or product evaluation set-up/take down
- Special projects outside the scope of this agreement

2.


LEVEL OF SERVICE/SERVICE COMMITMENT

PRODUCTIVITY SYSTEMS

Telephone response by the FSR within 2 hours.
On-site by the FSR within 6 hours ("All calls) or 12 hours ("B" calls). Repair completed within 24 hours.

If OmniCell should fail to meet these service commitments, Baxter will be reimbursed according to the following schedule.

------------------------------- ---------------------------- ---------------------------- ----------------------------
      Telephone Response             On-site Response             Repair Completion            Quarterly Penalty
------------------------------- ---------------------------- ---------------------------- ----------------------------
       98.00 - 100.00%                95.00 - 100.00%              95.00 - 100.00%                   $     0
------------------------------- ---------------------------- ---------------------------- ----------------------------
        97.50 - 97.99%                94.50 - 94.99%               94.50 - 94.99%                     $  500
------------------------------- ---------------------------- ---------------------------- ----------------------------
        97.00 - 97.49%                94.00 - 94.49%               94.00 - 94.49%                     $1,000
------------------------------- ---------------------------- ---------------------------- ----------------------------
        96.50 - 96.99%                93.50 - 93.99%               93.50 - 93.99%                     $1,500
------------------------------- ---------------------------- ---------------------------- ----------------------------
        96.00 - 9.49%                 93.00 - 93.49%               93.00 - 93.49%                     $2,000
------------------------------- ---------------------------- ---------------------------- ----------------------------
        95.50 - 95.99%                92.50 - 92.99%               93.50 - 92.99%                     $2,500
------------------------------- ---------------------------- ---------------------------- ----------------------------
    Each additional -0.5%          Each additional -0.5%        Each additional -0.5%                 $  250
------------------------------- ---------------------------- ---------------------------- ----------------------------

PAYMENT FOR SERVICES

None

FREIGHT

Baxter shall be responsible for all transportation costs related to returning a repaired product from an OmniCell repair facility to the customer except in those instances where OmniCell has failed to meet the six (6) calendar day turnaround commitment. In those instances OmniCell will be responsible for return transportation costs.

PRICING

FLAT RATE LABOR CHARGE PER MONTH

Any service calls that are the result of problems generated by the customer's computer network will be billed to Baxter at an hourly rate and parts at cost plus 10%. Parts prices are firm for year 1 of the contract and will be reviewed in November of each year for the upcoming year.

3.


EXHIBIT B

See attached.

1.


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Index Description

PRODUCTIVITY SYSTEMS INSTALLATION PROCEDURE FOR SURE-MED-Registered Trademark-

                                  CURRENT ISSUE
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DOCUMENT LIST
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                  N/A
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EFFECTIVE DATE
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                             DESCRIPTION OF CHANGE
--------------------------------------- ---------------------------------------
FROM                                    TO
--------------------------------------- ---------------------------------------
                                         NEW DOCUMENT
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                              REASON FOR CHANGE
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New Document.

-------------------------------------------------------------------------------
INITIATOR NO.              FIRST OF CODE           PQA FILE NO.
---------------------------------------------------------------
N/A                        YES                     N/A
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                           APPROVALS ON FILE IN IVS
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TECH APPR                  REQ                     IVS
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G. Young                   C. Buhner               T. Werenski
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                              CHANGE HISTORY
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   CHANGE                          INITIATION
   NUMBER        ISSUE DATE          NUMBER                 REASON RO CHANGE
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1.0 PURPOSE

To establish the process to be followed by Productivity Systems business of the IV Systems Division of Baxter Healthcare, in the installation and implementation of the Sure-Med-Registered Trademark- product.

2.0 SCOPE AND APPLICABILITY

This procedure applies to all employees or consultants contracted by Productivity Systems who are involved in the implementation process of the Sure-Med-Registered Trademark- product. This document is the standard procedure for a new installation of the Sure-Med-Registered Trademark- System, therefore some sections of this document may not apply to an add on of additional Sure-Med-Registered Trademark- equipment to an existing Sure-Med-Registered Trademark- account.

3.0 APPLICABLE DOCUMENTS

3.1 ?????? Sure-Med-Registered Trademark- Pre-Implementation Manual

For Use Only By Affiliates of Baxter Healthcare Corporation
THIS DOCUMENT CONTAINS PROPRIETARY INFORMATION-IT MUST NOT BE REPRODUCED
OR DISCLOSED TO OTHERS WITHOUT PRIOR WRITTEN APPROVAL

THE USER IS RESPONSIBLE FOR CHECKING THE CURRENT ISSUE DATE
BEFORE USING THIS DOCUMENT

SPECFORM/N Rev A


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3.2 ?????? Sure-Med-Registered Trademark- Field Service manual

3.3 PHG-133 Sure-Med-Registered Trademark- PA Process

3.4 07-19-03-525 Sure-Med-Registered Trademark- Version 5.2.1 Install/Upgrade Manual

4.0 ATTACHMENTS

4.1 Sure-Med-Registered Trademark- Account Information Sheet

4.2 Sure-Med-Registered Trademark- System Order/Return Form

4.3 Productivity Systems Training Form

4.4 Sure-Med-Registered Trademark- Security Configuration Form

4.5 Clinical Request Form (CRF)

4.6 FACE Document

4.7 Sure-Med-Registered Trademark- Dispenser Location Grid Form

4.8 Sure-Med-Registered Trademark- Inservice Information Form

4.9 Sure-Med-Registered Trademark- Equipment Checklists:


Unit Dose/Expansion Cabinet Stack
Dispensing Center Cabinet
Supply Center Cabinet
Supply Cabinet
Refrigerated Supply Cabinet
Expansion Cabinet
Pharmacy Workstation (Host)

4.10 Sure-Med-Registered Trademark- Exit Interview Form

4.11 Sure-Med-Registered Trademark- Installation Report

4.12 Sure-Med-Registered Trademark- Account Installation Report

5.0 DEFINITIONS:

5.1 Chicago Trainees: Sure-Med-Registered Trademark- Customers attending off site training session in Chicago.


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5.2 Pre-Implementation: A process that occurs prior to installation of the Sure-Med-Registered Trademark- equipment.

5.3 Consultant: A Productivity Systems business unit employee or consultant contracted by Productivity Systems who leads the implementation and installation process of the Sure-Med-Registered Trademark- product for each account.

5.4 Field Application Engineer (FAE) : A Productivity Systems business unit employee or consultant contracted by Productivity Systems who is responsible for all technical aspects of the installation process for the Sure-Med-Registered Trademark- product.

5.5 Nurse Consultant: A Productivity Systems business unit employee who supports the Consultant during the installation and implementation process as related to nursing, resolves nursing issues, develops nursing procedures, the training of account nursing staff and management of Network nurses.

5.6 Project Leader: A project leader is a account designated employee who has the ultimate responsibility for organizing and overseeing the implementation process and continued eternal maintenance support of the Sure-Med-Registered Trademark- system.

5.7 Information systems (IS) : A department within the account that is responsible for the accounts computer system(s).

5.8 Field Interface Engineer (FIE): A Productivity Systems business unit employee who supports the Consultant with field interface issues relating to each specific account.

5.9 Interface: An interface is a communication link between two or more computer systems.

5.10 Security Configuration Form: A form that the Consultant will complete as described in this document and utilize to identify and program levels of users end allowable functions with the Sure-Med-Registered Trademark- System.

5.11 Clinical Request Form (CRF): A form that the Consultant will complete as described in this document and is utilized to request nurse training support from the Nursing Network.

5.12 Host: A Sure-Med-Registered Trademark- Computer Pharmacy Workstation that is a key component to the Sure-Med-Registered Trademark- system.

5.13 Equipment: All hardware provided by Productivity System that makes up the Sure-Med-Registered Trademark- system.


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5.14 DID line: Dedicated Direct Inward Dial phone line used for incoming calls to the modem that is connected to the Sure-Med-Registered Trademark- host. This DID line is used for technical support to the Sure-Med-Registered Trademark- system.

5.15 Resource Nurse: Account users who with additional training provided by Baxter will in turn support and or train other account staff.

5.16 Users: Any account personnel who are permitted access to the Sure-Med-Registered Trademark- system.

5.17 FACE Document: Information complied by the FIE to summarize the interface installation and implementation for each specific account.

5.18 Drug List: A compiled list of all items to be stocked within the Sure-Med-Registered Trademark- system.

5.19 Dispenser Grid Form: A physical layout of the unit dose compartment that the Consultant will utilize to define locations of dispensers and cassettes.

5.20 Backorder: An ordered item from Customer Operations that is out of stock and can not be filled at the time of order placement.

5.21 Cabinet Communication Lines: A point to point communication line from Host to cabinet.

5.22 Interface Communication Lines: A communication line utilized to connect communications from the Sure-Med-Registered Trademark- host to the account computer system(s).

5.23 Network Nurse: A trainer contracted by Productivity Systems supplied by Nursing Network to institute training of users at the account.

5.24 Nursing Network: A Baxter group that manages network nurses.

5.25 In-Service Information Form: A document that is to be completed by the Consultant as described in this document and used to communicate customer account training information to the assigned network nurse(s).

5.26 Installation Team: A Productivity Systems business unit, employee(s) or consultant(s) contracted by Productivity Systems assembled to complete the on site installation process and meet the needs of the account.

5.27 Cabinet: A Sure-Med-Registered Trademark- cabinet is a computer-controlled storage unit.


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5.28 System: All hardware and software that bring together the Sure-Med-Registered Trademark- Distribution System.

5.29 Account Sales Specialist: Productivity Systems employee who completes sales process per account. They are account manager once completion of installation has occurred.

6.0 PROCEDURE

6.1 Phase I-Planning: The first and one of the more critical phases of the implementation process of the Sure-Med-Registered Trademark- product is the planning phase. This phase begins upon approved purchase order of Sure-Med-Registered Trademark- During this planning phase the Consultant is assigned to the account and information that is critical to the installation begins to be gathered. Phase II may not begin until all planning is complete.

                  6.1.1    Customer operations receives the approved sales
                           documentation from marketing. Customer Operations
                           will then generate a Sure-Med-Registered Trademark-
                           System Order/Return Form with the approved equipment
                           identified on order. This will be sent to the
                           appropriate Consultant Regional Manager and will
                           serve as notification of equipment to be installed.

                  6.1.2    During this same time period of an approved sale, the
                           Account Sales Specialist generates an Account
                           Information sheet that `is also sent to the
                           appropriate Consultant Regional Manager.

                  6.1.3    Once the Consultant Regional Manager receives both
                           documents, they are then sent to the, assigned
                           Consultant. The Consultant now becomes the project
                           leader of that installation.

                  6.1.4    The Consultant will contact the Account Sales
                           Specialist to acknowledge receipt of account
                           documents. This is to be done within the first 2-3
                           weeks.

                  6.1.5    The Consultant will contact the account within the
                           same 2-3 weeks to introduce themself, and discuss the
                           implementation process of the
                           Sure-Med-Registered Trademark- System. This
                           conversation will include setting realistic
                           expectations, and answering any questions the account
                           might have.

                  6.1.6    At this time the Consultant will determine the type
                           of installation to occur (pre-assembly or
                           traditional).

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If pre-assembly is chosen refer to document PHG-133 Sure-Med-Registered Trademark- Pre-Assembly Process. Sure-Med-Registered Trademark- order submitted by Account Sales Specialist may have been identified as Pre-Assembly upon placement of order.

                  6.1.7    After initial contact with the account the Consultant
                           will then document conversation(s) in a follow up
                           letter. This letter will be sent to the account with
                           copies to the Consultant's Regional Manager and
                           Account Sales Specialist.

                  6.1.8    The Consultant will notify the Interface Group of the
                           account and will check Field Interface Engineer (FIE)
                           availability to attend the pre-implementation meeting

                  6.1.9    The Consultant will contact the account to schedule
                           the pre-implementation meeting, tentative
                           installation date(s), the Round Lake training date
                           and identify the Chicago trainees. Once the
                           Consultant receives this information (s)he will
                           complete and submit the Productivity Systems Training
                           form to the Training Center.

                  6.1.10   The Consultant will order Pre-Implementation Manuals
                           and Nurse Training Kits from Customer Operations.
                           These are to he sent to the account prior to the
                           preimplementation meeting.

                           6.1.10.1     If Unit Dose
                                        Sure-Med-Registered Trademark-
                                        cabinet(s) are a part of the
                                        installation the Consultant will also
                                        order a drug list to be sent to the
                                        account.

                  6.1.11   The Consultant is to notify the Sales Specialist,
                           Nurse Consultant and FIE of the scheduled
                           pre-implementation meeting and tentative installation
                           date(s).

                  6.1.12   These dates are to be reflected on the Consultant's
                           personal calendar and submitted to his/her Regional
                           Manager. The Consultant Regional Manager will in turn
                           submit a regional calendar to the National Manager
                           Field Engineer for addition to National Field
                           Calendar. This calendar will be sent to all
                           appropriate Productivity System employees. National
                           Manager Field Engineer will assign the Field
                           Application Engineer (FAB) to the installation.

                  6.1.13   At the Consultants discretion a host and or other
                           equipment may be ordered from Customer Operations for
                           availability at the pre-implementation meeting.

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6.2 Phase II: Pre-implementation Meeting: This meeting will occur at the account facility with the account project leaders and Productivity Systems representatives. All attendees will have received the Pre-Implementation manual prior to the scheduled meeting so as to review the installation process. This manual will serve as the account's reference for the Sure-Med-Registered Trademark- installation.

The purpose of this meeting is to discuss the roles of both the account and Productivity Systems as they pertain to the implementation process. An installation timetable will be agreed upon and project goals will be established. Expectations will be defined for the installation process, interface functionality, and customization capabilities.

                  6.2.1    The Consultant will gather the necessary information
                           to complete the Security Configuration Form. The
                           installation team will utilize this form to configure
                           the Sure-Med-Registered Trademark- System to account
                           specifics.

                  6.2.2    The Consultant will gather nursing information
                           necessary to complete both the Clinical Request Form
                           (CRF) and the In- service form. The CRF will be used
                           to request nursing support from the Nursing Network.
                           Account resource nurses and/or nurse educators will
                           be also be identified along with what type of nurse
                           training process to implement i.e., classroom or
                           nursing unit.

                  6.2.3    Discussion will occur to identify and address any
                           expected changes in current practices to both
                           Pharmacy and Nursing. The Consultant will also
                           discuss the importance of developing Pharmacy and
                           Nursing Policies & Procedures for
                           Sure-Med-Registered Trademark-.

                  6.2.4    The Consultant will review the completed drug list
                           with the account, if available.

                  6.2.5    The FIE will review the Sure-Med-Registered
                           Trademark- specifications with the account
                           representatives which will include the following:

                           -        DID line
                           -        Cabinet communication lines
                           -        Interface
                           -        Electrical power

                  6.2.6    The installation team will review any accounts
                           external specifications. Note: To date there have
                           been no known account's with external specifications.

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                  6.2.1    At the conclusion of the Pre-Implementation meeting a
                           walk through of the facility will occur to identify
                           locations for equipment, assembly area and nurse
                           training.

                  6.2.8    At the Consultant's discretion, and if the equipment
                           is on site, set up of the host and any other
                           equipment may occur. If any equipment is set up it
                           will be necessary to train selected users of its
                           functionality.

6.3 Phase III: Pre-Installation: At the Pre-Implementation meeting a timetable of critical steps which must be completed prior to the actual installation were identified along with the responsible personnel. All steps should be completed and on schedule for if any are omitted or delayed the installation date may also be delayed. Rescheduling the installation could result in a further delay of two or three months. The Consultant is responsible for maintaining contact with all concerned and determine that the project is on schedule.

                  6.3.1    The Consultant will document a recap of the
                           pre-implementation meeting and send copies to the
                           account, regional manager, sales specialist and other
                           attendees.

                  6.3.2    The Consultant will send the completed CRF to the
                           Nurse Consultant who will review and submit to the
                           Nursing Network for assignment

                  6.3.3    The FIE will follow up any interface issues from the
                           pre-implementation meeting and produce the FACE
                           document.

                  6.3.4    Upon receipt of the completed drug list from the
                           account, the Consultant will develop a dispenser grid
                           form (Unit Doze cabinets only).

                  6.3.5    The Consultant will submit the completed
                           Sure-Med-Registered Trademark- System Order/Return
                           form(s) to Customer Operations at least 1 week
                           prior to installation. Customer Operations will
                           then notify the Consultant of any and all
                           backorders. Once all orders have been shipped by
                           Customer Operations the Consultant will verify
                           with the account receipt of the equipment

                  6.3.6    Two weeks prior to installation the Consultant will
                           verify with pharmacy, nursing, IS and engineering
                           that all pre-installation task(s) have been
                           completed, i.e., DID line, cabinet communication
                           lines, interface lines etc. These tasks were
                           identified and documented to account in follow-up
                           Pre-Implementation letter.

                                                   DOCUMENT NO:
                                                     CHANGE NO:
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                  6.3.7    The Consultant will coordinate travel arrangements
                           with the installation team and provide pertinent
                           documents as needed to the team.

                  6.3.8    Nursing Network will inform the Consultant of
                           assigned nurse(s) trainers. The Consultant will in
                           turn contact the assigned network nurse(s) and also
                           provide to nurses(s) the completed Inservice
                           Information packet which will provide all necessary
                           training information specific to that account.

                  6.3.9    Once Chicago training of the account has occurred the
                           Training Center will complete and forward to the
                           Consultant a synopsis of training.

                  6.3.10   One week prior to installation the Consultant will
                           follow up with the account project leader to confirm
                           availability of inventory, pulling of stock, and
                           appropriate resources have been allocated.

         6.4      Phase IV: Installation- The Consultant having determined

that all pre-installation steps have been completed approves the installation phase to begin for all Sure-Med-Registered Trademark- equipment. The installation team will then arrive at account site. The Consultant as the Baxter project leader authorizes the commencement of the installation and determines when the project is completed.

                  6.4.1    Upon arrival at the account site the Consultant will
                           establish with the account a time for daily update
                           meetings as well as date and time for an exit
                           meeting.

                  6.4.2    The Consultant will identify and address any
                           deficiencies anticipating the affect an the
                           installation process. This will be documented for
                           future reference with copies sent to Sales Specialist
                           and Regional Manager. These identified issues will be
                           discussed with the account project leader for
                           resolution.

                  6.4.3    The installation team will verify that all equipment
                           and supplies are present. If any discrepancies occur
                           in the received equipment the Consultant will contact
                           Customer Operations for resolution.

                  6.4.4    All equipment will be inspected for damage. If any
                           has occurred the Consultant will notify Customer
                           operations for replacement. Upon receipt of
                           replacement item the Consultant will complete a
                           return report for the damaged equipment received. A
                           copy of this will be sent to Customer Operations as
                           well as attached to the damaged item for return.
                           Customer Operation will complete any follow up
                           required.

                                                   DOCUMENT NO:
                                                     CHANGE NO:
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6.4.5 The installation team will complete all tasks as per the appropriate equipment checklists.

6.4.6 The FAE will refer to the Field Service Manual and

                           Sure-Med-Registered Trademark- version 5.2.1
                           installation/upgrade manual as needed.

                  6.4.6    If any equipment fails during the installation i.e.,
                           laptop, motherboard, dispenser's etc. replacements
                           will be ordered from Customer Operations. Upon
                           receipt of replacement item the accompanied document
                           will be completed by the installation team sighting
                           that item was detective. This document will be
                           attached to the item and returned to Round Lake

                  6.4.7    The installation team will establish and verify
                           communications between the host and the cabinet(s).
                           They will then download the medication and user files
                           to the cabinet(s). The Host will be re-located to its
                           permanent location and all connections will be
                           established.

                  6.4.8    The Consultant will identify and prepare cabinet(s)
                           specified for nurse training.

                  6.4.9    The installation team along with the account will
                           verify the viability of the interface(s).

                  6.4.10   The account project leader is to review and modify
                           the Sure-Med-Registered Trademark- System as needed.

                  6.4.11   The Consultant will review the entire
                           Sure-Med-Registered Trademark- System with the
                           Chicago trainee(s) and support the trainee(s) in any
                           additional system training.

                  6.4.12   The installation team will complete all
                           Sure-Med-Registered Trademark- System testing as
                           required per equipment checklists.

                  6.4.13   Nurse training will follow the developed pre-agreed
                           schedule.

                  6.4.14   Go live of the Sure-Med-Registered Trademark- System
                           will follow the pre-agreed schedule.

                  6.4.15   The installation team will prepare and notify
                           Customer Operations of any supplies to be returned.
                           The returns will include any appropriately labeled
                           damaged or failed equipment and a list of returned
                           inventory. A copy of the returns will be sent to
                           Customer Operation for follow up.

                                                   DOCUMENT NO:
                                                     CHANGE NO:
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                  6.4.16   The Consultant, along with the account, will complete
                           the Exit Interview document. This document will be
                           filed with the account folder and copies sent to
                           Account Sales Specialist and Regional Manager.

         6.5.     Phase V: Post Installation: with the completion of the

installation the Consultant continues to maintain interim contact with the account. The purpose is to determine any previously unidentified post installation issues and answer any questions that may have arisen.

                  6.5.1    The Consultant will send a thank you letter to the
                           account that will include a statement regarding any
                           outstanding issues. A copy will be sent to the
                           Account Sales Specialist and Regional Manager.

                  6.5.2    The Consultant will contact the account periodically
                           during first month.

                           6.5.2.1      Once the installation team has completed
                                        the installation and has left the
                                        account site all technical support will
                                        come from Technical Assistance Center
                                        (TAC)

                  6.5.3    Once all outstanding issues related to the
                           installation process have been resolved the Account
                           Sales Specialist will then become account manager
                           with Consultant support if required.

                  6.5.4    The FAE will complete the Installation Report and
                           submit it to Customer operations.

                  6.5.5    The Consultant will complete the Installation
                           overview Report and submit to Customer Operations
                           with copies to Regional Manager and Vice President
                           Field Operations.

7.0      TRAINING

7.1 Training of these procedures for all Field Implementation employees will occur within 90 days by written acknowledgment of reviewing this procedure. Upon receipt of written acknowledgment of the completed training, it will be recorded on the Training Roster.


December 23, 1999

Mr. Art Mollenhauer
Vice President Finance
I.V. Systems & Medical Products
Baxter Healthcare Corporation
One Baxter Parkway
Deerfield, Illinois 60015

Dear Art:

Once countersigned by you, this letter constitutes a final and binding agreement between OmniCell Technologies, Inc. ("OmniCell") and Baxter Healthcare Corporation ("Baxter") resolving certain issues which have arisen between OmniCell and Baxter concerning the Asset Purchase Agreement of December 18, 1998, as amended by the Letter Agreement dated as of January 25, 1999 ("APA"), and the Loan and Security Agreement between Baxter and OmniCell of January 29, 1999 ("LSA"). To the extent our agreement herein requires modification, amendment or waiver of any provision of either of those agreements, this letter agreement is a written modification of those other agreements pursuant to
Section 12 of the APA and Section 9.2 of the LSA. Our agreement herein, and any modification, amendment and/or waiver with respect to the APA and the LSA, applies only to those items specifically discussed below. All rights, remedies and obligations of the parties, including, but not limited to, the survival of certain representations and warranties under the APA, remain in effect and without modification except as specifically discussed below. All capitalized terms in this letter agreement are used as defined in the APA and/or LSA.

We have agreed as follows:

1. PURCHASE PRICE - The "Purchase Price" shall be $14,754,000, including the $2,000,000 of cash paid at Closing and $4,840,000 which has been paid by offsetting amounts collected by Baxter on OmniCell's behalf.

2. TERMINATION, MODIFICATION AND RELEASE - Sections 2.1, 2.2, 3.5, 3.11, 3.18, 5.9(b), 9.4 (except for the first and last sentences thereof) and 10.4 of the APA and Paragraphs (1), (2) and (5) of the Letter Agreement dated as of January 25, 1999 referred to above) are hereby terminated effective upon receipt by OmniCell of the amounts due from Baxter pursuant to Paragraph 3 below (the "Effective Time").

As of the Effective Time, Baxter and OmniCell hereby release each other and their respective employees, agents, shareholders, directors, officers, attorneys, affiliates and successors, from any and all claims, actions, causes of action, damages, demands of any nature whatsoever that have arisen or may arise in law or in equity based upon or arising under the foregoing provisions of the APA, including the Letter Agreement dated as of January 25, 1999.

In lieu of Section 3.18 of the APA, Baxter represents and warrants that the equipment described in the installation schedule referred to in Paragraph 12 below will be capable of being installed using commercially reasonable efforts by the dates indicated in the installation schedule.


Mr. Art Mollenhauer
Baxter Healthcare Corporation
December 23, 1999
Page 2.

OmniCell represents and warrants that it is not currently aware of any basis for any claim by it that Baxter has breached any of its representations and warranties or any of its other obligations under the APA as amended by this letter agreement.

3. RECONCILIATION PAYMENT - Baxter agrees to pay OmniCell no later than December 31, 1999), the amount of $1,195,968.

4. RESTATED PROMISSORY NOTE - The Promissory Note dated January 29, 1999 shall be restated in the form attached hereto as Exhibit A, with a revised principal amount of $7,914,000. OmniCell shall deliver the original Promissory Note to Baxter in exchange for the Restated Promissory Note. Baxter and OmniCell acknowledge that interest on the Promissory Note has been fully paid and satisfied through December 31, 1999. Simultaneously with the execution hereof, Baxter is signing and delivering to Silicon Valley Bank an amendment to the Intercreditor Agreement between Baxter and Silicon Valley Bank in the form attached hereto as Exhibit B. Baxter hereby releases OmniCell and its employees, agents, shareholders, directors, officers, attorneys, affiliates and successors, from any and all claims, actions, causes of action, damages, demands of any nature whatsoever that have arisen in law or in equity based upon or arising under the Promissory Note with respect to the nonpayment of interest with respect to any period through December 31, 1999.

5. BAXTER/OMNICELL e-COMMERCE RELATIONSHIP - Baxter agrees to introduce OmniCell to Baxter's e-commerce representatives and to give good faith consideration to Baxter becoming a supplier to OmniCell, including but not limited to having its products listed and available for sale on a non-exclusive basis through OmniBuyer, OmniCell's e-commerce system.

6. PRIVATE PLACEMENT - Baxter agrees that the limit on private placements of equity securities before a Mandatory Prepayment is required under
Section 2.8 of the LSA shall be modified to permit OmniCell to complete the private placement of up to $30,000,000 (total) of equity securities in one or more transactions or rounds of financing to be completed no later than December 31, 2000 without triggering a Mandatory Prepayment so long as OmniCell shall apply at least 50% of the proceeds of such private placement to redeem the Series J Preferred Stock of OmniCell.. The existing exceptions to the prepayment obligation OmniCell contained in the proviso to Section 2.8(a) of the LSA, will remain in effect, except that the exception for sales of equity securities not exceeding 10% of the outstanding equity securities of OmniCell contained in clause (y) shall not be available for the year 2000.

7. PWC CONSENT - Baxter agrees to cooperate with PricewaterhouseCoopers ("PWC") and promptly provide any assistance reasonably requested to enable PWC to issue its consent to inclusion of its opinion on the Sure-Med financial statements in the S-1 registration statement to be filed in connection with OmniCell's anticipated public offering.

8. ACCOUNTS RECEIVABLE - Baxter and OmniCell agree that the items set forth in Exhibits C1 and C2 all constitute assets transferred to OmniCell pursuant to the Bill of Sale and Assignment dated January 29, 1999 from Baxter. Upon written request of OmniCell, Baxter agrees provide notice in writing to all customers listed on Exhibit C2 in a form reasonably


Mr. Art Mollenhauer
Baxter Healthcare Corporation
December 23, 1999
Page 3.

satisfactory to OmniCell, that OmniCell is the party entitled to receive payments under all such accounts, and the party to whom payments by those customers should be made. The amounts shown on Exhibit C1 have been either collected by Baxter from the customers indicated on Exhibit C1 or have been converted to leases between Baxter and such customer. Baxter shall be entitled to retain all such amounts so collected or to be collected under such leases, and OmniCell waives and releases in favor of Baxter all claims to such amounts and such leases.

9. SEVERANCE ADJUSTMENTS - Baxter shall be responsible for all obligations to pay severance benefits with respect to all Remaining Employees, and OmniCell shall be responsible for all obligations to pay severance benefits with respect to all Transferred Employees. As described in Paragraph 2 above,
Section 5.9(b) of the APA is being terminated and there will be no further adjustment as between Baxter and OmniCell with respect to such severance obligations.

10. CANADIAN ISSUES - Baxter agrees to deliver to OmniCell at Palo Alto, California or such other place within the continental United States as OmniCell shall direct in writing the Canadian inventory described in Exhibit D hereto. All shipping and other costs of such delivery shall be the responsibility of Baxter.

11. WESTERN EUROPEAN DISTRIBUTION SERVICES - Baxter hereby waives and releases any and all claims against OmniCell and its subsidiaries and its affiliates with respect to distribution of Sure-Med products by Baxter in Western Europe during 1999.

12. INSTALLATION SCHEDULE - Baxter and OmniCell agree that they will work together over the next 30 days to develop a schedule, prioritized by Baxter, for installation of remaining uninstalled Sure-Med units relating to outstanding Baxter receivables.

13. OMNICELL EUROPE - Baxter agrees to waive any claim or right under
Section 6.2 of the LSA in connection with the establishment and maintenance by OmniCell of subsidiaries or operating branches in Europe for the purpose of manufacturing, marketing or distributing OmniCell products in Europe so long as the aggregate book value of the assets of such subsidiaries and branches calculated in accordance with generally accepted accounting principles consistently applied shall not at any time exceed USS 1,000,000.

14. CANADIAN AND EUROPEAN INVENTORY - Baxter acknowledges to OmniCell that the inventory described in Exhibit D and the inventory located in Europe that was included in the audited balance sheet for the Sure-Med business that was previously delivered to OmniCell are owned by OmniCell and Baxter hereby waives and releases any and all rights or claims thereto.

15. CONFIDENTIALITY - Baxter and OmniCell shall not disclose the existence or terms of this letter agreement without the prior written consent of the other party, except as required by law (including any disclosures required by Federal or state securities laws) and except that either party may make such disclosures as may be reasonably required to its respective independent accountants.


Mr. Art Mollenhauer
Baxter Healthcare Corporation
December 23, 1999
Page 4.

16. GOVERNING LAW - This letter agreement shall in all respects be governed by, and construed and enforced in accordance with, the laws of the State of Illinois.

As discussed above, this letter agreement sets forth the complete agreement between Baxter and OmniCell with respect to the subjects specifically identified and discussed in this letter. All other terms and conditions of the APA and LSA remain in effect. This letter agreement is final immediately upon its execution by both parties.

Sincerely,

/s/ Earl E. Fry
Earl E. Fry
Vice President and Chief Financial Officer
OmniCell Technologies, Inc.


Mr. Art Mollenhauer
Baxter Healthcare Corporation
December 23, 1999
Page 5.

ON BEHALF OF BAXTER HEALTHCARE CORPORATION, I HAVE EXECUTED AND AGREE

TO ALL OF THE FOREGOING.

By:    /s/ Arthur Mollenhauer
       Art Mollenhauer
       Vice President Finance
       I.V. Systems & Medical Products

       Baxter Healthcare Corporation


Standby Facility Agreement

January 27, 2000

Omnicell.com
1101 E. Meadow Drive
Palo Alto, California 94303

Gentlemen:

Reference is made to the Loan and Security between you ("Borrower") and us ("Silicon") dated January 27, 2000 (the "Loan Agreement'). (This letter agreement, the Loan Agreement, and all other written documents and agreements between us are referred to herein collectively as the "Loan Documents". Capitalized terms used but not defined in this agreement, shall have the meanings set forth in the Loan Agreement.)

You have advised us that you do not anticipate borrowing under the Loan Agreement, for a period of time, and you have requested that certain of the provisions of the Loan Agreement not apply during this period.

Accordingly, this will confirm our agreement that, from and after the date hereof (the "Standby Period") no Loans will be made under the Loan Agreement. During the Standby Period, provided no Event of Default has occurred and is continuing, you will not be required to provide us with daily reporting of transactions, daily schedules and assignments of Receivables or schedules of collections (as called for by Section 4.3 of the Loan Agreement), and you will not be required to deliver to us the proceeds of Receivables (as called for by Sections 4.4 of the Loan Agreement).

You may, at your option, terminate the Standby Period, so that you can thereafter request Loans under the Loan Agreement, by giving us written notice at least 30 days before the Standby Period is to terminate, together with such information relating to the Receivables and other Collateral as we shall specify.

Upon termination of the Standby Period, you will, then and thereafter, provide us with the daily reporting of transactions and daily schedules and assignments of Receivables and schedules of collections, as called for by
Section 4.3 of the Loan Agreement, and deliver all proceeds of Receivables to us, as called for by Sections 4.4 of the Loan Agreement.

This letter agreement, the Loan Agreement, and the other Loan Documents set forth in full all of the representations and agreements of the parties with respect to the subject matter hereof and supersede all prior discussions, oral representations, oral agreements and oral understandings between the parties with respect to the subject hereof. Except as herein expressly amended, all of the terms and provisions of the Loan Agreement, and all other Loan Documents shall continue in full force and effect and the same are hereby ratified and confirmed.


If foregoing correctly sets forth our agreement, please sign the enclosed copy of this Agreement and return it to us.

Sincerely yours,

Silicon Valley Bank

                                                   By: /s/ Christopher Hill
                                                   Title: Senior Vice President

Accepted and agreed:

Borrower:

Omnicell.com

By: /s/ Robert Y. Newell
      President or Vice President


SILICON VALLEY BANK

LOAN AND SECURITY AGREEMENT

BORROWER:    OMNICELL.COM
ADDRESS:     1101 E. MEADOW DRIVE
             PALO ALTO, CALIFORNIA 94303


DATE:        JANUARY 27, 2000

THIS LOAN AND SECURITY AGREEMENT is entered into on the above date between SILICON VALLEY BANK, COMMERCIAL FINANCE DIVISION ("Silicon"), whose address is 3003 Tasman Drive, Santa Clara, California 95054 and the borrower(s) names above (jointly and severally, the "Borrower"), whose chief executive office is located at the above address
("Borrower's Address"). The Schedule of this Agreement (the "Schedule")
shall for all purposes be deemed to be apart of this Agreement, and the same is an integral part of this Agreement. (Definitions of certain terms used in this Agreement are set forth in Section 8 below).

1. LOANS

1.1 LOANS. Silicon will make loans to Borrower (the "Loans"), in amounts determined by Silicon in its * up to the amounts (the "Credit Limit") shown on the Schedule, provided no Default or Event of Default has occurred and is continuing, and subject to deduction of any Reserves for accrued interest and such other Reserves as Silicon deems proper from time to time.

*GOOD FAITH BUSINESS JUDGMENT

1.2 INTEREST. All Loans and all other monetary Obligations shall bear interest at the rate shown on the Schedule, except where expressly set forth to the contrary in this Agreement. Interest shall be payable monthly, on the last day of the month. Interest may, in Silicon's discretion, be charged to Borrower's loan account, and the same shall thereafter bear interest at the same rate as the other Loans. Silicon may, in its discretion, charge interest to Borrower's Deposit Accounts maintained with Silicon.

1.3 OVERADVANCES. If at any time or for any reason the total of all outstanding Loans and all other Obligations exceeds the Credit Limit (an "Overadvance"), Borrower shall immediately pay the amount of the excess to Silicon, without notice or demand*. Without limiting Borrower's obligation to repay to Silicon on demand the amount of any Overadvance, Borrower agrees to pay Silicon interest on the outstanding amount of any Overadvance, on demand, at a rate equal to the interest rate which would otherwise be applicable to the Overadvance, plus an additional 2% per annum.

*PROVIDED THAT IF THE OVERADVANCE RESULTS FROM A CHANGE BY SILICON IN THE ADVANCE RATE WITH RESPECT TO ELIGIBLE RECEIVABLES, THEN SUCH OVERADVANCE SHALL BE DUE FROM THE BORROWER TO SILICON ON DEMAND.

1.4 FEES. Borrower shall pay Silicon the fee(s) shown on the Schedule, which are in addition to all interest and other sums payable to Silicon and are not refundable.

1.5 LETTERS OF CREDIT. At the request of Borrower, Silicon may, in its * issue or arrange for the issuance of letters of credit for the account of Borrower, in each case in form and substance satisfactory to Silicon in its sole discretion (collectively, "Letters of Credit"). The aggregate face amount of all outstanding Letters of Credit from time to time shall not exceed the amount shown on the Schedule (the " Letter of Credit Sublimit"), and shall be reserved against Loans which would otherwise be available hereunder. Borrower shall pay all bank charges (including charges of Silicon) for the issuance of Letters of Credit, together with such additional fee as Silicon's letter of credit department shall charge in connection with the issuance of the Letters of Credit. Any payment by Silicon under or in connection with a Letter of Credit shall constitute a Loan hereunder on the date such payment is made. Each Letter of Credit shall have an expiry date no later than thirty days prior to the Maturity Date. Borrower hereby agrees to indemnify, save, and hold Silicon harmless from any loss,


cost, expense, or liability, including payments made by Silicon, expenses, and reasonable attorneys' fees incurred by Silicon arising out of or in connection with any Letters of Credit**. Borrower agrees to be bound by the regulations and interpretations of the issuer of any Letters of Credit guarantied by Silicon and opened for Borrower's account or by Silicon's interpretations of any Letter of Credit issued by Silicon for Borrower's account, and Borrower understands and agrees that Silicon shall not be liable for any error, negligence, or mistake, whether of omission or commission, in following Borrower's instructions or those contained in the Letters of Credit or any modifications, amendments, or supplements thereto. Borrower understands that Letters of Credit may require Silicon to indemnify the issuing bank for certain costs or liabilities arising out of claims by Borrower against such issuing bank. Borrower hereby agrees to indemnify and hold Silicon harmless with respect to any loss, cost, expense, or liability incurred by Silicon under any Letter of Credit as a result of Silicon's indemnification of any such issuing bank. The provisions of this Loan Agreement, as it pertains to Letters of Credit, and any other present or future documents or agreements between Borrower and Silicon relating to Letters of Credit are cumulative.

*GOOD FAITH BUSINESS JUDGMENT

**EXCEPT FOR ANY SUCH LOSS, COST, EXPENSE OR LIABILITY DIRECTLY CAUSED BY SILICON'S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT

2. SECURITY INTEREST.

2.1 SECURITY INTEREST. TO secure the payment and performance of all of the Obligations when due, Borrower hereby grants to Silicon a security interest in all of Borrower's interest in the following, whether now owned or hereafter acquired, and wherever located: All Inventory, Equipment, Receivables, and General Intangibles, including, without limitation, all of Borrower's Deposit Accounts, and all money, and all property now or at any time in the future in Silicon's possession (including claims and credit balances), and all proceeds (including proceeds of any insurance policies, proceeds of proceeds and claims against third parties), all products and all books and records related to any of the foregoing (all of the foregoing, together with all other property in which Silicon may now or in the future be granted a lien or security interest, is referred to herein, collectively, as the "Collateral").

3. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE BORROWER.

In order to induce Silicon to enter into this Agreement and to make Loans, Borrower represents and warrants to Silicon as follows, and Borrower covenants that the following representations will continue to be true, and that Borrower will at all times comply with all of the following covenants:

3.1 CORPORATE EXISTENCE AND AUTHORITY Borrower, if a corporation, is and will continue to be, duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation. Borrower is and will continue to be qualified and licensed to do business in all jurisdictions in which any failure to do so would have a material adverse effect on Borrower. The execution, delivery and performance by Borrower of this Agreement, and all other documents contemplated hereby (i) have been duly and validly authorized, (ii) are enforceable against Borrower in accordance with their terms (except as enforcement may be limited by equitable principles and by bankruptcy, insolvency, reorganization, moratorium or similar laws relating to creditors' rights generally), and (iii) do not violate Borrower's articles or certificate of incorporation, or Borrower's by-laws, or any law or any material agreement or instrument which is binding upon Borrower or its property, and (iv) do not constitute grounds for acceleration of any material indebtedness or obligation under any material agreement or instrument which is binding upon Borrower or its property.

3.2 NAME; TRADE NAMES AND STYLES. The name of Borrower set forth in the heading to this Agreement is its correct name. Listed on the Schedule are all prior names of Borrower and all of Borrower's present and prior trade names. Borrower shall give Silicon 30 days' prior written notice before changing its name or doing business under any other name. Borrower has complied, and will in the future comply, with all laws relating to the conduct of business under a fictitious business name*.

*EXCEPT WHERE THE FAILURE TO SO COMPLY COULD NOT REASONABLY BE EXPECTED TO HAVE A MATERIAL ADVERSE EFFECT

3.3 PLACE OF BUSINESS; LOCATION OF COLLATERAL. The address set forth in the heading to this Agreement is Borrower's chief executive office. In addition, Borrower has places of business and Collateral is located only at the locations set forth on the Schedule. Borrower will give Silicon at least 30 days prior written notice before opening any additional place of business, changing its chief executive office, or moving any of the Collateral to a location other than Borrower's Address or one of the locations set forth on the Schedule.

3.4 TITLE TO COLLATERAL, PERMITTED LIENS. Borrower is now, and will at all times in the future be, the sole owner of all the Collateral, except for items of Equipment which are leased by Borrower. The Collateral now is and will remain free and clear of any and all liens, charges, security interests, encumbrances and adverse claims, except for Permitted Liens. Silicon now has, and will continue to have, a first-priority perfected and enforceable security interest in all of the Collateral, subject only to the Permitted Liens, and Borrower will at all times defend Silicon and the Collateral against all claims of others. None of the Collateral now is or will be affixed to any real property in such a manner, or with such intent, as to become a fixture. Borrower is not and will not become a lessee under any real property lease pursuant to which the lessor may obtain any rights in any of the Collateral and no such lease now prohibits, restrains, impairs or will prohibit, restrain or impair Borrower's right to remove any


Collateral from the leased premises. Whenever any Collateral is located upon premises in which any third party has an interest (whether. as owner, mortgagee, beneficiary under a deed of trust, lien or otherwise), Borrower shall, whenever requested by Silicon, use its best efforts to cause such third party to execute and deliver to Silicon, in form acceptable to Silicon, such waivers and subordinations as Silicon shall specify, so as to ensure that Silicon's rights in the Collateral are, and will continue to be, superior to the rights of any such third party. Borrower will keep in full force and effect, and will comply * with the terms of, any lease of real property where any of the Collateral now or in the future may be located.

*IN ALL MATERIAL RESPECTS

3.5 MAINTENANCE OF COLLATERAL. Borrower will maintain the Collateral in good working condition, and Borrower will not use the Collateral for any unlawful purpose. Borrower will immediately advise Silicon in writing of any material loss or damage to the Collateral.

3.6 BOOKS AND RECORDS. Borrower has maintained and will maintain at Borrower's Address complete and accurate books and records, comprising an accounting system in accordance with generally accepted accounting principles.

3.7 FINANCIAL CONDITION, STATEMENTS AND REPORTS. ALL financial statements now or in the future delivered to Silicon have been, and will be, prepared in conformity with generally 'accepted accounting principles and now and in the future will * the financial condition of Borrower, at the times and for the periods therein stated. Between the last date covered by any such statement provided to Silicon and the date hereof, there has been no material adverse change in the financial condition or business of Borrower. Borrower is now and will continue to be solvent.

*FAIRLY PRESENT

3.8 TAX RETURNS AND PAYMENTS; PENSION CONTRIBUTIONS. Borrower has timely filed, and will timely file, all tax returns and reports required by foreign, federal, state and local law, and Borrower has timely paid, and will timely pay, all foreign, federal, state and local taxes, assessments, deposits and contributions now or in the future owed by Borrower. Borrower may, however, defer payment of any contested taxes, provided that Borrower (i) in good faith contests Borrower's obligation to pay the taxes by appropriate proceedings promptly and diligently instituted and conducted, (ii) notifies Silicon in writing of the commencement of, and any material development in, the proceedings, and (iii) posts bonds or takes any other steps required to keep the contested taxes from becoming a lien upon any of the Collateral. Borrower is unaware of any claims or adjustments proposed for any of Borrower's prior tax years which could result in additional taxes becoming due and payable by Borrower. Borrower has paid, and shall continue to pay all amounts necessary to fund all present and future pension, profit sharing and deferred compensation plans in accordance with their terms, and Borrower has not and will not withdraw from participation in, permit partial or complete termination of, or permit the occurrence of any other event with respect to, any such plan which could result in any liability of Borrower, including any liability to the Pension Benefit Guaranty Corporation or its successors or any other governmental agency. Borrower shall, at all times, utilize the services of an outside payroll service providing for the automatic deposit of all payroll taxes payable by Borrower.

3.9 COMPLIANCE WITH LAW. Borrower has complied, and will comply, in all material respects, with all provisions of all foreign, federal, state and local laws and regulations relating to Borrower, including, but not limited to, those relating to Borrower's ownership of real or personal property, the conduct and licensing of Borrower's business, and all environmental matters*.

3.10 LITIGATION. Except as disclosed in the Schedule, there is no claim, suit, litigation, proceeding or investigation pending or (to best of Borrower's knowledge) threatened by or against or affecting Borrower in any court or before any governmental agency (or any basis therefor known to Borrower) which * result, either separately or in the aggregate, in ** Borrower will promptly inform Silicon in writing of any claim, proceeding, litigation or investigation in the future threatened or instituted by or against Borrower involving any single claim of $50,000 or more, or involving $ 100,000 or more in the aggregate.

*COULD REASONABLY BE EXPECTED TO

**A MATERIAL ADVERSE EFFECT

3.11 USE OF PROCEEDS. All proceeds of all Loans shall be used solely for lawful business purposes. Borrower is not purchasing or carrying any "margin stock" (as defined in Regulation U of the Board of Governors of the Federal Reserve System) and no part of the proceeds of any Loan will be used to purchase or carry any "margin stock" or to extend credit to others for the purpose of purchasing or carrying any "margin stock."

4. RECEIVABLES.

4.1 REPRESENTATIONS RELATING TO RECEIVABLES. Borrower represents and warrants to Silicon as follows: Each Receivable with respect to which Loans are requested by Borrower shall, on the date each Loan is requested and made, (i) represent an undisputed bona fide existing unconditional obligation of the Account Debtor created by the sale, delivery, and acceptance


of goods or the rendition of services in the ordinary course of Borrower's business, and (ii) meet the Minimum Eligibility Requirements set forth in
Section 8 below.

4.2 REPRESENTATIONS RELATING TO DOCUMENTS AND LEGAL COMPLIANCE. Borrower represents and warrants to Silicon as follows: All statements made and all unpaid balances appearing in all invoices, instruments and other documents evidencing the Receivables are and shall be true and correct and all such invoices, instruments and other documents and all of Borrower's books and records are and shall be genuine and in all respects what they purport to be, and all signatories and endorsers have the capacity to contract. All sales and other transactions underlying or giving rise to each Receivable shall * with all applicable laws and governmental rules and regulations. All signatures and endorsements on all documents, instruments, and agreements relating to all Receivables are and shall be genuine, and all such documents, instruments and agreements are and shall be legally enforceable in accordance with their terms**".

*IN ALL MATERIAL RESPECTS

**EXCEPT AS ENFORCEABILITY MAY BE LIMITED BY EQUITABLE PRINCIPLES OR BY BANKRUPTCY, INSOLVENCY, REORGANIZATION, MORATORIUM OR SIMILAR LAWS RELATING TO CREDITORS' RIGHTS GENERALLY

4.3 SCHEDULES AND DOCUMENTS RELATING TO RECEIVABLES. Borrower shall deliver to Silicon transaction reports and loan requests, schedules and assignments of all Receivables, and schedules of collections, all on Silicon's standard forms; provided, however, that Borrower's failure to execute and deliver the same shall not affect or limit Silicon's security interest and other rights in all of Borrower's Receivables, nor shall Silicon's failure to advance or lend against a specific Receivable affect or limit Silicon's security interest and other rights therein. Loan requests received after 12:00 Noon will not be considered by Silicon until the next Business Day. Together with each such schedule and assignment, or later if requested by Silicon, Borrower shall furnish Silicon with copies (or, at Silicon's request, originals) of all contracts, orders, invoices, and other similar documents, and all original shipping instructions, delivery receipts, bills of lading, and other evidence of delivery, for any goods the sale or disposition of which gave rise to such Receivables, and Borrower warrants the genuineness of all of the foregoing. Borrower shall also furnish to Silicon an aged accounts receivable trial balance in such form and at such intervals as Silicon shall request. In addition, * Borrower shall deliver to Silicon the originals of all instruments, chattel paper, security agreements, guarantees and other documents and property evidencing or securing any Receivables, ** receipt thereof and in the same form as received, with all necessary endorsements, all of which shall be with recourse. Borrower shall also provide Silicon with copies of all credit memos within two days after the date issued.

*ON REQUEST BY SILICON

**WITHIN ONE BUSINESS DAY AFTER

4.4 COLLECTION OF RECEIVABLES. Borrower shall have the right to collect all Receivables, unless and until a Default or an Event of Default has occurred*. Borrower shall hold all payments on, and proceeds of, Receivables in trust for Silicon, and Borrower shall immediately deliver all such payments and proceeds to Silicon in their original form, duly endorsed in blank, to be applied to the Obligations in such order as Silicon shall determine. Silicon may, in its discretion, require that all proceeds of Collateral be deposited by Borrower into a lockbox account, or such other "blocked account" as Silicon may specify, pursuant to a blocked account agreement in such form as Silicon may specify. Silicon or its designee may, at any time, notify Account Debtors that the Receivables have been assigned to Silicon.

*AND IS CONTINUING

4.5 REMITTANCE OF PROCEEDS. All proceeds arising from the disposition of any Collateral shall be delivered, in kind, by Borrower to Silicon in the original form in which received by Borrower not later than the following Business Day after receipt by Borrower, to be applied to the Obligations in such order as Silicon shall determine; provided that, if no Default or Event of Default has occurred*, Borrower shall not be obligated to remit to Silicon the proceeds of the sale of worn out or obsolete equipment disposed of by Borrower in good faith in an arm's length transaction for an aggregate purchase price of $25,000 or less (for all such transactions in any fiscal year). Borrower agrees that it will not commingle proceeds of Collateral with any of Borrower's other funds or property, but will hold such proceeds separate and apart from such other funds and property and in an express trust for Silicon. Nothing in this
Section limits tile restrictions on disposition of Collateral set forth elsewhere in this Agreement.

*AND IS CONTINUING

4.6 DISPUTES. Borrower shall notify Silicon promptly of all disputes or claims relating to Receivables. Borrower shall not forgive (completely or partially), compromise or settle any Receivable for less than payment in full, or agree to do any of the foregoing, except that Borrower may do so, provided that: (i) Borrower does so in good faith, in a commercially reasonable manner, in the ordinary course of business, and in arm's length transactions, which are reported to Silicon on the regular reports provided to Silicon; (ii) no Default or Event of Default has occurred and is continuing; and (iii) taking into account all such discounts settlements and forgiveness, the total outstanding Loans will not exceed the Credit Limit. Silicon may, at any time after the occurrence * of an Event of Default, settle or adjust disputes or claims directly with Account Debtors for amounts and upon terms which Silicon considers advisable in its reasonable credit judgment and, in all cases, Silicon shall credit Borrower's Loan account with only the net amounts received by Silicon in payment of any Receivables.

*AND DURING THE CONTINUANCE


4.7 RETURNS. Provided no Event of Default has occurred and is continuing, if any Account Debtor returns any Inventory to Borrower in the ordinary course of its business, Borrower shall promptly determine the reason for such return and promptly issue a credit memorandum to the Account Debtor in the appropriate amount (sending a copy to Silicon). In the event any attempted return occurs after the occurrence * of any Event of Default, Borrower shall (i) hold the returned Inventory in trust for Silicon, (ii) segregate all returned Inventory from all of Borrower's other property, (iii) conspicuously label the returned Inventory as Silicon's property, and (iv) immediately notify Silicon of the return of any Inventory, specifying the reason for such return, the location and condition of the returned Inventory, and on Silicon's request deliver such returned Inventory to Silicon.

*AND DURING THE CONTINUANCE

4.8 VERIFICATION Silicon may, from time to time, verify directly with the respective Account Debtors the validity, amount and other matters relating to the Receivables, by means of mail, telephone or otherwise, either in the name of Borrower or Silicon or such other name as Silicon may choose.

4.9 NO LIABILITY. Silicon shall not under any circumstances be responsible or liable for any shortage or discrepancy in, damage to, or loss or destruction of, any goods, the sale or other disposition of which gives rise to a Receivable, or for any error, act, omission, or delay of any kind occurring in the settlement, failure to settle, collection or failure to collect any Receivable, or for settling any Receivable in good faith for less than the full amount thereof, nor shall Silicon be deemed to be responsible for any of Borrower's obligations under any contract or agreement giving rise to a Receivable. Nothing herein shall, however, relieve Silicon from liability for its own gross negligence or willful misconduct.

5. ADDITIONAL DUTIES OF THE BORROWER.

5.1 FINANCIAL AND OTHER COVENANTS. Borrower shall at all times comply with the financial and other covenants set forth in the Schedule.

5.2 INSURANCE. Borrower shall, at all times insure all of the tangible personal property Collateral and carry such other business insurance, with insurers reasonably acceptable to Silicon, in such form and amounts as *, and Borrower shall provide evidence of such insurance to Silicon, so that Silicon is satisfied that such insurance is, at all times, in full force and effect. All such insurance policies shall name Silicon as an additional loss payee, and shall contain a lenders loss payee endorsement in form reasonably acceptable to Silicon. Upon receipt of the proceeds of any such insurance, Silicon shall apply such proceeds in reduction of the Obligations as Silicon shall determine in its sole discretion, except that, provided no Default or Event of Default has occurred and is continuing, Silicon shall release to Borrower insurance proceeds with respect to Equipment totaling less than $100,000, which shall be utilized by Borrower I for the replacement of the Equipment with respect to which the insurance proceeds were paid. Silicon may require reasonable assurance that the insurance proceeds so released will be so used. If Borrower fails to provide or pay for any insurance, Silicon may, but is not obligated to, obtain the same at Borrower's expense. Borrower shall promptly deliver to Silicon copies of all reports made to insurance companies.

* ARE CUSTOMARY IN BORROWER'S INDUSTRY IN BORROWER'S LOCATION

5.3 REPORTS. Borrower, at its expense, shall provide Silicon with the written reports set forth in the Schedule, and such other written reports with respect to Borrower (including budgets, sales projections, operating plans and other financial documentation), as Silicon shall from time to time reasonably specify.

5.4 ACCESS TO COLLATERAL, BOOKS AND RECORDS. At reasonable times, and on one Business Day's notice, Silicon, or its agents, shall have the right to inspect the Collateral, and the right to audit and copy Borrower's books and records. Silicon shall take reasonable steps to keep confidential all information obtained in any such inspection or audit, but Silicon shall have the right to disclose any such information to its auditors, regulatory agencies, and attorneys, and pursuant to any subpoena or other legal process. The foregoing inspections and audits shall be at Borrower's expense and the charge therefor shall be $600 per person per day (or such higher amount as shall represent Silicon's then current standard charge for the same), plus reasonable out of pocket expenses. Borrower will not enter into any agreement with any accounting firm, service bureau or third party to store Borrower's books or records at any location other than Borrower's Address, without first obtaining Silicon's written consent, which may be conditioned upon such accounting firm, service bureau or other third party agreeing to give Silicon the same rights with respect to access to books and records and related rights as Silicon has under this Loan Agreement. Borrower waives the benefit of any accountant-client privilege or other evidentiary privilege precluding or limiting the disclosure, divulgence or delivery of any of its books and records (except that Borrower does not waive any attorney-client privilege).

5.5 NEGATIVE COVENANTS. Except as may be permitted in the Schedule, Borrower shall not, without Silicon's prior written consent*, do any of the following: (i) merge or consolidate with another corporation or entity**; (ii) acquire any assets, except in the ordinary course of business (iii) enter into any other transaction outside the ordinary course of business; (iv) sell or transfer any Collateral, except for the sale of finished Inventory in the ordinary course of Borrower's


business, and except for the sale of obsolete or unneeded Equipment in the ordinary course of business***; (v) store any Inventory or other Collateral with any warehouseman or other third party; (vi) sell any Inventory on a sale-or-return, guaranteed sale, consignment, or other contingent basis;. (vii) make any loans of any money or other assets**; (viii) incur any debts, outside the ordinary course of business, which would have a material, adverse effect on Borrower or on the prospect of repayment of the Obligations; (ix) guarantee or other-wise become liable with respect to the obligations of another party or entity; (x) pay or declare any dividends on Borrower's stock (except for dividends payable solely in stock of Borrower); (xi) redeem, retire, purchase or otherwise acquire, directly or indirectly, any of Borrower's stock****; (xii) make any change in Borrower's capital structure which would have a material adverse effect on Borrower or on the prospect of repayment of the Obligations; or (xiii); or (xiv) dissolve or elect to dissolve. Transactions permitted by the foregoing provisions of this Section are only permitted if no Default or Event of Default would occur as a result of such transaction.

*(WHICH SHALL BE A MATTER OF ITS GOOD-FAITH BUSINESS JUDGMENT)

**EXCEPT FOR MERGERS OF ANY OF BORROWER'S FUTURE SUBSIDIARIES INTO BORROWER

***AND EXCEPT FOR NON-EXCLUSIVE LICENSING OF INTELLECTUAL PROPERTY IN THE ORDINARY COURSE OF BUSINESS, AND EXCEPT FOR THE LEASING OF BORROWER'S INVENTORY IN THE ORDINARY COURSE OF BUSINESS AND THE SALE BY BORROWER OF ITS INTEREST AS LESSOR IN SUCH LEASES IN THE ORDINARY COURSE OF BUSINESS

****EXCEPT THAT BORROWER MAY REDEEM OR REPURCHASE ITS SECURITIES IN AN AGGREGATE AMOUNT NOT EXCEEDING $100,000 IN ANY FISCAL YEAR FROM AN OFFICER, DIRECTOR OR EMPLOYEE, IN CONNECTION WITH THE TERMINATION OF SUCH PERSON'S EMPLOYMENT OR SERVICES, PROVIDED NO EVENT OF DEFAULT OR EVENT WHICH WITH NOTICE OR LAPSE OF TIME WOULD CONSTITUTE AN EVENT OF DEFAULT HAS OCCURRED AND IS CONTINUING

-EXCEPT FOR THE FOLLOWING, IN AN AGGREGATE AMOUNT FOR ALL SUCH LOANS NOT TO EXCEED $200,000 AT ANY TIME OUTSTANDING: TRAVEL ADVANCES, EMPLOYEE RELOCATION LOANS AND OTHER EMPLOYEE LOANS AND ADVANCES IN THE ORDINARY COURSE OF BUSINESS, LOANS TO EMPLOYEES, OFFICERS AND DIRECTORS THE PROCEEDS OF WHICH ARE USED CONCURRENTLY TO PURCHASE EQUITY SECURITIES OF BORROWER, AND OTHER LOANS TO OFFICERS AND EMPLOYEES APPROVED BY BORROWER'S BOARD OF DIRECTORS

5.6 LITIGATION COOPERATION. Should any third-party suit or proceeding be instituted by or against Silicon with respect to any Collateral or in any manner relating to Borrower, Borrower shall, without expense to Silicon, make available Borrower and its officers, employees and agents and Borrower's books and records, to the extent that Silicon may deem them reasonably necessary in order to prosecute or defend any such suit or proceeding.

5.7 FURTHER ASSURANCES. Borrower agrees, at its expense, on request by Silicon, to execute all documents and take all actions, as Silicon, may deem reasonably necessary or useful in order to perfect and maintain Silicon's perfected security interest in the Collateral, and in order to fully consummate the transactions contemplated by this Agreement.

6. TERM.

6.1 MATURITY DATE. This Agreement shall continue in effect until the maturity date set forth on the Schedule (the "Maturity Date"), subject to
Section 6.3 below.

6.2 EARLY TERMINATION. This Agreement may be terminated prior to the Maturity Date as follows: (i) by Borrower, effective three Business Days after written notice of termination is given to Silicon; or (ii) by Silicon at any time after the occurrence * of an Event of Default, without notice, effective immediately. If this Agreement is terminated by Borrower or by Silicon under this Section 6.2, Borrower shall pay to Silicon a termination fee in an amount equal to *, provided that no termination fee shall be charged if the credit facility hereunder is replaced with a new facility from another division of Silicon Valley Bank. The termination fee shall be due and payable on the effective date of termination and thereafter shall bear interest at a rate equal to the highest rate applicable to any of the Obligations.

*AND DURING THE CONTINUANCE

**$100,000

6.3 PAYMENT OF OBLIGATIONS. On the Maturity Date or on any earlier effective date of termination, Borrower shall pay and perform in full all Obligations, whether evidenced by installment notes or otherwise, and whether or not all or any part of such Obligations are otherwise then due and payable. Without limiting the generality of the foregoing, if on the Maturity Date, or on any earlier effective date of termination, there are any outstanding Letters of Credit issued by Silicon or issued by another institution based upon an application, guarantee, indemnity or similar agreement on the part of Silicon, then on such date Borrower shall provide to Silicon cash collateral in an amount equal to the face amount of all such Letters of Credit plus all interest, fees and cost due or to become due in connection therewith, to secure all of the Obligations relating to said Letters of Credit, pursuant to Silicon's then standard form cash pledge agreement. Notwithstanding any termination of this Agreement, all of Silicon's security interests in all of the Collateral and all of the terms and provisions of this Agreement shall continue in full force and effect until all Obligations have been paid and performed in full; provided that, without limiting the fact that Loans are subject to the discretion of Silicon, Silicon may, in


its sole discretion, refuse to make any further Loans after termination. No termination shall in any way affect or impair any right or remedy of Silicon, nor shall any such termination relieve Borrower of any Obligation to Silicon, until all of the Obligations have been paid and performed in full. Upon payment and performance in full of all the Obligations and termination of this Agreement, Silicon shall promptly deliver to Borrower termination statements, requests for reconveyances and such other documents as may be required to fully terminate Silicon's security interests.

7. EVENTS OF DEFAULT AND REMEDIES.

7.1 EVENTS OF DEFAULT. The occurrence of any of the following events shall constitute an "Event of Default" under this Agreement, and Borrower shall give Silicon immediate written notice thereof: (a) Any warranty representation, statement, report or certificate made or delivered to Silicon by Borrower or any of Borrower's officers, employees or agents, now or in the future, shall be untrue or misleading in a material respect *; or (b) Borrower shall fail to pay when due any Loan or any interest thereon or any other monetary Obligation **; or (c) the total Loans and other Obligations outstanding at any time shall exceed the Credit Limit ***; or (d) Borrower shall fail to comply with any of the financial covenants set forth in the Schedule or shall fail to perform any other non-monetary Obligation which by its nature cannot be cured; or (e) Borrower shall fail to perform any other non-monetary Obligation, which failure is not cured within **** Business Days after the date ***** or (f) any levy, assessment, attachment, seizure, lien or encumbrance (other than a Permitted Lien) is made on all or any part of the Collateral ****** which is not cured within 10 days after the occurrence of the same; or (g) any default or event of default occurs under any obligation secured by a Permitted Lien, which is not cured within any applicable cure period or waived in writing by the holder of the Permitted Lien; or (h) Borrower breaches any material contract or obligation, which has or may reasonably be expected to have a material adverse effect on Borrower's business or financial condition; or (i) Dissolution, termination of existence, insolvency or business failure of Borrower; or appointment of a receiver, trustee or custodian, for all or any part of the property of, assignment for the benefit of creditors by, or the commencement of any proceeding by Borrower under any reorganization, bankruptcy, insolvency, arrangement, readjustment of debt, dissolution or liquidation law or statute of any jurisdiction, now or in the future in effect; or (j) the commencement of any proceeding against Borrower or any guarantor of any of the Obligations under any reorganization, bankruptcy, insolvency, arrangement, readjustment of debt, dissolution or liquidation law or statute of any jurisdiction, now or in the future in effect, which is not cured by the dismissal thereof within 30 days after the date commenced; or (k) revocation or termination of, or limitation or denial of liability upon, any guaranty of the Obligations or any attempt to do any of the foregoing, or commencement of proceedings by any guarantor of any of the Obligations under any bankruptcy or insolvency law; or (1) revocation or termination of, or limitation or denial of liability upon, any pledge of any certificate of deposit, securities or other property or asset of any kind pledged by any third party to secure any or all of the Obligations, or any attempt to do any of the foregoing, or commencement of proceedings by or against any such third party under any bankruptcy or insolvency law; or (m) Borrower makes any payment on account of any indebtedness or obligation which has been subordinated to the Obligations other than as permitted in the applicable subordination agreement, or if any Person who has subordinated such indebtedness or obligations terminates or in any way limits his subordination agreement; or (n) there shall be a change in the record or beneficial ownership of an aggregate of more than 20% of the outstanding shares of stock of Borrower, in one or more transactions, compared to the ownership of outstanding shares of stock of Borrower in effect on the date hereof*******, without the prior written consent of Silicon; or (o) Borrower shall generally not pay its debts as they become due, or Borrower shall conceal, remove or transfer any part of its property, with intent to hinder, delay or defraud its creditors, or make or suffer any transfer of any of its property which may be fraudulent under any bankruptcy, fraudulent conveyance or similar law; or (p) there shall be a material adverse change in Borrower's business or financial condition; or (q) Silicon may cease making any Loans hereunder during any of the above cure periods, and thereafter if an Event of Default has occurred********.

*WHEN MADE

** ,PROVIDED THAT BORROWER SHALL HAVE 30 DAYS TO CURE ANY EVENT OF DEFAULT ARISING FROM THE FAILURE TO PAY WHEN DUE ANY MONETARY OBLIGATION OTHER THAN THE PAYMENT OF ANY LOAN OR INTEREST THEREON, SUCH 30 DAYS TO BEGIN UPON THE OCCURRENCE OF SUCH EVENT OF DEFAULT

***, SUBJECT TO THE PROVISIONS OF SECTION 1.3 ABOVE

**** 3

***** SILICON GIVES WRITTEN NOTICE TO BORROWER OF SUCH EVENT OF DEFAULT

****** HAVING AN AGGREGATE VALUE IN EXCESS OF $25,000

******* OTHER THAN IN CONNECTION WITH AN INITIAL PUBLIC OFFERING OF

BORROWER'S STOCK

******** AND IS CONTINUING

7.2 REMEDIES. Upon the occurrence of any Event of Default, and at any time thereafter*, Silicon, at its option, and without notice or demand of any kind (all of which are hereby expressly waived by Borrower-, may do any one or more of the following: (a) Cease making Loans or otherwise extending credit to Borrower under this Agreement or any other document or agreement; (b) Accelerate and declare all or any part of the Obligations to be immediately due, payable, and performable, notwithstanding any deferred or installment payments allowed by any instrument evidencing or relating to any Obligation; (c) Take possession of any or all of the Collateral wherever it may be found, and for that purpose


Borrower hereby authorizes Silicon without judicial process to enter onto any of Borrower's premises without interference to search for, take possession of, keep, store, or remove any of the Collateral, and remain on the premises or cause a custodian to remain on the premises in exclusive control thereof, without charge ** for so long as Silicon deems it reasonably necessary in order to complete the enforcement of its rights under this Agreement or any other agreement; provided, however, that should Silicon seek to take possession of any of the Collateral by Court process, Borrower hereby irrevocably waives: (i) any bond and any surety or security relating thereto required by any statute, court rule or otherwise as an incident to such possession; (ii) any demand for possession prior to the commencement of any suit or action to recover possession thereof-, and (iii) any requirement that Silicon retain possession of, and not dispose of, any such Collateral until after trial or final judgment; (d) Require Borrower to assemble any or all of the Collateral and make it available to Silicon at places designated by Silicon which are reasonably convenient to Silicon and Borrower, and to remove the Collateral to such locations as Silicon may deem advisable; (e) Complete the processing, manufacturing or repair of any Collateral prior to a disposition thereof and, for such purpose and for the purpose of removal, Silicon shall have the right to use Borrower's premises, vehicles, hoists, lifts, cranes, equipment and all other property without charge; (f) Sell, lease or otherwise dispose of any of the Collateral, in its condition at the time Silicon obtains possession of it or after further manufacturing, processing or repair, at one or more public and/or private sales, in lots or in bulk, for cash, exchange or other property, or on credit, and to adjourn any such sale from time to time without notice other than oral announcement at the time scheduled for sale. Silicon shall have the right to conduct such disposition on Borrower's premises without charge**", for such time or times as Silicon deems reasonable, or on Silicon's premises, or elsewhere and the Collateral need not be located at the place of disposition. Silicon may directly or through any affiliated company purchase or lease any Collateral at any such public disposition, and if permissible under applicable law, at any private disposition. Any sale or other disposition of Collateral shall not relieve Borrower of any liability Borrower may have if any Collateral is defective as to title or physical condition or otherwise at the time of sale;
(g) Demand payment of, and collect any Receivables and General Intangibles comprising Collateral and, in connection therewith, Borrower irrevocably authorizes Silicon to endorse or sign Borrower's name on all collections, receipts, instruments and other documents, to take possession of and open mail addressed to Borrower and remove therefrom payments made with respect to any item of the Collateral or proceeds thereof, and, in Silicon's sole discretion, to grant extensions of time to pay, compromise claims and settle Receivables and the like for less than face value; (h) Offset against any sums in any of Borrower's general, special or other Deposit Accounts with Silicon; and (i) Demand and receive possession of any of Borrower's federal and state income tax returns and the books and records utilized in the preparation thereof or refer-ring thereto. All reasonable attorneys' fees, expenses, costs, liabilities and obligations incurred by Silicon with respect to the foregoing shall be added to and become part of the Obligations, shall be due on demand, and shall bear interest at a rate equal to the highest interest rate applicable to any of the Obligations. Without limiting any of Silicon's rights and remedies, from and after the occurrence of any Event of Default*, the interest rate applicable to the Obligations shall be increased by an additional four percent per annum.

*DURING THE CONTINUANCE OF SUCH EVENT OF DEFAULT

**BY BORROWER

-(EXCEPT THAT SILICON SHALL GIVE BORROWER ONE GENERAL NOTICE, CONCURRENTLY WITH OR PRIOR TO EXERCISING ANY OF' THE FOLLOWING REMEDIES, WHICH NOTICE MAY BE GIVEN VIA FACSIMILE (WHICH WILL BE DEEMED TO HAVE BEEN GIVEN THE DAY OF ELECTRONIC CONFIRMATION OF DELIVERY VIA FACSIMILE, OR IF THAT DAY IS NOT A BUSINESS DAY, THEN THE NEXT BUSINESS DAY AFTER ELECTRONIC CONFIRMATION OF DELIVERY VIA FACSIMILE), STATING, IN GENERAL TERMS, THAT "SILICON IS PROCEEDING TO EXERCISE ITS RIGHTS AND REMEDIES" OR WORDS OF SIMILAR EFFECT (BUT NO SUCH NOTICE SHALL BE REQUIRED IF EXIGENT CIRCUMSTANCES MAKE IT UNDULY DIFFICULT OR IMPRACTICAL TO GIVE ANY SUCH NOTICE)), SILICON

7.3 STANDARDS FOR DETERMINING COMMERCIAL REASONABLENESS. Borrower and Silicon agree that a sale or other disposition (collectively, "sale") of any Collateral which complies with the following standards will conclusively be deemed to The commercially reasonable: (i) Notice of the sale is given to Borrower at least seven days prior to the sale, and, in the case of a public sale, notice of the sale is published at least seven days before the sale in a newspaper of general circulation in the county where the sale is to be conducted; (ii) Notice of the sale describes the collateral in general, nonspecific terms; (iii) The sale is conducted at a place designated by Silicon, with or without the Collateral being present; (iv) The sale commences at any time between 8:00 a.m. and 6:00 p.m; (v) Payment of the purchase price in cash or by cashier's check or wire transfer is required; (vi) With respect to any sale of any of the Collateral, Silicon may (but is not obligated to) direct any prospective purchaser to ascertain directly from Borrower any and all information concerning the same. Silicon shall be free to employ other methods of noticing and selling the Collateral, in its discretion, if they are commercially reasonable.

7.4 POWER OF ATTORNEY. Upon the occurrence * of any Event of Default, without limiting Silicon's other rights and remedies, Borrower grants to Silicon an irrevocable power of attorney coupled with an interest, authorizing and permitting Silicon (acting through any of its employees, attorneys or agents) at any time, at its option, but without obligation, with or without notice to Borrower, and at Borrower's expense, to do any or all of the following, in Borrower's name or otherwise, but Silicon agrees to exercise the following powers


in a commercially reasonable manner: (a) Execute on behalf of Borrower any documents that Silicon may, in its sole discretion, deem advisable in order to perfect and maintain Silicon's security interest in the Collateral, or in order to exercise a right of Borrower or Silicon, or in order to fully consummate all the transactions contemplated under this Agreement, and all other present and future agreements; (b) Execute on behalf of Borrower any document exercising, transferring or assigning any option to purchase, sell or otherwise dispose of or to lease (as lessor or lessee) any real or personal property which is part of Silicon's Collateral or in which Silicon has an interest; (c) Execute on behalf of Borrower, any invoices relating to any Receivable, any draft against any Account Debtor and any notice to any Account Debtor, any proof of claim in bankruptcy, any Notice of Lien, claim of mechanic's, materialman's or other lien, or assignment or satisfaction of mechanic's, materialman's or other lien;
(d) Take control in any manner of any cash or non-cash items of payment or proceeds of Collateral; endorse the name of Borrower upon any instruments, or documents, evidence of payment or Collateral that may come into Silicon's possession; (e) Endorse all checks and other forms of remittances received by Silicon; (f) Pay, contest or settle any lien, charge, encumbrance, security interest and adverse claim in or to any of the Collateral, or any judgment based thereon, or otherwise take any action to terminate or discharge the same; (g) Grant extensions of time to pay, compromise claims and settle Receivables and General Intangibles for less than face value and execute all releases and other documents in connection therewith; (h) Pay any sums required on account of Borrower's taxes or to secure the release of any liens therefor, or both; (i) Settle and adjust, and give releases of, any insurance claim that relates to any of the Collateral and obtain payment therefor; (j) Instruct any third party having custody or control of any books or records belonging to, or relating to, Borrower to give Silicon the same rights of access and other rights with respect thereto as Silicon has under this Agreement; and (k) Take any action or pay any sum required of Borrower pursuant to this Agreement and any other present or future agreements. Any and all reasonable sums paid and any and all reasonable costs, expenses, liabilities, obligations and attorneys' fees incurred by Silicon with respect to the foregoing shall be added to and become part of the Obligations, shall be payable on demand, and shall bear interest at a rate equal to the highest interest rate applicable to any of the Obligations. In no event shall Silicon's rights under the foregoing power of attorney or any of Silicon's other rights under this Agreement be deemed to indicate that Silicon is in control of the business, management or properties of Borrower.

*AND DURING THE CONTINUANCE

7.5 APPLICATION OF PROCEEDS. All proceeds realized as the result of any sale of the Collateral shall be applied by Silicon first to the reasonable costs, expenses, LIABILITIES, obligations and attorneys' fees incurred by Silicon in the exercise of its rights under this Agreement, second to the interest due upon any of the Obligations, and third to the principal of the Obligations, in such order as Silicon shall determine in its sole discretion. Any surplus shall be paid to Borrower or other persons legally entitled thereto; Borrower shall remain liable to Silicon for any deficiency. If, Silicon, in its sole discretion, directly or indirectly enters into a deferred payment or other credit transaction with any purchaser at any sale of Collateral, Silicon shall have the option, exercisable at any time, in its sole discretion, of either reducing the Obligations by the principal amount of purchase price or deferring the reduction of the Obligations until the actual receipt by Silicon of the cash therefor.

7.6 REMEDIES CUMULATIVE. In addition to the rights and remedies set forth in this Agreement, Silicon shall have all the other rights and remedies accorded a secured party under the California Uniform Commercial Code and under all other applicable laws, and under any other instrument or agreement now or in the future entered into between Silicon and Borrower, and all of such rights and remedies are cumulative and none is exclusive. Exercise or partial exercise by Silicon of one or more of its rights or remedies shall not be deemed an election, nor bar Silicon from subsequent exercise or partial exercise of any other rights or remedies. The failure or delay of Silicon to exercise any rights or remedies shall not operate as a waiver thereof, but all rights and remedies shall continue in full force and effect until all of the Obligations have been fully paid and performed.

8. DEFINITIONS. As used in this Agreement, the following terms have the following meanings:

"ACCOUNT DEBTOR" means the obligor on a Receivable.

"AFFILIATE" means, with respect to any Person, a relative, partner, shareholder, director, officer, or employee of such Person, or any parent or subsidiary of such Person, or any Person controlling, controlled by or under common control with such Person.

"BUSINESS DAY" means a day on which Silicon is open for business.

"CODE" means the Uniform Commercial Code as adopted and in effect in the State of California from time to time.

"COLLATERAL" has the meaning set forth in Section 2.1 above.

"DEFAULT" means any event which with notice or passage of time or both, would constitute an Event of Default.

"DEPOSIT ACCOUNT" has the meaning set forth in Section 9105 of the Code.

"ELIGIBLE INVENTORY" [NOT APPLICABLE].


"ELIGIBLE RECEIVABLES" means Receivables arising in the ordinary course of Borrower's business from the sale of goods or rendition of services, which Silicon, in its * judgment, shall deem eligible for borrowing, based on such considerations as Silicon may from time to time deem appropriate. Without limiting the fact that the determination of which Receivables are eligible for borrowing is a matter of Silicon's discretion, the following (the "MINIMUM ELIGIBILITY REQUIREMENTS") are the minimum requirements for a Receivable to be an Eligible Receivable: (i) the Receivable must not be outstanding for more than 90 days from its invoice date, (ii) the Receivable must not represent progress billings, or be due under a fulfillment or requirements contract with the Account Debtor, (iii) the Receivable must not be subject to any contingencies (including Receivables arising from sales on consignment, guaranteed sale or other terms pursuant to which payment by the Account Debtor may be conditional), (iv) the Receivable must not be owing from an Account Debtor with whom the Borrower has any dispute (whether or not relating to the particular Receivable)*, (v) the Receivable must not be owing from an Affiliate of Borrower, (vi) the Receivable must not be owing from an Account Debtor which is subject to any insolvency or bankruptcy proceeding, or whose financial condition is not acceptable to Silicon, or which, fails or goes out of a material portion of its business, (vii) the Receivable must not be owing from the United States or any department, agency or instrumentality thereof (unless there has been compliance, to Silicon's satisfaction, with the United States Assignment of Claims Act), (viii) the Receivable must not be owing from an Account Debtor located outside the United States or Canada (unless pre-approved by Silicon in its discretion in writing, or backed by a letter of credit satisfactory to Silicon, or FCIA insured satisfactory to Silicon), (ix) the Receivable must not be owing from an Account Debtor to whom Borrower is or may be liable for goods purchased from such Account Debtor or otherwise. Receivables owing from one Account Debtor will not be deemed Eligible Receivables to the extent they exceed 25% of the total Receivables outstanding. In addition, if more than 50% of the Receivables owing from an Account Debtor are outstanding more than 90 days from their invoice date (without regard to unapplied credits) or are otherwise not eligible Receivables, then all Receivables owing from that Account Debtor will be deemed ineligible for borrowing. Silicon may, from time to time, in its ** revise the Minimum Eligibility Requirements, upon written notice to the Borrower.

* PROVIDED THAT, IN THAT CASE, THEN RECEIVABLES OWING FROM THE ACCOUNT DEBTOR WILL BE INELIGIBLE ONLY TO THE EXTENT OF THE AMOUNT OF SUCH DISPUTE.

**GOOD FAITH BUSINESS JUDGMENT

"EQUIPMENT" means all of Borrower's present and hereafter acquired machinery, molds, machine tools, motors, furniture, equipment, furnishings, fixtures, trade fixtures, motor vehicles, tools, parts, dyes, jigs, goods and other tangible personal property (other than Inventory) of every kind and description used in Borrower's operations or owned by Borrower and any interest in any of the foregoing, and all attachments, accessories, accessions, replacements, substitutions, additions or improvements to any of the foregoing, wherever located.

"EVENT OF DEFAULT" means any of the events set forth in Section 7.1 of this Agreement.

"GENERAL INTANGIBLES" means all general intangibles of Borrower, whether now owned or hereafter created or acquired by Borrower, including, without limitation, all choses in action, causes of action, corporate or other business records, Deposit Accounts, inventions, designs, drawings, blueprints, patents, patent applications, trademarks and the goodwill of the business symbolized thereby, names, trade names, trade secrets, goodwill, copyrights, registrations, licenses, franchises, customer lists, security and other deposits, rights in all litigation presently or hereafter pending for any cause or claim (whether in contract, tort or otherwise), and all judgments now or hereafter arising therefrom, all claims of Borrower against Silicon, rights to purchase or sell real or personal property, rights as a licensor or licensee of any kind, royalties, telephone numbers, proprietary information, purchase orders, and all insurance policies and claims (including without limitation life insurance, key man insurance, credit insurance, liability insurance, property insurance and other insurance), tax refunds and claims, computer programs, discs, tapes and tape files, claims under guaranties, security interests or other security held by or granted to Borrower, all rights to indemnification and all other intangible property of every kind and nature (other than Receivables).

"INVENTOR" means all of Borrower's now owned and hereafter acquired goods, merchandise or other personal property, wherever located, to be furnished under any contract of service or held for sale or lease (including without limitation all raw materials, work in process, finished goods and goods in transit), and all materials and supplies of every kind, nature and description which are or might be used or consumed in Borrower's business or used in connection with the manufacture, packing, shipping, advertising, selling or finishing of such goods, merchandise or other personal property, and all warehouse receipts, documents of title and other documents representing any of the foregoing. *

*"MATERIAL ADVERSE EFFECT" means (i) a material adverse effect on the business, operations, results of operations, assets, liabilities or condition of Borrower, (ii) the impairment of Borrower's ability to perform its obligations under this Agreement or any other present or future documents or agreements between Borrower and Silicon, or of Silicon to enforce the Obligations or realize upon the Collateral, or (iii) a material adverse effect on the value of the Collateral or the amount which Silicon would be likely to receive in the liquidation of the Collateral.


"OBLIGATION" means all present and future Loans, advances, debts, liabilities, obligations, guaranties, covenants, duties and indebtedness at any time owing by Borrower to Silicon, whether evidenced by this Agreement or any note or other instrument or document, whether arising from an extension of credit, opening of a letter of credit, banker's acceptance, loan, guaranty, indemnification or otherwise, whether direct or indirect (including, without limitation, those acquired by assignment and any participation by Silicon in Borrower's debts owing to others), absolute or contingent, due or to become due, including, without limitation, all interest, charges, expenses, fees, attorney's fees, expert witness fees, audit fees, letter of credit fees, collateral monitoring fees, closing fees, facility fees, termination fees, minimum interest charges and any other sums chargeable to Borrower under this Agreement or under any other present or future instrument or agreement between Borrower and Silicon.

"PERMITTED LIENS" means the following: (i) purchase money security interests in specific items of Equipment; (ii) leases of specific items of Equipment; (iii) liens for taxes not yet payable; (iv) additional security interests and liens consented to in writing by Silicon, which consent shall not be unreasonably withheld; (v) security interests being terminated substantially concurrently with this Agreement; (vi) liens of materialmen, mechanics, warehousemen, carriers, or other similar liens arising in the ordinary course of business and securing obligations which are not delinquent; (vii) liens incurred in connection with the extension, renewal or refinancing of the indebtedness secured by liens of the type described above in clauses (i) or (ii) above, provided that any extension, renewal or replacement lien is limited to the property encumbered by the existing lien and the principal amount of the indebtedness being extended, renewed or refinanced does not increase; (viii) Liens in favor of customs and revenue authorities which secure payment of customs duties in connection with the importation of goods*. Silicon will have the right to require, as a condition to its consent tinder subparagraph (iv) above, that the holder of the additional security interest or lien sign an intercreditor agreement on Silicon's then standard form, acknowledge that the security interest is subordinate to the security interest in favor of Silicon, and agree not to take any action to enforce its subordinate security interest so long as any Obligations remain outstanding, and that Borrower agree that any uncured default in any obligation secured by the subordinate security interest shall also constitute an Event of Default under this Agreement.

*(ix) LIENS IN FAVOR OF BAXTER HEALTHCARE CORPORATION, WHICH ARE SUBJECT TO AN INTERCREDITOR AGREEMENT BETWEEN SILICON AND BAXTER HEALTHCARE CORPORATION DATED AS OF JANUARY 29, 1999 (AS AMENDED FROM TIME TO TIME)

"PERSON" means any individual, sole proprietorship, partnership, joint venture, trust, unincorporated organization, association, corporation, government, or any agency or political division thereof, or any other entity.

"RECEIVABLES" means all of Borrower's now owned and hereafter acquired accounts (whether or not earned by performance), letters of credit, contract rights, chattel paper, instruments, securities, securities accounts, investment property, documents and all other forms of obligations at any time owing to Borrower, all guaranties and other security therefor, all merchandise returned to or repossessed by Borrower, and all rights of stoppage in transit and all other rights or remedies of an unpaid vendor, lienor or secured party.

"RESERVES" means, as of any date of determination, such amounts as Silicon may from time to time establish and revise in good faith reducing the amount of Loans, Letters of Credit and other financial accommodations which would other-wise be available to Borrower under the lending formula(s) provided in the Schedule: (a) to reflect events, conditions, contingencies or risks which, as determined by Silicon in good faith, do or may affect (i) the Collateral or any other property which is security for the Obligations or its value (including without limitation any increase in delinquencies of Receivables), (ii) the assets, business or prospects of Borrower or any Guarantor, or (iii) the security interests and other rights of Silicon in the Collateral (including the enforceability, perfection and priority thereof); or (b) to reflect Silicon's good faith belief that any collateral report or financial information furnished by or on behalf of Borrower or any Guarantor to Silicon is or may have been incomplete, inaccurate or misleading in any material respect; or (c) in respect of any state of facts which Silicon determines in good faith constitutes an Event of Default or may, with notice or passage of time or both, constitute an Event of Default.

OTHER TERMS. All accounting terms used in this Agreement, unless otherwise indicated, shall have the meanings given to such terms in accordance with generally accepted accounting principles, consistently applied. All other terms contained in this Agreement, unless otherwise indicated, shall have the meanings provided by the Code, to the extent such terms are defined therein.

9. GENERAL PROVISIONS.

9.1 INTEREST COMPUTATION. In computing interest on the Obligations, all checks, wire transfers and other items of payment received by Silicon (including proceeds of Receivables and payment of the Obligations in full) shall be deemed applied by Silicon on account of the Obligations three Business Days after receipt by Silicon of immediately available funds, and, for purposes of the foregoing, any such funds received after 12:00 Noon on any day shall be deemed received on the next Business Day. Silicon shall not, however, be required to credit Borrower's account for the amount of any item of payment which is unsatisfactory to Silicon in its sole discretion, and Silicon may charge Borrower's loan account for the amount of any item of payment which is returned to Silicon unpaid.


9.2 APPLICATION OF PAYMENTS. All payments with respect to the Obligations may be applied, and in Silicon's sole discretion reversed and re-applied, to the Obligations, in such order and manner as Silicon shall determine in its sole discretion.

9.3 CHARGES TO ACCOUNTS. Silicon may, in its discretion, require that Borrower pay monetary Obligations in cash to Silicon, or charge them to Borrower's Loan account, in which event they will bear interest at the same rate applicable to the Loans. Silicon may also, in its discretion, charge any monetary Obligations to Borrower's Deposit Accounts maintained with Silicon.

9.4 MONTHLY ACCOUNTINGS. Silicon shall provide Borrower monthly with an account of advances, charges, expenses and payments made pursuant to this Agreement. Such account shall be deemed correct, accurate and binding on Borrower and an account stated (except for reverses and reapplications of payments made and corrections of errors discovered by Silicon), unless Borrower notifies Silicon in writing to the contrary within thirty days after each account is rendered, describing the nature of any alleged errors or admissions.

9.5 NOTICES. All notices to be given under this Agreement shall be in writing and shall be given either personally or by reputable private delivery service or by regular first-class mail, or certified mail return receipt requested, addressed to Silicon or Borrower at the addresses shown in the heading to this Agreement, or at any other address designated in writing by one party to the other party. Notices to Silicon shall be directed to the Commercial Finance Division, to the attention of the Division Manager or the Division Credit Manager. All notices shall be deemed to have been given upon delivery in the case of notices personally delivered, or at the expiration of one Business Day following delivery to the private delivery service, or two Business Days following the deposit thereof in the United States mail, with postage prepaid.

9.6 SEVERABILITY. Should any provision of this Agreement be held by any court of competent jurisdiction to be void or unenforceable, such defect shall not affect the remainder of this Agreement, which shall continue in full force and effect.

9.7 INTEGRATION. This Agreement and such other written agreements, documents and instruments as may be executed in connection herewith are the final, entire and complete agreement between Borrower and Silicon and supersede all prior and contemporaneous negotiations and oral representations and agreements, all of which are merged and integrated in this Agreement. THERE ARE NO ORAL UNDERSTANDINGS, REPRESENTATIONS OR AGREEMENTS BETWEEN THE PARTIES WHICH ARE NOT SET FORTH IN THIS AGREEMENT OR IN OTHER WRITTEN AGREEMENTS SIGNED BY THE PARTIES IN CONNECTION HEREWITH.

9.8 WAIVERS. The failure of Silicon at any time or times to require Borrower to strictly comply with any of the provisions of this Agreement or any other present or future agreement between Borrower and Silicon shall not waive or diminish any right of Silicon later to demand and receive strict compliance therewith. Any waiver of any default shall not waive or affect any other default, whether prior or subsequent, and whether or not similar. None of the provisions of this Agreement or any other agreement now or in the future executed by Borrower and delivered to Silicon shall be deemed to have been waived by any act or knowledge of Silicon or its agents or employees, but only by a specific written waiver signed by an authorized officer of Silicon and delivered to Borrower. Borrower waives demand, protest, notice of protest and notice of default or dishonor, notice of payment and nonpayment, release, compromise, settlement, extension or renewal of any commercial paper, instrument, account, General Intangible, document or guaranty at any time held by Silicon on which Borrower is or may in any way be liable, and notice of any action taken by Silicon, unless expressly required by this Agreement.

9.9 NO LIABILITY FOR ORDINARY NEGLIGENCE. Neither Silicon, nor any of its directors, officers, employees, agents, attorneys or any other Person affiliated with or representing Silicon shall be liable for any claims, demands, losses or damages, of any kind whatsoever, made, claimed, incurred or suffered by Borrower or any other party through the ordinary negligence of Silicon, or any of its directors, officers, employees, agents, attorneys or any other Person affiliated with or representing Silicon, but nothing herein shall relieve Silicon from liability for its own gross negligence or willful misconduct.

9.10 AMENDMENT. The terms and provisions of this Agreement may not be waived or amended, except in a writing executed by Borrower and a duly authorized officer of Silicon.

9.11 TIME OF ESSENCE. Time is of the essence in the performance by Borrower of each and every obligation under this Agreement.

9.12 ATTORNEYS FEES AND COSTS. Borrower shall reimburse Silicon for all reasonable attorneys' fees and all filing, recording, search, title insurance, appraisal, audit, and other reasonable costs incurred by Silicon, pursuant to, or in connection with, or relating to this Agreement (whether or not a lawsuit is filed), including, but not limited to, any reasonable attorneys' fees and costs Silicon incurs in order to do the following: prepare and negotiate this Agreement and the documents relating to this Agreement; obtain legal advice in connection with this Agreement or Borrower; enforce, or seek to enforce, any of its rights; prosecute actions against, or defend actions by, Account Debtors; commence, intervene in, or defend any action or proceeding; initiate any complaint to be relieved of the automatic stay in bankruptcy; file or prosecute any probate claim, bankruptcy claim, third party


claim, or other claim; examine, audit, copy, and inspect any of the Collateral or any of Borrower's books and records; protect, obtain possession of, lease, dispose of, or otherwise enforce Silicon's security interest in, the Collateral; and otherwise represent Silicon in any litigation relating to Borrower. IN SATISFYING BORROWER'S OBLIGATION HEREUNDER TO REIMBURSE SILICON FOR ATTORNEYS FEES, BORROWER MAY, FOR CONVENIENCE, ISSUE CHECKS DIRECTLY TO SILICON'S ATTORNEYS, LEVY, SMALL & LALLAS, BUT BORROWER ACKNOWLEDGES AND AGREES THAT LEVY, SMALL & LALLAS IS REPRESENTING ONLY SILICON AND NOT BORROWER IN CONNECTION WITH THIS AGREEMENT. If either Silicon or Borrower files any lawsuit against the other predicated on a breach of this Agreement, the prevailing party in such action shall be entitled to recover its reasonable costs and attorneys' fees, including (but not limited to) reasonable attorneys' fees and costs incurred in the enforcement of, execution upon or defense of any order, decree, award or judgment. All attorneys' fees and costs to which Silicon may be entitled pursuant to this Paragraph shall immediately become part of Borrower's Obligations, shall be due on demand, and shall bear interest at a rate equal to the highest interest rate applicable to any of the Obligations.

9.13 BENEFIT OF AGREEMENT. The provisions of this Agreement shall be binding upon and inure to the benefit of the respective successors, assigns, heirs, beneficiaries and representatives of Borrower and Silicon; provided, however, that Borrower may not assign or transfer any of its rights under this Agreement without the prior written consent of Silicon, and any prohibited assignment shall be void. No consent by Silicon to any assignment shall release Borrower from its liability for the Obligations.

9.14 JOINT AND SEVERAL LIABILITY. If Borrower consists of more than one Person, their liability shall be joint and several, and the compromise of any claim with, or the release of, any Borrower shall not constitute a compromise with, or a release of, any other Borrower.

9.15 LIMITATION OF ACTIONS. Any claim or cause of action by Borrower against Silicon, its directors, officers, employees, agents, accountants or attorneys, based upon, arising from, or relating to this Loan Agreement, or any other present or future document or agreement, or any other transaction contemplated hereby or thereby or relating hereto or thereto, or any other matter, cause or thing whatsoever, occurred, done, omitted or suffered to be done by Silicon, its directors, officers, employees, agents, accountants or attorneys, shall be barred unless asserted by Borrower by the commencement of an action or proceeding in a court of competent jurisdiction by the filing of a complaint within * after the first act, occurrence or omission upon which such claim or cause of action, or any part thereof, is based, and the service of a summons and complaint on an officer of Silicon, or on any other person authorized to accept service on behalf of Silicon, within thirty (30) days thereafter. Borrower agrees that such ** period is a reasonable and Sufficient time for Borrower to investigate and act upon any such claim or cause of action. The ** one year period provided herein shall not be waived, tolled, or extended except by the written consent of Silicon in its sole discretion. This provision shall survive any termination of this Loan Agreement or any other present or future agreement.

*TWO YEARS **TWO-YEAR

9.16 PARAGRAPH HEADINGS; CONSTRUCTION. Paragraph headings are only used in this Agreement for convenience. Borrower and Silicon acknowledge that the headings may not describe completely the subject matter of the applicable paragraph, and the headings shall not be used in any manner to construe, limit, define or interpret any term or provision of this Agreement. The term "including", whenever used in this Agreement, shall mean "including (but not limited to)". This Agreement has been fully reviewed and negotiated between the parties and no uncertainty or ambiguity in any term or provision of this Agreement shall be construed strictly against Silicon or Borrower under any rule of construction or otherwise.

9.17 GOVERNING LAW; JURISDICTION; VENUE. This Agreement and all acts and transactions hereunder and all rights and obligations of Silicon and Borrower shall be governed by the laws of the State of California. As a material part of the consideration to Silicon to enter into this Agreement, Borrower (i) agrees that all actions and proceedings relating directly or indirectly to this Agreement shall, at Silicon's option, be litigated in courts located within California, and that the exclusive venue therefor shall be Santa Clara County;
(ii) consents to the jurisdiction and venue of any such court and consents to service of process in any such action or proceeding by personal delivery or any other method permitted by law; and (iii) waives any and all rights Borrower may have to object to the jurisdiction of any such court, or to transfer or change the venue of any such action or proceeding.

9.18 MUTUAL WAIVER OF JURY TRIAL. BORROWER AND SILICON EACH HEREBY WAIVE THE RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING BASED UPON, ARISING OUT OF, OR IN ANY WAY RELATING TO, THIS AGREEMENT OR ANY OTHER PRESENT OR FUTURE INSTRUMENT OR AGREEMENT BETWEEN SILICON AND BORROWER, OR ANY CONDUCT, ACTS OR OMISSIONS OF SILICON OR BORROWER OR ANY OF THEIR DIRECTORS, OFFICERS, EMPLOYEES, AGENTS, ATTORNEYS OR ANY OTHER PERSONS AFFILIATED WITH SILICON OR BORROWER, IN ALL OF THE FOREGOING CASES, WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE.


BORROWER:

OMNICELL.COM

    By /s/ Robert Y. Newell
           PRESIDENT OR VICE PRESIDENT

    By /s/ Robert J. Brigham
          SECRETARY OR ASS'T SECRETARY

SILICON:

SILICON VALLEY BANK

By /s/ Christopher Hill
TITLE Vice President



SILICON VALLEY BANK

SCHEDULE TO

LOAN AND SECURITY AGREEMENT

Borrower:         OMNICELL.COM
Address:          1101 E. Meadow Drive
                  Palo Alto, California 94303

Date:              January 27, 2000

         This Schedule forms an integral part of the Loan and Security Agreement

between Silicon Valley Bank and the above-borrower of even date.


1. CREDIT LIMIT

(Section 1.1): An amount not to exceed the lesser of. (i)
$10,000,000 at any one time outstanding (the "Maximum Credit Limit"); or (ii) 75% of the amount of Borrower's Eligible Receivables (as defined in
Section 8 above).

CASH MANAGEMENT SERVICES AND RESERVES. Borrower may use up to $1,000,000 of Loans available hereunder for Silicon's Cash Management Services (as defined below), including, merchant services, business credit card, ACH and other services identified in the cash management services agreement related to such service (the "Cash Management Services"). Silicon may, in its sole discretion, reserve against Loans which would otherwise be available hereunder such sums as Silicon shall determine in connection with the Cash Management Services, and Silicon may charge to Borrower's Loan account, any amounts that may become due or owing to Silicon in connection with the Cash Management Services. Borrower agrees to execute and deliver to Silicon all standard form applications and agreements of Silicon in connection with the Cash Management Services, and, without limiting any of the terms of such applications and agreements, Borrower will pay all standard fees and charges of Silicon in connection with the Cash Management Services. The Cash Management Services shall terminate on the Maturity Date.

LETTER OF CREDIT SUBMIT
(Section 1.5): $100,000


2. INTEREST.

INTEREST RATE (Section 1.2):


A rate equal to the "Prime Rate" in effect from time to time, plus 2.25% per annum. Interest shall be calculated on the basis of a 360-day year for the actual number of days elapsed. "Prime Rate" means the rate announced from time to time by Silicon as its "prime rate;" it is a base rate upon which other rates charged by Silicon are based, and it is not necessarily the best rate available at Silicon. The interest rate applicable to the Obligations shall change on each date is a change in the Prime Rate.

MINIMUM MONTHLY
INTEREST

         (Section 1.2)         not applicable

================================================================================

3.       FEES (SECTION 1.4):

               Loan Fee:       $61,250, payable concurrently herewith.

               Collateral
               Monitoring

               Fee:            $750 per month, payable in arrears (prorated for
                               any partial month at the beginning and at
                               termination of this Agreement.

================================================================================

4.       MATURITY DATE
               (Section 6.1):  One year from the date of this Agreement.

================================================================================

5.       FINANCIAL COVENANTS

               (Section 5.1):  Borrower shall comply with each of the following
                               covenant(s). Compliance shall be determined as of
                               the end of each month, except as otherwise
                               specifically provided below:

               MAXIMUM
               TANGIBLE
               NET DEFICIT:    Borrower shall maintain a Tangible Net Deficit of
                               not more than $22,000,000.

               DEFINITIONS.    For purposes of this foregoing financial
                               covenants, the following term shall have the
                               following meaning:

                               "Tangible Net Deficit" shall mean the excess of
                               total liabilities over total assets, determined
                               in accordance with generally accepted accounting
                               principles, with the following adjustments:


(A) there shall be excluded from assets: (i) notes, accounts receivable and other obligations owing to the Borrower from its officers or other Affiliates, and (ii) all assets which would be classified as intangible assets under generally accepted accounting principles, including without limitation goodwill, licenses, patents, trademarks, trade names, copyrights, capitalized software and organizational costs, licenses and franchises

(B) there shall be excluded from liabilities:
all indebtedness which is subordinated to the Obligations under a subordination agreement in form specified by Silicon or by language in the instrument evidencing the indebtedness which is acceptable to Silicon in its discretion.


6. REPORTING. (Section 5.3):

Borrower shall provide Silicon with the following:

1. Monthly Receivable agings, aged by invoice date, within fifteen days after the end of each month.

2. Monthly accounts payable agings, aged by invoice date, within fifteen days after the end of each month.

3. Monthly reconciliations of Receivable agings (aged by invoice date), transaction reports, and general ledger, within thirty days after the end of each month.

4. Monthly unaudited financial statements, as soon as available, and in any event within thirty days after the end of each month.

5. Monthly Compliance Certificates, within thirty days after the end of each month, in such form as Silicon shall reasonably specify, signed by the Chief Financial Officer of Borrower, certifying that as of the end of such month Borrower was in full compliance with all of the terms and conditions of this Agreement, and setting forth calculations showing compliance with the financial covenants set forth in this Agreement and such other information as Silicon shall reasonably request, including, without limitation, a statement that at the end of such month there were no held checks.

6. Monthly outstanding or held check registers, if any, within thirty days after the end of each month.


7. Quarterly unaudited financial statements, as soon as available, and in any event within thirty days after the end of each fiscal quarter of Borrower.

8. Annual operating budgets (including income statements, balance sheets and cash flow statements, by month) for the upcoming fiscal year of Borrower within thirty days prior to the end of each fiscal year of Borrower.

9. Annual financial statements, as soon as available, and in any event within 120 days following the end of Borrower's fiscal year, certified by independent certified public accountants acceptable to Silicon.


7. COMPENSATION
(Section 5.5): [Omitted].


8. BORROWER INFORMATION:

PRIOR NAMES OF
BORROWER

(Section 3.2):             Omnicell Technologies, Inc.

PRIOR TRADE
NAMES OF BORROWER
(Section 3.2):             None

EXISTING TRADE
NAMES OF BORROWER
(Section 3.2): None

OTHER LOCATIONS AND
Addresses (Section 3.3): See Exhibit A hereto

MATERIAL ADVERSE
LITIGATION (Section 3.10): None


9. OTHER COVENANTS (Section 5.1):

Borrower shall at all times comply with all of the following additional covenants:

(1) BANKING RELATIONSHIP. Borrower shall at all times maintain its primary banking relationship with Silicon.


(2) SUBORDINATION OF INSIDE DEBT. All present and future indebtedness of the Borrower to its officers, directors and shareholders ("Inside Debt") shall, at all times, be subordinated to the Obligations pursuant to a subordination agreement on Silicon's standard form. Borrower represents and warrants that there is no Inside Debt presently outstanding, except for the following: _____________ . Prior to incurring any Inside Debt in the future, Borrower shall cause the person to whom such Inside Debt will be owed to execute and deliver to Silicon a subordination agreement on Silicon's standard form.

(3) COPYRIGHT FILINGS. Concurrently, Borrower is

                            executing and delivering to Silicon a Collateral
                            Assignment, Patent Mortgage and Security Agreement
                            between Borrower and Silicon (the "Intellectual
                            Property Agreement"). Within 90 days after the date
                            hereof, Borrower shall (i) cause all of its computer
                            software, the licensing of which results in
                            Receivables, to be registered with the United States
                            Copyright Office, (ii) complete the Exhibits to the
                            Intellectual Property Agreement with all of the
                            information called for with respect to such
                            software, (iii) cause the Intellectual Property
                            Agreement to be recorded in the United States
                            Copyright Office, and (iv) provide evidence of such
                            recordation to Silicon.

Borrower:                                  Silicon:
    OMNICELL.COM                           SILICON VALLEY BANK



    By /s/ Robert Y. Newell                By /s/ Christopher Hill
         President or Vice President       Title Vice President

    By /s/ Robert J. Brigham
         Secretary or Asst Secretary

SILICON VALLEY BANK

         AMENDMENT TO LOAN DOCUMENTS

BORROWER:         OMNICELL.COM
ADDRESS:          1101 E. MEADOW DRIVE
                  PALO ALTO, CALIFORNIA 94303

DATE:             JANUARY 27, 2000

         THIS AMENDMENT TO LOAN DOCUMENTS is entered into between SILICON VALLEY

BANK (" Silicon") and the borrower named above (the "Borrower"), with reference to the various loan and security agreements and other documents, instruments and agreements between them, including but not limited to that certain Loan and Security Agreement dated March 26, 1999 (as amended, if at all, the "Existing Loan Agreement"; the Existing Loan Agreement and all related documents, instruments and agreements may be referred to collectively herein as the "Existing Loan Documents").

The Parties agree to amend the Existing Loan Documents, as follows:

1. PRESENT LOAN BALANCE. Borrower acknowledges that the present unpaid principal balance of the Borrower's indebtedness, liabilities and obligations to Silicon under the Existing Loan Documents, including interest accrued through 1-27-00 is $0.00 (the "Present Loan Balance"), and that said sum is due and owing without any defense, offset, or counterclaim of any kind.

2. AMENDMENT TO EXISTING LOAN DOCUMENTS. The Existing Loan Documents are hereby amended in their entirety to read as set forth in the Loan and Security Agreement, and related documents, being executed concurrently (collectively, the "New Loan Documents"). The Borrower acknowledges that the Present Loan Balance shall be the opening balance of the Loans pursuant to the New Loan Documents as of the date hereof, and shall, for all purposes, be deemed to be Loans made by Silicon to the Borrower pursuant to the New Loan Documents. Notwithstanding the execution of the New Loan Documents, the following Existing Loan Documents shall continue in full force and effect and shall continue to secure all present and future indebtedness, liabilities, guarantees and other Obligations (as defined in the New Loan Documents): All standard documents of Silicon entered into by the Borrower in connection with Letters of Credit and/or Foreign Exchange Contracts; all security agreements, collateral assignments and mortgages, including but not limited to those relating to patents, trademarks, copyrights and other intellectual property; all lockbox agreements and/or blocked account agreements; and all UCC-1 financing statements and other documents filed with governmental offices which perfect liens or security interests in favor of Silicon. In addition, in the event the Borrower has previously issued any stock options, stock purchase warrants or securities to Silicon, the same and all documents and agreements relating thereto shall also continue in full force and effect.


3. GENERAL PROVISIONS. This Amendment and the New Loan Documents set forth in full all of the representations and agreements of the parties with respect to the subject matter hereof and supersede all prior discussions, representations, agreements and understandings between the parties with respect to the subject hereof.

Borrower:                                       Silicon:

OMNICELL.COM                                    SILICON VALLEY BANK



By /s/ Robert Y. Newell                         By /s/
        President or Vice President             Title Vice President

By /s/ Robert J. Brigham
        Secretary or Ass't Secretary


SILICON VALLEY BANK

CERTIFIED RESOLUTION AND INCUMBENCY CERTIFICATE

BORROWER: OMNICELL.COM,
A CORPORATION ORGANIZED UNDER THE LAWS

OF THE STATE OF CALIFORNIA

DATE: JANUARY 27, 2000

I, the undersigned, Secretary or Assistant Secretary of the above-named borrower, a corporation organized under the laws of the state set forth above, do hereby certify that the following is a full, true and correct copy of resolutions duly and regularly adopted by the Board of Directors of said corporation as required by law, and by the by-laws of said corporation, and that said resolutions are still in full force and effect and have not been in any way modified, repealed, rescinded, amended or revoked.

RESOLVED, that this corporation borrow from Silicon Valley Bank ("Silicon"), from time to time, such sum or sums of money as, in the judgment of the officer or officers hereinafter authorized hereby, this corporation may require.

RESOLVED FURTHER, that any officer of this corporation be, and he or she is hereby authorized, directed and empowered, in the name of this corporation, to execute and deliver to Silicon, and Silicon is requested to accept, the loan agreements, security agreements, notes, financing statements, and other documents and instruments providing for such loans and evidencing and/or securing such loans, with interest thereon, and said authorized officers are authorized from time to time to execute renewals, extensions and/or amendments of said loan agreements, security agreements, and other documents and instruments.

RESOLVED FURTHER, that said authorized officers be and they are hereby authorized, directed and empowered, as security for any and all indebtedness of this corporation to Silicon, whether arising pursuant to this resolution or otherwise, to grant, transfer, pledge, mortgage, assign, or otherwise hypothecate to Silicon, or deed in trust for its benefit, any property of any and every kind, belonging to this corporation, including, but not limited to, any and all real property, accounts, inventory, equipment, general intangibles, instruments, documents, chattel paper, notes, money, deposit accounts, furniture, fixtures, goods, and other property of every kind, and to execute and deliver to Silicon any and all grants, transfers, trust receipts, loan or credit agreements, pledge agreements, mortgages, deeds of trust, financing statements, security agreements and other hypothecation agreements, which said instruments and the note or notes and other instruments referred to in the preceding paragraph may contain such provisions, covenants, recitals and agreements as Silicon may require and said authorized officers may approve, and the execution thereof by said authorized officers shall be conclusive evidence of such approval.

RESOLVED FURTHER, that Silicon may conclusively rely upon a certified copy of these resolutions and a certificate of the Secretary or Ass't Secretary of this corporation as to the officers of this corporation and their offices and signatures, and continue to conclusively rely on such certified copy of these resolutions and said certificate for all past, present and future transactions until written notice of any change hereto or thereto is given to Silicon by this corporation by certified mail, return receipt requested.


The undersigned further hereby certifies that the following persons are the duly elected and acting officers of the corporation named above as borrower and that the following are their actual signatures:

NAMES                            OFFICE(S)                              ACTUAL SIGNATURES
-----                            ---------                              -----------------
Randall A. Lipps                 Chairman                               /s/ Randall A. Lipps

Sheldon A. Asher                 President and Chief Executive Officer  /s/ Sheldon A. Asher

-------------------------------  -------------------------------------  -------------------------

IN WITNESS WHEREOF, I have hereunto set my hand as such Secretary or Assistant Secretary on the date set forth above.

/s/ Robert J. Brigham
Secretary or Assistant Secretary


COLLATERAL ASSIGNMENT, PATENT MORTGAGE
AND SECURITY AGREEMENT

This Collateral Assignment, Patent Mortgage and Security Agreement is made as of January 27, 2000 by and between OMNICELL.COM ("Assignor"), and Silicon Valley Bank, a California banking corporation ("Assignee").

RECITALS

A. Assignee has agreed to lend to Assignor certain funds (the "Loans"), pursuant to a Loan and Security Agreement dated January 26, 2000 (the "Loan Agreement") and Assignor desires to borrow such funds from Assignee.

B. In order to induce Assignee to make the Loans, Assignor has agreed to assign certain intangible property to Assignee for purposes of securing the obligations of Assignor to Assignee.

NOW, THEREFORE, THE PARTIES HERETO AGREE AS FOLLOWS:

1. ASSIGNMENT, PATENT MORTGAGE AND GRANT OF SECURITY INTEREST. As collateral security for the prompt and complete payment and performance of all of Assignor's present or future indebtedness, obligations and liabilities to Assignee, Assignor hereby assigns, transfers, conveys and grants a security interest and mortgage to Assignee, as security, but not as an ownership interest, in and to Assignor's entire right, title and interest in, to and under the following (all of which shall collectively be called the "Collateral"):

(a) All of present and future United States registered copyrights and copyright registrations, including, without limitation, the registered copyrights listed in EXHIBIT A-1 to this Agreement (and including all of the exclusive rights afforded a copyright registrant in the United States under 17 U.S.C. Section 106 and any exclusive rights which may in the future arise by act of Congress or otherwise) and all present and future applications for copyright registrations (including applications for copyright registrations of derivative works and compilations) (collectively, the "Registered Copyrights"), and any and all royalties, payments, and other amounts payable to Assignor in connection with the Registered Copyrights, together with all renewals and extensions of the Registered Copyrights, the right to recover for all past, present, and future infringements of the Registered Copyrights, and all computer programs, computer databases, computer program flow diagrams, source codes, object codes and all tangible property embodying or incorporating the Registered Copyrights, and all other rights of every kind whatsoever accruing thereunder or pertaining thereto.
(b) All present and future copyrights which are not registered in the United States Copyright Office (the "Unregistered Copyrights"), whether now owned or hereafter acquired, including without limitation the Unregistered Copyrights listed in EXHIBIT A-2 to this Agreement, and any and all royalties, payments, and other amounts payable to Assignor in connection with the Unregistered Copyrights, together with all renewals and extensions of the


Unregistered Copyrights, the right to recover for all past, present, and future infringements of the Unregistered Copyrights, and all computer programs, computer databases, computer program flow diagrams, source codes, object codes and all tangible property embodying or incorporating the Unregistered Copyrights, and all other rights of every kind whatsoever accruing thereunder or pertaining thereto. The Registered Copyrights and the Unregistered Copyrights collectively are referred to herein as the "Copyrights."
(c) All right, title and interest in and to any and all present and future license agreements with respect to the Copyrights, including without limitation the license agreements listed in EXHIBIT A-3 to this Agreement (the "Licenses").
(d) All present and future accounts, accounts receivable and other rights to payment arising from, in connection with or relating to the Copyrights.
(e) Any and all trade secrets, and any and all intellectual property rights in computer software and computer software products now or hereafter existing, created, acquired or held;
(f) Any and all design rights which, may be available to Assignor now or hereafter existing, created, acquired or held;
(g) All patents, patent applications and like protections including, without limitation, improvements, divisions, continuations, renewals, reissues, extensions and continuations-in-part of the same, including without limitation the patents and patent applications set forth on EXHIBIT B attached hereto (collectively, the "Patents");
(h) Any trademark and servicemark rights, whether registered or not, applications to register and registrations of the same and like protections, and the entire goodwill of the business of Assignor connected with and symbolized by such trademarks, including without limitation those set forth on EXHIBIT C attached hereto (collectively, the "Trademarks")
(i) Any and all claims for damages by way of past, present and future infringements of any of the rights included above, with the right, but not the obligation, to sue for and collect such damages for said use or infringement of the intellectual property rights identified above;
(j) All licenses or other rights to use any of the Copyrights, Patents or Trademarks, and all license fees and royalties arising from such use to the extent permitted by such license or rights;
(k) All amendments, extensions, renewals and extensions of any of the Copyrights, Trademarks or Patents; and
(l) All proceeds and products of the foregoing, including without limitation all payments under insurance or any indemnity or warranty payable in respect of any of the foregoing.

THE INTEREST IN THE COLLATERAL BEING ASSIGNED HEREUNDER SHALL NOT BE CONSTRUED AS A CURRENT ASSIGNMENT, BUT AS A CONTINGENT ASSIGNMENT TO SECURE ASSIGNOR'S OBLIGATIONS TO ASSIGNEE UNDER THE LOAN AGREEMENT.

2. AUTHORIZATION AND REQUEST. Assignor authorizes and requests that the Register of Copyrights and the Commissioner of Patents and Trademarks record this conditional assignment.

3. COVENANTS AND WARRANTIES. Assignor represents, warrants, covenants and agrees as follows:


(a) ASSIGNOR IS NOW THE SOLE OWNER OF THE COLLATERAL, EXCEPT FOR NON-EXCLUSIVE LICENSES GRANTED BY ASSIGNOR TO ITS CUSTOMERS IN THE ORDINARY COURSE OF BUSINESS.

(b) Listed on Exhibits A-1 and A-2 are all copyrights owned by Assignor, in which Assignor has an interest, or which are used in Assignor's business.

(c) Each employee, agent and/or independent contractor who has participated in the creation of the property constituting the Collateral has either executed an assignment of his or her rights of authorship to Assignor or is an employee of Assignor acting within the scope of his or her employment and was such an employee at the time of said creation.

(d) All of Assignor's present and future software, computer programs and other works of authorship subject to United States copyright protection, the sale, licensing or other disposition of which results in royalties receivable, license fees receivable, accounts receivable or other sums owing to Assignor (collectively, "Receivables"), have been and shall be registered with the United States Copyright Office prior, to the date Assignor requests or accepts any loan from Assignee with respect to such Receivables and prior to the date Assignor includes any such Receivables in any accounts receivable aging, borrowing base report or certificate or other similar report provided to Assignee, and Assignor shall provide to Assignee copies of all such registrations promptly upon the receipt of the same.

(e) Assignor shall undertake all reasonable measures to cause its employees, agents and independent contractors to assign to Assignor all rights of authorship to any copyrighted material in which Assignor has or may subsequently acquire any right or interest.

(f) Performance of this Assignment does not conflict with or result in a breach of any agreement to which Assignor is bound, except to the extent that certain intellectual property agreements prohibit the assignment of the rights thereunder to a third party without the licensor's or other party's consent and this Assignment constitutes an assignment.

(g) During the term of this Agreement, Assignor will not transfer or otherwise encumber any interest in the Collateral, except for non-exclusive licenses granted by Assignor in the ordinary course of business or as set forth in this Assignment;

(h) Each of the Patents is valid and enforceable, and no part of the Collateral has been judged invalid or unenforceable, in whole or in part, and no claim has been made that any part of the Collateral violates the rights of any third party;

(i) Assignor shall promptly advise Assignee of any material adverse change in the composition of the Collateral, including but not limited to any subsequent ownership right of the Assignor in or to any Trademark, Patent or Copyright not specified in this Assignment;


(j) Assignor shall (i) protect, defend and maintain the validity and enforceability of the Trademarks, Patents and Copyrights, (ii) use its best efforts to detect infringements of the Trademarks, Patents and Copyrights and promptly advise Assignee in writing of material infringements detected and (iii) not allow any Trademarks, Patents, or Copyrights to be abandoned, forfeited or dedicated to the public without the written consent of Assignee, which shall not be unreasonably withheld unless Assignor determines that reasonable business practices suggest that abandonment is appropriate.

(k) Assignor shall promptly register the most recent version of any of Assignor's Copyrights, if not so already registered, and shall, from time to time, execute and file such other instruments, and take such further actions as Assignee may reasonably request from time to time to perfect or continue the perfection of Assignee's interest in the Collateral;

(l) This Assignment creates, and in the case of after acquired Collateral, this Assignment will create at the time Assignor first has rights in such after acquired Collateral, in favor of Assignee a valid and perfected first priority security interest in the Collateral in the United States securing the payment and performance of the obligations evidenced by the Loan Agreement upon making the filings referred to in clause (m) below;

(m) To its knowledge, except for, and upon, the filing with the United States Patent and Trademark office with respect to the Patents and Trademarks and the Register of Copyrights with respect to the Copyrights necessary to perfect the security interests and assignment created hereunder and except as has been already made or obtained, no authorization, approval or other action by, and no notice to or filing with, any U.S. governmental authority or U.S. regulatory body is required either (i) for the grant by Assignor of the security interest granted hereby or for the execution, delivery or performance of this Assignment by Assignor in the U.S. Or (ii) for the perfection in the United States or the exercise by Assignee of its rights and remedies thereunder;

(n) All information heretofore, herein or hereafter supplied to Assignee by or on behalf of

(o) Assignor shall not enter into any agreement that would materially impair or conflict with Assignor's obligations hereunder without Assignee's prior written consent, which consent shall not be unreasonably withheld. Assignor shall not permit the inclusion in any material contract to which it becomes a party of any provisions that could or might in any way prevent the creation of a security interest in Assignor's rights and interest in any property included within the definition of the Collateral acquired under such contracts, except that certain contracts may contain anti-assignment provisions that could in effect prohibit the creation of a security interest in such contracts.

(p) Upon any executive officer of Assignor obtaining actual knowledge thereof, Assignor will promptly notify Assignee in writing of any event that materially adversely affects the value of any material Collateral, the ability of Assignor to dispose of any material Collateral or the rights and remedies of Assignee in relation thereto, including the levy of any legal process against any of the Collateral.


4. ASSIGNEE'S RIGHTS. Assignee shall have the right, but not the obligation, to take, at Assignor's sole expense, any actions that Assignor is required under this Assignment to take but which Assignor fails to take, after fifteen (15) days' notice to Assignor. Assignor shall reimburse and indemnify Assignee for all reasonable costs and reasonable expenses incurred in the reasonable exercise of its rights under this section 4.

5. INSPECTION RIGHTS. Assignor hereby grants to Assignee and its employees, representatives and agents the right to visit, during reasonable hours upon prior reasonable written notice to Assignor, and any of Assignor's plants and facilities that manufacture, install or store products (or that have done so during the prior six-month period) that are sold utilizing any of the Collateral, and to inspect the products and quality control records relating thereto upon reasonable written notice to Assignor and as often as may be reasonably requested, but not more than one (1) in every six (6) months; provided, however, nothing herein shall entitle Assignee access to Assignor's trade secrets and other proprietary information.

6. FURTHER ASSURANCES; ATTORNEY IN FACT.

(a) Upon an Event of Default, on a continuing basis thereafter, Assignor will, subject to any prior licenses, encumbrances and restrictions and prospective licenses, make, execute, acknowledge and deliver, and file and record in the proper filing and recording places in the United States, all such instruments, including, appropriate financing and continuation statements and collateral agreements and filings with the United States Patent and Trademarks Office and the Register of Copyrights, and take all such action as may reasonably be deemed necessary or advisable, or as requested by Assignee, to perfect Assignee's security interest in all Copyrights, Patents and Trademarks and otherwise to carry out the intent and purposes of this Collateral Assignment, or for assuring and confirming to Assignee the grant or perfection of a security interest in all Collateral.

(b) Upon an Event of Default, Assignor hereby irrevocably appoints Assignee as Assignor's attorney-in-fact, with full authority in the place and stead of Assignor and in the name of Assignor, Assignee or otherwise, from time to time in Assignee's discretion, upon Assignor's failure or inability to do so, to take any action and to execute any instrument which Assignee may deem necessary or advisable to accomplish the purposes of this Collateral Assignment, including:
(i) To modify, in its sole discretion, this Collateral Assignment without first obtaining Assignor's approval of or signature to such modification by amending Exhibit A-I, Exhibit A-2, Exhibit A-3, Exhibit B and Exhibit C, thereof, as appropriate, to include reference to any right, title or interest in any Copyrights, Patents or Trademarks acquired by Assignor after the execution hereof or to delete any reference to any right, title or interest in any Copyrights, Patents or Trademarks in which Assignor no longer has or claims any right, title or interest; and
(ii) To file, in its sole discretion, one or more financing or continuation statements and amendments thereto, relative to any of the Collateral without the signature of Assignor where permitted by law.


7. EVENTS OF DEFAULT. The occurrence of any of the following shall constitute an Event of Default under the Assignment:

(a) An Event of Default occurs under the Loan Agreement; or
(b) Assignor breaches any warranty or agreement made by Assignor in this Assignment.

8. REMEDIES. Upon the occurrence and continuance of an Event of Default, Assignee shall have the right to exercise all the remedies of a secured party under the California Uniform Commercial Code, including without limitation the right to require Assignor to assemble the Collateral and any tangible property in which Assignee has a security interest and to make it available to Assignee at a place designated by Assignee. Assignee shall have a nonexclusive, royalty free license to use the Copyrights, Patents and Trademarks to the extent reasonably necessary to permit Assignee to exercise its rights and remedies upon the occurrence of an Event of Default. Assignor will pay any expenses (including reasonable attorney's fees) incurred by Assignee in connection with the exercise of any of Assignee's rights hereunder, including without limitation any expense incurred in disposing of the Collateral. All of Assignee's rights and remedies with respect to the Collateral shall be cumulative.

9. INDEMNITY. Assignor agrees to defend, indemnify and hold harmless Assignee and its officers, employees, and agents against: (a) all obligations, demands, claims, and liabilities claimed or asserted by any other party in connection with the transactions contemplated by this Agreement, and (b) all losses or expenses in any way suffered, incurred, or paid by Assignee as a result of or in any way arising out of, following or consequential to transactions between Assignee and Assignor, whether under this Assignment or otherwise (including without limitation, reasonable attorneys fees and reasonable expenses), except for losses arising form or out of Assignee's gross negligence or willful misconduct.

10. RELEASE. At such time as Assignor shall completely satisfy all of the obligations secured hereunder, Assignee shall execute and deliver to Assignor all assignments and other instruments as may be reasonably necessary or proper to terminate Assignee's security interest in the Collateral, subject to any disposition of the Collateral which may have been made by Assignee pursuant to this Agreement. For the purpose of this Agreement, the obligations secured hereunder shall be deemed to continue if Assignor enters into any bankruptcy or similar proceeding at-a time when any amount paid to Assignee could be ordered to be repaid as a preference or pursuant to a similar theory, and shall continue until it is finally determined that no such repayment can be ordered.

11. NO WAIVER. No course of dealing between Assignor and Assignee, nor any failure to exercise nor any delay in exercising, on the part of Assignee, any right, power, or privilege under this Agreement or under the Loan Agreement or any other agreement, shall operate as a waiver. No single or partial exercise of any right, power, or privilege under this Agreement or under the Loan Agreement or any other agreement by Assignee shall preclude any other or further exercise of such right, power, or privilege or the exercise of any other right, power, or privilege by Assignee.


12. RIGHTS ARE CUMULATIVE. All of Assignee's rights and remedies with respect to the Collateral whether established by this Agreement, the Loan Agreement, or any other documents or agreements, or by law shall be cumulative and may be exercised concurrently or in any order.

13. COURSE OF DEALING. No course of dealing, nor any failure to exercise, nor any delay in exercising any right, power or privilege hereunder shall operate as a waiver thereof.

14. ATTORNEYS' FEES. If any action relating to this Assignment is brought by either party hereto against the other party, the prevailing party shall be entitled to recover reasonable attorneys fees, costs and disbursements.

15. AMENDMENTS. This Assignment may be amended only by a written instrument signed by both parties hereto. To the extent that any provision of this Agreement conflicts with any provision of the Loan Agreement, the provision giving Assignee greater rights or remedies shall govern, it being understood that the purpose of this Agreement is to add to, and not detract from, the rights granted to Assignee under the Loan Agreement. This Agreement, the Loan Agreement, and the documents relating thereto comprise the entire agreement of the parties with respect to the matters addressed in this Agreement.

16. SEVERABILITY. The provisions of this Agreement are severable. If any provision of this Agreement is held invalid or unenforceable in whole or in part in any jurisdiction, then such invalidity or unenforceability shall affect only such provision, or part thereof, in such jurisdiction, and shall not in any manner affect such provision or part thereof in any other jurisdiction, or any other provision of this Agreement in any jurisdiction.

17. COUNTERPARTS. This Assignment may be executed in two or more counterparts, each of which shall be deemed an original but all of which together shall constitute the same instrument.

18. CALIFORNIA LAW AND JURISDICTION. This Assignment shall be governed by the laws of the State of California, without regard for choice of law provisions. Assignor and Assignee consent to the nonexclusive jurisdiction of any state or federal court located in Orange County, California.

19. CONFIDENTIALITY. In handling any confidential information, Assignee shall exercise the same degree of care that it exercises with respect to its own proprietary information of the same types to maintain the confidentiality of any non-public information thereby received or received pursuant to this Assignment except that the disclosure of this information may be made (i) to the affiliates of the Assignee, (ii) to prospective transferee or purchasers of an interest in the obligations secured hereby, provided that they have entered into a comparable confidentiality agreement in favor of Assignor and have delivered a copy to Assignor, (iii) as required by law, regulation, rule or order, subpoena judicial order or similar order and (iv) as may be required in connection with the examination, audit or similar investigation of Assignee.

20. WAIVER OF RIGHT TO JURY TRIAL. ASSIGNEE AND ASSIGNOR EACH 'HEREBY WAIVE THE RIGHT TO TRIAL BY JURY IN ANY ACTION OR


PROCEEDING BASED UPON, ARISING OUT OF, OR IN ANY WAY RELATING TO: (I) THIS AGREEMENT; OR (II) ANY OTHER PRESENT OR FUTURE INSTRUMENT OR AGREEMENT BETWEEN ASSIGNEE AND ASSIGNOR; OR (III) ANY CONDUCT, ACTS OR OMISSIONS OF ASSIGNEE OR ASSIGNOR OR ANY OF THEIR DIRECTORS, OFFICERS, EMPLOYEES, AGENTS, ATTORNEYS OR ANY OTHER PERSONS AFFILIATED WITH ASSIGNEE OR ASSIGNOR; IN EACH OF THE FOREGOING CASES, WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE.

IN WITNESS WHEREOF, the parties hereto have executed this Assignment on the day and year first above written.

ASSIGNOR:

OMNICELL.COM

By: /s/ Robert Y. Newell
Title: Chief Financial Officer
Name (please Print):
Robert Y. Newell

ADDRESS OF ASSIGNOR:

1101 E. Meadow Drive
Palo Alto, California 94303


CONFIDENTIAL TREATMENT

CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

EXHIBIT 10.11

VERTICAL HOSTED LICENSE AGREEMENT

This VERTICAL HOSTED LICENSE AGREEMENT (this "Agreement") is entered into as of August ___, 1999 (the "Effective Date") by and between Commerce One, Inc., a Delaware corporation having offices at 1600 Riviera Avenue, Walnut Creek, California 94596 ("C1") and OmniCell, a California corporation having offices at 1101 East Meadow, Palo Alto, CA 94303 ("Licensee").

WHEREAS, C1 is developing or has the rights to the software and documentation described in Section 1 ("Definitions") below and desires to license Licensee to use such software and documentation on the terms and conditions stated herein; and

WHEREAS, Licensee is interested in licensing such software and documentation on the terms and conditions set forth herein in order to create a marketplace for the electronic procurement of goods and services by businesses over the Internet.

NOW THEREFORE, in consideration of the premises and the mutual covenants and conditions stated herein, the parties agree as follows:

1. DEFINITIONS

1.1 "Authorized Users" means the total number of End Users and/or Suppliers, as applicable, authorized to use the Software, as specified in Schedule A ("Software, Users and License Fees").

1.2 "Confidential Information" means this Agreement (including Schedules A-E attached hereto and incorporated herein by reference), any addenda hereto signed by both parties, all Software listings, Documentation, information, data, drawings, benchmark tests, specifications, trade secrets, object code and machine-readable copies of the Software, and any other proprietary information supplied to Licensee by C1, or by Licensee to C1, and clearly marked as "confidential information", including all items defined as "confidential information" in any other agreement between Licensee and C1 whether executed prior to or after the date of this Agreement.

1.3 "Documentation" means any on-line help files or written instruction manuals regarding the use of the Software.

1.4 "End User" means an end user customer who accesses the Software for the electronic procurement of products and/or services from one or more Suppliers.

1.5 "Executable Code" means the fully compiled version of a software program that can be executed by a computer and used by an end user without further compilation.

1.6 "Field" means healthcare.

1.7 "Maintenance and Support" means the services described in Section 5 ("Maintenance and Support").

1.8 "Vertical MarketSite Service" means a service that (i) is specifically focused upon the provision of goods and services within the Field, and is targeted to Suppliers and End Users within the Field, and (ii) enables trading partners to (1) exchange business information within the Field and (2) provide access to services that are specifically directed at the Field.

1

1.9 "Software" means the computer software programs specified in Schedule A_("Software, Users and License Fees") (in machine executable object code form).

1.10 "Source Code" means the human-readable version of the Software that can be compiled into Executable Code, together with all applicable build scripts, test scripts and programmers' notes and other documentation necessary to understand and use the code.

1.11 "Supplier" means a third party supplier in the Field who provides products and/or services to End Users.

1.12 "Update" means a version of the Software consisting of corrections and minor functional enhancements to the prior version of the Software. C1 registers updates by means of a change of the number to the right of the decimal point, e.g. 3.0 greater than 3.1.

1.13 "Upgrade" means a version of the Software in which substantial new functionalities or other substantial changes to the prior version of the Software. C1 registers upgrades by means of a change of the number to the left of the decimal point, e.g. 3.0 greater than 4.0.

1.14 "Use" means utilization of the Software pursuant to the terms and conditions set forth herein by no more than the number of Authorized Nodes set forth on Schedule A ("Software, Users and License Fees").

2. Grant of Rights

2.1 Grant. Subject to the terms and conditions of this Agreement, C1 hereby grants to Licensee during the Term, a perpetual, irrevocable, non- exclusive, non-transferable, fully-paid and royalty-free license, without right of sublicense, to Use the Software to (a) reproduce, install and use the Software on computer hardware servers owned or operated by Licensee or, with prior written notice to C1, reproduce the Software on substitute computer hardware servers, (b) provide up to the number of Authorized Users with remote access to the Software via such servers, and (c) use the Documentation in connection with such use of the Software. The foregoing license to the MarketSite Software shall be for the sole purpose of providing End Users with access to the Vertical MarketSite Service and supporting such use by End Users. In addition, with respect to the license to the BuySite Hosted Edition Software, Use shall be limited only to Use with the MarketSite Software. This license transfers to Licensee neither title nor any proprietary or intellectual property rights to the Software, Documentation, or any copyrights, patents, or trademarks, embodied or used in connection therewith, except for the rights expressly granted herein.

2.2 Delivery and Acceptance; Source Code Escrow.

(a) Delivery and Acceptance. C1 shall issue to Licensee, as soon as practicable but in no event later than September 10, 1999, one (1) machine-readable copy of the Software for Use at the Site only, along with one (1) copy of the on-line Documentation. C1 will provide Licensee with written copies of the Documentation at C1's standard charges. Licensee may not copy the Documentation. Licensee acknowledges that no copy of the Source ode of the Software will be provided to Licensee, except as provided herein. Licensee shall test the Software for conformance with the Documentation ("Acceptance Test") by September 30, 1999. If the Software performs in substantial accordance with the Documentation, then Licensee shall notify C1 in writing of its acceptance of the Software. In the event Licensee finds material errors or defects with the Software, Licensee shall notify C1 in writing of such errors or defects and provide adequate detail to facilitate C1 replicating the error or defect. Upon receipt of written notice, C1 shall have fifteen (15) days to correct the defect and reinstall the Software at the Licensee site, and Omnicell shall then re-perform the Acceptance Test. If Licensee does not accept the Software after the second Acceptance Test, then C1 shall have an additional 15-day remediation period in which to correct the defect and reinstall the Software at the Licensee site, and Omnicell shall perform a third Acceptance Test. If after the third Acceptance Test, Licensee does not accept the Software, Licensee may, at its sole option, elect to (i) repeat the Acceptance Test or (ii) receive a refund of any Fees paid to C1 as of such date and terminate the Agreement. Both parties acknowledge that any professional services provided to

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Licensee subsequent to the installation and acceptance of the Software are non- essential for the purpose of the acceptance of the Software.

(b) Source Code Escrow. As soon as is reasonably practicable, but in no event later than forty-five (45) days after the Effective Date, C1 will deposit two (2) copies of annotated listings of the Source Code for the Software and all associated flowcharts, decision tables, schematics, and other technical documentation and information necessary for a reasonably skilled programmer to understand the structure of, correct errors in, and make modifications to such Source Code (the "Escrow Materials") into escrow with a mutually acceptable third party escrow agent pursuant to the terms of a mutually acceptable escrow agreement that entitles Licensee to receive a copy of the Escrow Materials upon the occurrence of any Release Condition described in Section 9.2 ("Termination by Licensee").

2.3 Copies. Licensee will be entitled to make a reasonable number of machine-readable copies of the Software for backup or archival purposes only. Licensee may not copy the Software, except as permitted by this Agreement. Licensee shall maintain accurate and up-to-date records of the number and location of all copies of the Software and inform C1 in writing of such location(s). All copies of the Software will be subject to all terms and conditions of this Agreement. Whenever Licensee is permitted to copy or reproduce all or any part of the Software, all titles, trademark symbols, copyright symbols and legends, and other proprietary markings must be reproduced.

2.4 End User Licenses. As to each End User or Supplier who is provided access to the Software, Licensee shall secure the End User's or Supplier's consent to an end user agreement which provides that the End User or Supplier may access and/or use the Software only under terms and conditions which include, at a minimum, those set forth on Schedule B ("End User/Supplier Terms and Conditions").

2.5 Attribution. The Vertical MarketSite Service shall conspicuously display a graphic or other attribution to be provided by C1reasonably acceptable to Licensee that indicates that C1's technology is being used. The specifications for such graphic or other attribution shall be as set forth on Schedule C ("Attribution Guidelines").

2.6 Trademark License. C1 hereby grants Licensee a nontransferable, nonexclusive license under C1's trademarks during the Term to display the C1 icon in accordance with Section 2.4 ("End User Licenses"), and otherwise, in connection with the provision and promotion of the Vertical MarketSite Service. Licensee agrees to submit materials containing C1's trademarks to C1 before release to the public for inspection, and C1 will have the right to modify any such materials. Except as set forth in this Section, nothing in this Agreement shall grant or shall be deemed to grant to Licensee any right, title or interest in or to C1's trademarks. All uses of C1's trademarks by Licensee shall inure to the benefit of C1. At no time during or after the Term shall Licensee challenge or assist others to challenge the C1 trademarks (except to the extent such restriction is prohibited by applicable law) or the registration thereof or attempt to register any trademarks, marks or trade names confusingly similar to those of C1.

2.7 Usage Reports. Within fifteen (15) days after the end of each month, Licensee will deliver to C1 a user access log report, which report shall include, at a minimum and without limitation, data describing transactions and system activity, and such other information as the parties shall mutually agree. The information contained in the reports, including but not limited to data pertaining to End Users ("End User Data"), shall be deemed the Confidential Information of Licensee.

2.8 Data Ownership. Licensee shall own all End User Data. C1 shall have no rights in or to such End User Data, except C1 shall have a limited license, for the term of this Agreement, to use such End User data as may be required to perform its obligations under this Agreement.

3. License Restrictions

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3.1 Licensee agrees that it will not itself, or through any parent, subsidiary, affiliate, agent or other third party:

(a) sell, lease, license or sublicense the Software or the Documentation;

(b) decompile, disassemble, or reverse engineer the Software, in whole or in part;

(c) write or develop any derivative software or any other software program based upon the Software or any Confidential Information; or

(d) provide, disclose, divulge or make available to, or permit use of the Software by any third party without C1's prior written consent; provided, however, that Licensee may allow its Suppliers and End Users to use the Software solely for the purpose of transacting goods and services via the Vertical MarketSite Service.

4. License Fee.

4.1 License Fee. In consideration of the License granted pursuant to Section 2.1 ("Grant"), Licensee agrees to pay C1 the License Fees specified Schedule A as follows:

(a) [*] of the license fee is due upon execution of this Agreement;

(b) [*] of the license fee is due by December 31, 1999, and

(c) [*] of the license fee is due by February 29, 2000.

4.2 Taxes. Licensee agrees to pay or reimburse C1 for all federal, state, dominion, provincial, or local sales, use, personal property, payroll, excise or other taxes, fees, or duties arising out of this Agreement or the transactions contemplated by this Agreement (other than taxes on the net income of C1).

4.3 No Offset. Except in the event of C1 breach, fees and expenses actually owed by Licensee under this Agreement may not be withheld or offset by Licensee against other amounts actually owed to Licensee for any reason.

4.4 Audit. Each party shall provide the other with information as reasonably requested by such party to verify compliance with the terms of this Agreement. In addition, subject to prior written approval by Licensee's customer(s), which approval may be withheld in such customer's sole and complete discretion, Licensee shall install and permit C1 to operate C1 "polling software" which monitors all transactions associated with the Software. Subject to prior written approval by Licensee's customer(s), which approval may be withheld in such customer's sole and complete discretion, Licensee shall at all times cooperate with C1 to ensure that C1 has remote access to Licensee's equipment for such purposes. Where applicable, Licensee shall also provide C1 with reasonable access to such "polling software" to verify its operation. Should any of Licensee's customer(s) fail to approve the installation or use of, or access to, such "polling software," the parties shall use commercially reasonable efforts to implement an alternate tracking and verification mechanism that is acceptable to such customer(s).

5. Maintenance and Support

Subject to the provisions of Section 4.3 ("No Offset") pertaining to OmniCell's right to offset in the event of C1 breach, for so long as Licensee is current in the payment of all accrued Maintenance Fees (described below), Licensee will be entitled to Maintenance and Support as specified in this
Section 5 ("Maintenance and Support").

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5.1 Term and Termination. C1's provision of Maintenance and Support to Licensee will commence on the Effective Date and will continue for an initial term of one (1) year. Maintenance and Support will automatically renew at the end of the initial term and any subsequent term for a renewal term of one (1) year unless Licensee has provided C1 with written notice of its intention not to renew the Maintenance and Support at least sixty (60) days prior to the expiration of the then-current term. C1 reserves the right to propose reasonable changes to standard Maintenance and Support services from time to time, and such changes shall be subject to Licensee approval, which shall not be unreasonably withheld. Termination of Maintenance and Support or failure to renew will not affect the license of the Software.

5.2 Maintenance and Support Services. Maintenance and Support will be provided only with respect to versions of the Software that are being supported by C1. For purposes of this Agreement, however, C1 will support all current versions, (i.e., Upgrades, versus Updates), of the Software, in addition to the two (2) previously-released versions (i.e., Upgrades, versus Updates) of the Software. As part of Maintenance and Support, C1 will provide standard support as follows: (i) timely delivery of all Updates and Upgrades, when and if available, and related Documentation, and (ii) telephone assistance with respect to the Software, including (a) clarification of functions and features of the Software; (b) clarification of the Documentation; (c) guidance in the operation of the Software; and (d) error verification, analysis and correction, to the extent possible by telephone. C1's standard hours of service are Monday through Friday, 7:00a.m. to 7:00p.m. (PST), except for holidays as observed by C1. Support via pager coverage will be provided by C1 for hours outside standard hours of service. C1 response times during standard hours of service shall be consistent with C1's standard service escalation levels. C1 response times during times of beeper coverage are two hours for Priority 1 issues and 4 hours for all other issues. In addition to standard support services, C1 will designate a C1 employee as Licensee's primary support contact. Licensee shall designate up to five (5) Licensee support contacts, who shall have direct access to the primary support contact at C1.

5.3 Installation. Upon Licensee's request, C1 or a designated C1 partner can perform the installation of the Software. Unless otherwise agreed, the costs hereof shall be invoiced to Licensee on the basis of C1's then-current price list rates, less any discounts applicable to Licensee.

5.4 Causes which are not attributable to C1. Maintenance and Support will not include services requested as a result of, or with respect to causes which are not attributable to C1. These services will be billed to Licensee at C1's then-current standard price list rates, less any discounts applicable to Licensee. Causes which are not attributable to C1 include but are not limited to:

(a) accident; unusual physical, electrical or electromagnetic stress; neglect; misuse; failure or fluctuation of electric power, air conditioning or humidity control; failure of rotation media not furnished by C1; excessive heating; fire and smoke damage; operation of the Software with other media and hardware, software or telecommunication interfaces not meeting or not maintained in accordance with the manufacturer's specifications; or causes other than ordinary use;

(b) improper installation by Licensee or use of the Software that deviates from any operating procedures established by C1 in the applicable Documentation

(c) modification, alteration or addition or attempted modification, alteration or addition of the Software undertaken by persons other than C1 or C1's authorized representatives; and

(d) software programs made by Licensee, or other third parties, which software programs are not specified by C1 to operate by the Software.

5.5 Responsibilities of Licensee. C1's provision of Maintenance and Support to Licensee is subject to the following:

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(a) Subject to Licensee's standard security policies and procedures, Licensee shall provide C1 with reasonable access to Licensee's personnel and equipment during normal business hours. This access must include the ability, upon prior written notice and approval, such approval not to be unreasonably withheld or delayed, to dial-in to the equipment on which the Software is operating and to obtain the highest privilege or clearance level required, in Licensee's reasonable judgment, for C1 to provide Maintenance and Support. C1 shall not be responsible for providing Maintenance and Support absent adequate access to the equipment. C1 will inform Licensee of the specifications of the modem equipment and associated software needed, and Licensee will be responsible for the costs and use of said equipment.

(b) Licensee shall document and promptly report all material errors or malfunctions of the Software to C1. Licensee shall take all steps necessary to carry out procedures for the rectification of errors or malfunctions within a commercially reasonable time after such procedures have been received from C1. Licensee shall maintain a current backup copy of all programs and data.

5.6 Maintenance Fee. The Maintenance Fee for each calendar year of Maintenance and Support will be [*] (for Hosted BuySite) and [*] (for MarketSite) of the License Fees set forth in Schedule A ("Software, Users and License Fees"). The initial Maintenance Fee payment is due and payable on [*] the initial acceptance of the Software. Any undisputed amounts not paid within thirty (30) days of such date will be subject to interest of 1% per month, which interest will be immediately due and payable. Each calendar year, the Maintenance Fee may be modified by written mutual agreement of the parties at least thirty (30) days prior to the end of the then-current term. In the event of a modification of the Maintenance Fee, Licensee may discontinue Maintenance and Support. If Licensee elects not to renew Maintenance and Support, Licensee may re-enroll only upon payment of the annual Maintenance Fee for the coming year and fifty percent (50%) of all Maintenance Fees that would have been paid had Licensee not terminated Maintenance and Support, which entitles Licensee to all Updates and Releases of the Software which have been released during the same period.

6. Limited Warranty and Limitation of Liability

6.1 Warranty.

(a) C1 represents and warrants that any release of the Software will perform in substantial accordance with the Documentation for a period of ninety
(90) days from the date Licensee installs and accepts such Software, which acceptance, for the initial delivery of the software, is anticipated to occur no later than September 30, 1999, provided that such initial delivery takes place on or prior to September 10, 1999. If during this time period the Software does not perform as warranted, C1 shall first (i) undertake to promptly correct the Software, or (if correction of the Software is reasonably not possible) (ii) replace such Software free of charge with other software, at Licensee's discretion, that is supported by C1. If, after attempting both (i) and (ii), neither of the foregoing successfully resolves the nonperformance, this Agreement shall terminate, and C1 shall refund the License Fee, all Maintenance Fees and any prepaid Maintenance Fees and Services Fees (refunded on a prorated basis) paid by Licensee to C1 hereunder. In addition, C1 warrants that the media on which the Software is distributed will be free from defects in materials and workmanship under normal use for a period of ninety (90) days from the date Licensee accepts such Software. C1 will replace any defective media returned to C1 within the ninety (90) day period, at no additional charge to Licensee. The warranty set forth above is made to and for the benefit of Licensee only. The warranty will apply only if:

(1) the Software has been used at all times in accordance with the instructions for use; and

(2) no modification, alteration or addition has been made to the Software by persons other than C1 or C1's authorized representative; and

(3) Licensee has not requested modifications, alterations or additions to the Software that cause it to deviate from the Documentation. Notwithstanding the foregoing limitations of Section 6.1(a)(3)

[*] CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS UNDER 17.C.F.R. SECTIONS 200.80(b)(4), 200.83 AND 230.406.

6

("Warranty"), should Licensee request modifications, alterations or additions to the Software, the above warranty shall apply only to those portions of the Software not modified, altered or added to, and no warranty shall apply to the modified, altered or added to portions of the Software unless specific warranty provisions are executed in writing by the parties to cover such modifications, alterations or additions. (but only to the extent of such modifications, alterations or additions).

(b) Harmful Code. C1 represents and warrants that, to the best of its knowledge, the Software and media used to deliver the software contain at delivery to Licensee no computer instructions, circuitry or other technological means whose purpose or effect is to disrupt, damage or interfere with any use of Licensee's computer and communications facilities or equipment ("Harmful Code"), and it has used commercially reasonable efforts to prevent the introduction of such Harmful Code to the Software prior to delivery to Licensee. For the purposes of this warranty, Harmful Code shall include, without limitation, (a) any instrumentality that could cause the Software to fail to be operative as a result of use by more than the authorized number of users or use beyond the termination or expiration date of this Agreement and (b) any code containing viruses, Trojan horses, worms, or like destructive code or code that self- replicates. C1shall defend, indemnify, and hold Licensee harmless from any and all liabilities, losses, damages and expenses, including without limitation attorneys' fees, arising from the presence of Harmful Code in or with the Software or media used to deliver the Software.

(c) Year 2000 Compliance. Commerce One warrants that the Software, when used in accordance with its associated documentation will be, prior to, on and subsequent to 1/1/00, capable of accurately processing, providing and receiving date data from, into and between the twentieth and twenty-first centuries, including the years 1999 and 2000, and leap year calculations. C1 shall use commercially reasonable efforts to correct or replace the defective Software with conforming Software within a reasonable period of time.

(d) Each party represents and warrants that it will take all necessary precautions to prevent injury to any persons or damage to property during the term of this Agreement. Should either party (the "Permitting Party") permit the other party to use any of the Permitting Party's equipment, tools, or facilities during the term of this Agreement, such permission shall be gratuitous and the other party shall be responsible for, and indemnify the Permitting Party for, any injury to any person (including death) or damage to property (including the Permitting Party's property) arising out of use of such equipment, tools or facilities, whether or not such claim is based upon its condition or on the alleged negligence of the Permitting Party in permitting its use.

6.2 Disclaimer. EXCEPT AS SET FORTH HEREIN, C1 MAKES NO WARRANTIES, WHETHER EXPRESS, IMPLIED, OR STATUTORY REGARDING OR RELATING TO THE SOFTWARE OR THE DOCUMENTATION, OR ANY MATERIALS OR SERVICES FURNISHED OR PROVIDED TO LICENSEE UNDER THIS AGREEMENT, INCLUDING MAINTENANCE AND SUPPORT. C1 SPECIFICALLY DISCLAIMS ALL IMPLIED WARRANTIES OF MERCHANTABILITY FITNESS FOR A PARTICULAR PURPOSE AND NONINFRINGEMENT WITH RESPECT TO THE SOFTWARE, DOCUMENTATION AND SAID OTHER MATERIALS AND SERVICES, AND WITH RESPECT TO THE USE OF ANY OF THE FOREGOING.

6.3 Limitation of Liability. EXCEPT FOR INDEMNITY OBLIGATIONS HEREUNDER, IN NO EVENT WILL EITHER PARTY BE LIABLE FOR ANY LOSS OF PROFITS, LOSS OF USE, BUSINESS INTERRUPTION, LOSS OF DATA, COST OF COVER OR INDIRECT, SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES OF ANY KIND IN CONNECTION WITH OR ARISING OUT OF THE FURNISHING, PERFORMANCE OR USE OF THE SOFTWARE OR SERVICES PERFORMED HEREUNDER, WHETHER ALLEGED AS A BREACH OF CONTRACT OR TORTIOUS CONDUCT, INCLUDING NEGLIGENCE, EVEN IF SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. C1 WILL NOT BE LIABLE FOR ANY DAMAGES CAUSED BY DELAY IN DELIVERY OR FURNISHING THE SOFTWARE OR SERVICES, PROVIDED SUCH DELAY IS CURED WITHIN A COMMERCIALLY REASONABLE TIME (NOT TO EXCEED THIRTY (30) DAYS). HOWEVER, THE LIMITATION OF LIABILITY PROVIDED IN THIS SECTION 6.3 ("LIMITATION OF LIABILITY") SHALL NOT APPLY TO ANY DAMAGES CAUSED BY C1'S FAILURE TO DELIVER OR

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FURNISH THE SOFTWARE OR SERVICES, AS OTHERWISE PROVIDED IN THIS AGREEMENT. EACH PARTY'S LIABILITY UNDER THIS AGREEMENT FOR DAMAGES OF ANY KIND, INCLUDING, WITHOUT LIMITATION, RESTITUTION, WILL NOT, IN ANY EVENT, EXCEED AN AMOUNT EQUAL TO THE LICENSE FEE, ALL MAINTENANCE FEES AND ANY PREPAID MAINTENANCE FEES AND SERVICES FEES (ON A PRORATED BASIS) PAID BY LICENSEE TO C1 UNDER THIS AGREEMENT.

6.4 No Other Warranty. No employee, agent, representative or affiliate of C1 has authority to bind C1 to any oral representations or warranty concerning the Software. Any written representation or warranty not expressly contained in this Agreement will not be enforceable.

6.5 Licensee Indemnity. Licensee shall indemnify and hold C1 harmless from and against any costs, losses, liabilities and expenses (including reasonable attorneys' fees) arising out of third party claims related to Licensee's use of the Software outside of the scope of this Agreement, provided that: (a) prompt notice shall be given to Licensee of any claim to which the foregoing indemnity relates; (b) Licensee shall have sole control of the defense and settlement of any such claim; and (c) C1 shall give Licensee all reasonable assistance at Licensee's expense in the defense or settlement of such claim. THIS SECTION 6.5 ("LICENSEE INDEMNITY") STATES LICENSEE'S ENTIRE LIABILITY AND C1'S SOLE AND EXCLUSIVE REMEDY HEREUNDER.

7. Indemnification for Infringement

7.1 Indemnity. C1 shall, at its expense, indemnify, defend and/or settle and hold Licensee harmless from and against any claim, action or allegation brought against Licensee that the Software infringes or misappropriates any copyright, patent or trade secret of any third party and shall pay all expenses, fees and costs (including reasonable attorneys fees) incurred by Licensee as a result thereof; provided that Licensee gives prompt written notice to C1 of any such claim, action or allegation of infringement and gives C1 the authority to proceed as contemplated herein. C1 will have the exclusive right to defend any such claim, action or allegation and make settlements thereof at its own discretion (provided such settlement unconditionally releases Licensee and does not materially limit or restrict Licensee's rights under the Agreement), and Licensee may not settle or compromise such claim, action or allegation, except with prior written consent of C1, which consent shall not be unreasonably withheld. Licensee shall give such assistance and information as C1 may reasonably require to settle or oppose such claims. In the event any such infringement, claim, action or allegation is brought or threatened, C1 shall, at its sole option and expense:

(a) procure for Licensee the right to continue use of the Software or infringing part thereof; or

(b) modify or amend the Software or infringing part thereof, or replace the Software or infringing part thereof with other software having substantially the same or better capabilities.

However, if, after C1 attempts both (a) and (b), above, the parties mutually agree that neither (a) nor (b) is possible, C1 shall have the right to terminate this Agreement and refund all fees paid by Licensee hereunder.

7.2 Exclusions. The foregoing obligations shall not apply to the extent the infringement arises as a result of (i) modifications to the Software made by any party other than C1 or C1's authorized representative; or (ii) use of any release of the Software which C1 has ceased to maintain and support.

7.3 Sole Obligation. The foregoing states the entire liability of C1 with respect to infringement of any patent, copyright, trade secret or other proprietary right.

8. Confidential Information

[*] CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS UNDER 17.C.F.R. SECTIONS 200.80(b)(4), 200.83 AND 230.406.

8

8.1 Obligations of Confidentiality. Each party acknowledges that the Confidential Information constitutes valuable trade secrets and each party agrees that it shall use Confidential Information solely in accordance with the provisions of this Agreement and will not disclose, or permit to be disclosed, the same, directly or indirectly, to any third party without the other party's prior written consent. Each party agrees to exercise due care in protecting the Confidential Information from unauthorized use and disclosure. However, neither party bears any responsibility for safeguarding information that (i) is publicly available, (ii) already in the other party's possession and not subject to a confidentiality obligation, (iii) obtained by the other party from third parties without restrictions on disclosure, (iv) independently developed by the other party without reference to Confidential Information, or (v) required to be disclosed by order of a court or other governmental entity or as is otherwise required by law.

8.2 Injunctive Relief. In the event of actual or threatened breach of the provisions of Section 8.1 ("Obligations of Confidentiality"), the non-breaching party will have no adequate remedy at law and will be entitled to immediate and injunctive and other equitable relief, without bond and without the necessity of showing actual money damages.

9. Term and Termination

9.1 Term. This Agreement will take effect on the Effective Date and will

remain in force for a period of three (3) years ("Term") unless terminated in accordance with this Agreement.

9.2 Termination by Licensee. Licensee may, by thirty (30) days written notice to C1, terminate this Agreement without cause, provided that no such termination will entitle Licensee to a refund of any portion of the License Fee or Maintenance Fee. Further, Licensee may, by written notice to C1, terminate this Agreement if (a) C1 is in material breach of any term, condition or provision of this Agreement, which breach, if capable of being cured, is not cured within thirty (30) days after Licensee gives C1 prior written notice of such breach; (b) specifically, C1 is in material breach of Section 5.2 ("Maintenance and Support Services"), which breach, if capable of being cured, is not cured within thirty (30) days after Licensee gives C1 prior written notice of such breach; or (c) C1 (i) terminates or suspends its business activities, (ii) becomes insolvent, admits in writing its inability to pay its debts as they mature, makes an assignment for the benefit of creditors, or becomes subject to direct control of a trustee, receiver or similar authority, or (iii) becomes subject to any bankruptcy or insolvency proceeding under federal or state statutes (b and c each, a "Release Condition"). Upon the occurrence of (a), (b) or (c) described above, C1 agrees to refund the License Fee, all Maintenance Fees and any prepaid Maintenance Fees and Services Fees (refunded on a prorated basis) paid by Licensee hereunder, and CI agrees to provide reasonable assistance to transition Licensee to a comparable system. If any Release Condition occurs, the License shall continue, and Licensee shall be entitled to receive a copy of the Source Code from C1's then-current escrow agent, and C1 agrees to execute all documents necessary to effect the release of such Source Code to Licensee, but only after C1 has exhausted all reasonable measures to cure or resolve any of the above Release Conditions within such thirty (30) day period, absent a force majeure as described in Section 12.1 ("Force Majeure").

9.3 Termination by C1. C1 may, by written notice to Licensee, terminate this Agreement if any of the following events (each, a "Termination Event") occur, provided that no such termination will entitle Licensee to a refund of any portion of the License Fee or Maintenance Fee:

(a) Licensee fails to pay any amount actually due to C1 within thirty (30) days after C1 gives Licensee written notice of such non-payment; or

(b) Licensee is in material breach of any non-monetary term, condition or provision of this Agreement, which breach, if capable of being cured, is not cured, or disputed by Licensee, within thirty (30) days after C1 gives Licensee written notice of such breach; or

(c) Licensee (i) terminates or suspends its business activities,
(ii) becomes insolvent, admits in writing its inability to pay its debts as they mature, makes an assignment for the benefit of creditors, or becomes subject to direct

[*] CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS UNDER 17.C.F.R. SECTIONS 200.80(b)(4), 200.83 AND 230.406.

9

control of a trustee, receiver or similar authority, or (iii) becomes subject to any bankruptcy or insolvency proceeding under federal or state statutes.

If any Termination Event occurs, termination will become effective immediately or on the date set forth in the written notice of termination. The following Sections will survive termination of this Agreement for any reason:
2.1 ("License Grant"), 2.2(b) ("Source Code Escrow"), 2.6 ("Trademark License")
4 ("License Fee"), 6.1(a) ("Warranty"); 6.1(b) ("Harmful Code"), 6.1(c) ("Year 2000 Compliance"), 6.2 ("Disclaimer"), 6.3 ("Limitation of Liability"), 6.4 ("No Other Warranty"), 6.5 ("Licensee Indemnity"), 7 ("Indemnification for Infringement"), 8 ("Confidential Information"), 9 ("Term and Termination"), 10 ("Non-assignment/Binding Agreement"), 11 ("Notices") and 12 ("Miscellaneous"). Termination of this Agreement will not affect the provisions regarding Licensee's or C1's treatment of Confidential Information, provisions relating to the payment of amounts due, or provisions limiting or disclaiming liability, which provisions will survive termination of this Agreement.

9.4 Return of Materials. Except in the event of any occurrence described in Section 9.2 ("Termination by Licensee") relating to termination by Licensee for cause, within twenty (20) days after the date of termination or discontinuance of this Agreement for any reason whatsoever, Licensee shall return the Software, derivative works and all copies thereof, in whole or in part, all related Documentation and all copies thereof, and any other Confidential Information in its possession. Licensee shall furnish C1 with a certificate signed by an executive officer of Licensee verifying that the same has been done. In the event of any Release Condition described in Section 9.2 ("Termination by Licensee") resulting in a release of the Source Code to Licensee, Licensee shall be entitled to retain any materials reasonably related to maintaining and supporting the Software, including, but not limited to, support documentation and other technical information. However, in such event, Licensee shall return any materials not reasonably related to maintaining or supporting the Software, including, but not limited to, financial, marketing, corporate development and strategic alliance information.

10. Non-assignment/Binding Agreement

Neither this Agreement nor any rights under this Agreement may be assigned or otherwise transferred by either party, in whole or in part, whether voluntary or by operation of law, including by way of sale of assets, merger or consolidation, without the prior written consent of the other party, which consent will not be unreasonably withheld. Subject to the foregoing, this Agreement will be binding upon and will inure to the benefit of the parties and their respective successors and assigns.

11. Notices

Any notice required or permitted under the terms of this Agreement or required by law must be in writing and must be (a) delivered in person, (b) sent by first class registered mail, or air mail, as appropriate, (c) sent by overnight air courier, or (d) by facsimile, in each case properly posted to the appropriate address set forth above. Either party may change its address for notice by notice to the other party given in accordance with this Section. Notices will be considered to have been given at the time of actual delivery in person, three (3) business days after deposit in the mail as set forth above, one (1) day after delivery to an overnight air courier service, or one (1) day after the moment of transmission by facsimile.

12. Miscellaneous

12.1 Force Majeure. Neither party will incur any liability to the other party on account of any loss or damage resulting from any delay or failure to perform all or any part of this Agreement if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control and without negligence of the parties. Such events, occurrences, or causes will include, without limitation, acts of God, strikes, lockouts, riots, acts of war, failures of the Internet, earthquakes, fire and explosions, but the inability to meet financial obligations is expressly excluded.

[*] CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS UNDER 17.C.F.R. SECTIONS 200.80(b)(4), 200.83 AND 230.406.

10

12.2 Waiver. Any waiver of the provisions of this Agreement or of a party'srights or remedies under this Agreement must be in writing to be effective. Failure, neglect, or delay by a party to enforce the provisions of this Agreement or its rights or remedies at any time, will not be construed and will not be deemed to be a waiver of such party's rights under this Agreement and will not in any way affect the validity of the whole or any part of this Agreement or prejudice such party's right to take subsequent action. Except as expressly stated in this Agreement, no exercise or enforcement by either party of any right or remedy under this Agreement will preclude the enforcement by such party of any other right or remedy under this Agreement or that such party is entitled by law to enforce.

12.3 Severability. If any term, condition, or provision in this Agreement is found to be invalid, unlawful or unenforceable to any extent, the parties shall endeavor in good faith to agree to such amendments that will preserve, as far as possible, the intentions expressed in this Agreement. If the parties fail to agree on such an amendment, such invalid term, condition or provision will be severed from the remaining terms, conditions and provisions, which will continue to be valid and enforceable to the fullest extent permitted by law.

12.4 Entire Agreement. This Agreement (including the Schedules and any addenda hereto signed by both parties) contains the entire agreement of the parties with respect to the subject matter of this Agreement and supersedes all previous communications, representations, understandings and agreements, either oral or written, between the parties with respect to said subject matter. This Agreement may not be amended, except by a writing signed by both parties.

12.5 Standard terms of Licensee. No terms, provisions or conditions of any purchase order, acknowledgment or other business form that Licensee may use in connection with the acquisition or licensing of the Software will have any effect on the rights, duties or obligations of the parties under, or otherwise modify, this Agreement, regardless of any failure of C1 to object to such terms, provisions or conditions.

12.6 Public Announcements. Licensee acknowledges that C1 may desire to use its name in press releases, product brochures and financial reports indicating that Licensee is a Licensee of C1, and Licensee agrees that C1 may use its name in such a manner, subject to Licensee's prior written approval, which shall not be unreasonably withheld or delayed. Reciprocally, C1 acknowledges that Licensee may desire to use its name in press releases, product brochures and financial reports indicating that C1 is a solutions provider to Licensee, and C1 acknowledges that Licensee may use its name in such a manner, subject to C1's prior written approval, which shall not be unreasonably withheld or delayed.

12.7 Counterparts. This Agreement may be executed in counterparts, each of which so executed will be deemed to be an original and such counterparts together will constitute one and the same agreement.

12.8 Applicable law; Jurisdiction. This Agreement will be interpreted and construed in accordance with the laws of the State of California and the United States of America, without regard to conflict of law principles. All disputes arising out of this Agreement shall be subject to the exclusive jurisdiction and venue of the state and federal courts of Santa Clara County, California, and the parties consent to the exclusive and personal jurisdiction of these courts.

12.9 Headings. Section and Schedule headings are for ease of reference only and do not form part of this Agreement.

12.10 Non-solicitation. Licensee acknowledges and agrees that the employees and consultants of C1 who perform the Maintenance and Support services or other services are a valuable asset to C1 and are difficult to replace. Accordingly, Licensee agrees that, during the Term of this Agreement, it will not offer employment to any C1 employee who performs any of the Maintenance and Support services, without the prior written consent of C1, which shall not be unreasonably withheld.

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written.

[*] CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS UNDER 17.C.F.R. SECTIONS 200.80(b)(4), 200.83 AND 230.406.

11

LICENSEE                                   COMMERCE ONE, INC.


By: /s/ Earl E. Fry                        By: /s/ Kirby Coryell
   --------------------------                 -----------------------
Name: EARL E. FRY                          Name: Kirby Coryell
     ------------------------                   ---------------------
Title:VP & CFO                             Title: VP Operations
      -----------------------                    --------------------

[*] CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS UNDER 17.C.F.R. SECTIONS 200.80(b)(4), 200.83 AND 230.406.

12

SCHEDULE A

SOFTWARE, USERS AND LICENSE FEES

Software:

BuySite Hosted Edition version 5.0

MarketSite version 2.0

Authorized Users:

BuySite Hosted Edition: Unlimited

MarketSite: Unlimited

License Fees:
BuySite Hosted Edition: [*]
MarketSite: [*]

PAYMENT TERMS

1. License Fees - as provided in Agreement.
2. Maintenance Fees - net 30 of Software acceptance [*], and each year thereafter.
3. Transaction Fees - quarterly payments shall be due to Commerce One, net 30 days after OmniCell quarter close (schedule to be submitted by OmniCell to Commerce One).
4. Services Fees - net 30 days from date of Commerce One invoice

ADDITIONAL TERMS AND CONDITIONS

1. Hosted BuySite and Branded Market Site

(a) The parties agree to undertake reasonable efforts to reach agreement on a joint development agreement allowing OmniCell to customize certain aspects of the CommerceOne Branded MarketSite Source Code for internal use only.
(b) OmniCell and CommerceOne will use commercially reasonable efforts to enable OmniCell to host healthcare suppliers (including, but not limited to,
[*]) for CommerceOne's BuySite customers (including, but not limited to, the [*]).
(c) For a period of 12 months from the contract execution date, CommerceOne agrees not to solicit business from the following companies relating to Hosted BuySite and/or Branded MarketSite:

(i) [*]
(ii) [*]
(iii) [*]
(iv) [*]
(v) [*]
(vi) [*]
(vii) [*]
(viii) [*]
(ix) [*]
(x) [*]
(xi) [*]
(xii) [*]
(xiii) [*]

[*] CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS UNDER 17.C.F.R. SECTIONS 200.80(b)(4), 200.83 AND 230.406.

13

* See (d), below, relating to Branded Market Site only.

(d) For a period of 9 months from the contract execution date, CommerceOne agrees not to solicit business from the following companies relating to Branded MarketSite only:
(i) [*]
(ii) [*]
(iii) [*]

2. Technical Program Manager

(a) OmniCell agrees to pay CommerceOne an additional fee of [*] upon contract execution and, at OmniCell option and in its sole discretion, upon each anniversary of the contract execution during the term of this Agreement (and any renewal terms thereof), for the right to select a named CommerceOne program manager ("Program Manager"), from a pool of at least five (5) qualified candidates provided by CommerceOne. If, at any time, OmniCell determines that such Program Manager is not meeting OmniCell's objectives, OmniCell shall have the right to select an alternate Program Manager from a pool of at least five (5) qualified candidates provided by CommerceOne.

(b) Further, for the term of this Agreement (and any renewal terms thereof), OmniCell shall be permitted to participate in the following:

(i) CommerceOne Design Partner Program;
(ii) CommerceOne Partner Program(s);
(iii) CommerceOne Commerce Council (membership);
(iv) Planned Vertical Council (membership); and
(v) Technical Reviews of CommerceOne product roadmaps/product development plans (quarterly)

3. Programming Support

(a) CommerceOne will provide a dedicated CommerceOne programming resource to OmniCell to ensure prompt and timely attention to scheduled and ad hoc application modifications per OmniCell direction

(b) OmniCell shall pre-pay Commerce One in 1000 hour `blocks' as follows:

(i) All Programming Support will be billed at [*].
(ii) All Programming Support will be directed by the Commerce One Technical Program Manager.
(iii) All pre-paid 1,000 hour blocks will be delivered within a one year period and utilized in increments of 80 hours.
(iv) If increments less than 80 hours are needed by OmniCell, 4 week advance approval by the Commerce One Technical Program Manager is required.

(c) The Technical Program Manager, based on application requests of OmniCell, will manage staffing and utilization.

(d) All billing to OmniCell will be done as services are rendered, with invoicing occurring monthly.

[*] CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS UNDER 17.C.F.R. SECTIONS 200.80(b)(4), 200.83 AND 230.406.

14

SCHEDULE B

End User/Supplier Terms and Conditions

1. Third Party Beneficiary. Commerce One, Inc. ("Commerce One") shall be a direct and intended third-party beneficiary to this Agreement.

2. Usage Reports. Within fifteen (15) days after the end of each month, End User will deliver to Licensor a user access log report, which report shall include, at a minimum and without limitation, data describing transactions and system activity and such other information as the parties shall mutually agree.

3. Audit. Licensor and Commerce One will have the right, exercisable not more than once every twelve (12) months, to inspect upon reasonable notice and during End User's regular business hours, End User's relevant records to verify End User's compliance with the terms of this Agreement and/or Licensor's compliance with its obligations to Commerce One.

4. NO WARRANTY. TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW, THE SOFTWARE PROVIDED TO END USER HEREUNDER IS PROVIDED "AS IS" WITHOUT ANY CONDITION OR WARRANTY WHATSOEVER. THE ENTIRE RISK ASSOCIATED WITH THE USE OF THE SOFTWARE RESIDES WITH END USER. ALL OTHER CONDITIONS OR WARRANTIES, WHETHER EXPRESS, IMPLIED, OR STATUTORY, ARE DISCLAIMED, INCLUDING WITHOUT LIMITATION, ALL IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE AND NONINFRINGEMENT.

5. LIMITATION OF LIABILITY. IN NO EVENT WILL LICENSOR, COMMERCE ONE OR THEIR RESPECTIVE LICENSORS OR SUPPLIERS BE LIABLE FOR ANY LOSS OF PROFITS, LOSS OF USE, BUSINESS INTERRUPTION, LOSS OF DATA, COST OF COVER OR INDIRECT, SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES OF ANY KIND IN CONNECTION WITH OR ARISING OUT OF THE FURNISHING, PERFORMANCE OR USE OF THE SOFTWARE OR SERVICES PERFORMED HEREUNDER, WHETHER ALLEGED AS A BREACH OF CONTRACT OR TORTIOUS CONDUCT, INCLUDING NEGLIGENCE, EVEN IF LICENSOR, COMMERCE ONE OR THEIR RESPECTIVE LICENSORS OR SUPPLIERS HAVE BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. IN ADDITION, LICENSOR, COMMERCE ONE AND THEIR RESPECTIVE LICENSORS AND SUPPLIERS WILL NOT BE LIABLE FOR ANY DAMAGES CAUSED BY DELAY IN DELIVERY OR FURNISHING THE SOFTWARE OR SAID SERVICES. LICENSOR, COMMERCE ONE AND THEIR RESPECTIVE LICENSORS AND SUPPLIERS LIABILITY UNDER THIS AGREEMENT FOR DIRECT, INDIRECT, SPECIAL, INCIDENTAL AND/OR CONSEQUENTIAL DAMAGES OF ANY KIND, INCLUDING, WITHOUT LIMITATION, RESTITUTION, WILL NOT, IN ANY EVENT, EXCEED THE FEE PAID BY END USER TO LICENSOR UNDER THIS AGREEMENT.

[*] CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS UNDER 17.C.F.R. SECTIONS 200.80(b)(4), 200.83 AND 230.406.

15

SCHEDULE C

Attribution Guidelines

[*] CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS UNDER 17.C.F.R. SECTIONS 200.80(b)(4), 200.83 AND 230.406.

16

SCHEDULE D

Revenue Share

Transaction Revenue Sharing:
A. Commerce One will promote OmniCell as the MarketSite service provider for the healthcare vertical.
B. All Transaction Revenue Sharing pertains to the healthcare vertical only, except as noted below:
i. For Commerce One customers who desire to use content from a named OmniCell Supplier, OmniCell will provide such content through CommerceOne in accordance with the Transaction Revenue Sharing defined in this section. If it is not economically practical for CommerceOne and its non-OmniCell customers to receive content from OmniCell, Commerce One and such customers are not obligated to use OmniCell content and, at the sole discretion of CommerceOne and its customers, CommerceOne and its customers may source content for themselves or from other parties.
C. The parties agree to share all revenues derived from transactions performed using the OmniCell Branded MarketSite in accordance with the following business mode:
i. Commerce One shares in all transaction-based revenues attained by an OmniCell branded MarketSite.
ii. Commerce One will receive a [*] revenue share on all transaction revenues received by OmniCell for transactions conducted within the OmniCell Branded MarketSite. (See Exhibit C - example)
iii. OmniCell (or its designated outsourcing party) will disclose its transaction fee schedule and pay fees to Commerce One at no less than the then current Commerce One transaction fee schedule.
D. Definitions:
i. OmniCell Buyer - A buyer/buying organization that uses the OmniCell BuySite Hosted Edition service offering.
ii. Commerce One Buyer - A Commerce One and/or PeopleSoft BuySite customer (see Schedule E).
iii. OmniCell Supplier - A Supplier that has mutually agreed upon OmniCell and Commerce One as a "named" OmniCell Supplier
iv. Commerce One Supplier - A Supplier whose content is available in MarketSite.net.
E. The specific process for OmniCell to "name" Suppliers outlined below will apply:
i. OmniCell shall submit to Commerce One a draft list of OmniCell Suppliers on a quarterly basis.
ii. Upon OmniCell submitting the draft list, Commerce One and OmniCell shall review such list and develop a final shared list, which will become the "named" OmniCell Suppliers.
G. Transactions are defined as transactions through MarketSite.
H. Transaction Revenue Sharing is effective for the term of the Agreement, for as long as OmniCell utilizes the Commerce One platform and maintains their MarketSite (branded) as a healthcare Portal.

[*] CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS UNDER 17.C.F.R. SECTIONS 200.80(b)(4), 200.83 AND 230.406.

17

SCHEDULE D (continued)

Transaction Revenue Share Example:

               Buyer                      Supplier         Transactions      Trans Rev      OmniCell Share      C1 Share
-----------------------------------  ------------------  ----------------  -------------  ------------------  ----------
OmniCell                                  OmniCell             100,000           [*]               [*]              [*]
OmniCell                                Commerce One            20,000           [*]               [*]              [*]
Commerce One                              OmniCell              20,000           [*]               [*]              [*]

TOTAL Transaction Revenue                                      140,000           [*]               [*]              [*]

Total Due to Commerce One                   [*]

Any applicable transaction fees shall be capped at [*] of the then-current CommerceOne transaction fee matrix. Presently such matrix is as follows:

Supplier / Vendor Guidelines

S.1        Catalogue                                      [*] / per line item
           Update Fee

           Fee Structure: Suppliers will pay [*]/per line item to update
           catalog content in MarketSite
           Updates include -additions, modifications and deletions
           Note 1: No charge for initial loading of catalog content
           Note 2: No charge for pricing updates of catalog content
           Note 3: If supplier changes format of data submission a fee of [*]
           will be charged to re-create the mappings
           Note 4: Billed on a quarterly basis
           Note 5: This is a non-commission sales item

S.2        Purchase Order Transaction Fee Schedule
           Fee is charged to suppliers based on the number of Purchase Orders
           processed by MarketSite. Billing occurs on a quarterly basis.

           Purchase Orders / month                     Cost per Purchase Order
           -----------------------                     ------------------------
           0 - 500                                                          [*]
           501 - 5000                                                       [*]
           5,001 - 10,000                                                   [*]
           * 10,000                                                         [*]
___________

* Greater than

Example:

If MarketSite processed 22,100 PO's for supplier X in Q1 the total amount due Commerce One would be: [*]

Month           Num Po's       Fee
---------------------------------------
Jan                    800      [*]
---------------------------------------
Feb                   7000      [*]
---------------------------------------

[*] CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS UNDER 17.C.F.R. SECTIONS 200.80(b)(4), 200.83 AND 230.406.

18

---------------------------------------
March                14300     [*]
---------------------------------------
Total                22100     [*]
---------------------------------------

--------------------------------------------------------------------------------
Rate               Jan         Feb           March                  Total
--------------------------------------------------------------------------------
PO's [*]           500         500            500                     [*]
--------------------------------------------------------------------------------
PO's [*]           300        4499           4499                     [*]
--------------------------------------------------------------------------------
PO's [*]             0        2001           4999                     [*]
--------------------------------------------------------------------------------
PO's [*]             0           0           4302                     [*]
--------------------------------------------------------------------------------
Total              800        7000          14300                     [*]
--------------------------------------------------------------------------------

[*] CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS UNDER 17.C.F.R. SECTIONS 200.80(b)(4), 200.83 AND 230.406.

19

SCHEDULE E

PeopleSoft OEM Agreement

OmniCell acknowledges the existence of an OEM arrangement between CommerceOne and PeopleSoft, the general terms of which are specified below:

Distribution Arrangement: PeopleSoft has become the exclusive distributor of Commerce One BuySite, Enterprise and Hosted Edition, into an account base of 3200 accounts as of the date of the Agreement between Commerce One and PeopleSoft. Commerce One receives a royalty on all sales of BuySite and the derivate PeopleSoft Business Network procurement product which will be jointly developed by PeopleSoft and Commerce One, based on the initial Source Code of BuySite.

Going forward, PeopleSoft will retain the exclusive right to distribute Commerce One's BuySite and PeopleSoft's PSBN Site into this account base, subject to the continued achievement of certain minimum revenue targets measured on a quarterly basis.

The term of the exclusivity arrangement is five (5) years, provided PeopleSoft continues to meet the minimum threshold commitments.

Commerce One MarketSite, including all partners who run MarketSite services that offer multi-supplier goods and services, will be designated the exclusive MRO portal by PeopleSoft for an initial period of eighteen (18) months.

PeopleSoft will also retain the right to distribute access to MarketSite.Net, the Commerce One Portal, and other MarketSite partners world-wide, provided such rights are agreed to by third party MarketSite operators.

[*] CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS UNDER 17.C.F.R. SECTIONS 200.80(b)(4), 200.83 AND 230.406.

20

[LOGO]

AMENDMENT TO VERTICAL HOSTED LICENSE AGREEMENT

This AMENDMENT (the "Amendment"), effective April 18, 2000 (the "Effective Date"), is made to the Vertical Hosted License Agreement, by and between COMMERCE ONE, INC. ("C1") and OMNICELL.COM, dated August 21, 1999 (the "Agreement").

WHEREAS, C1 and Omnicell.com wish to amend the terms of the Agreement to better reflect the original intent of the parties.

NOW THEREFORE, for good and valuable consideration the receipt and sufficiency of which is hereby acknowledged, the parties agree as follows.

DEFINITIONS. All capitalized terms not specifically defined in this Amendment shall have the meanings ascribed to such terms in the Agreement.

SECTION 9.1. TERM. THE ORIGINAL TEXT OF SECTION 9.1 IS HEREBY DELETED AND REPLACED BY THE FOLLOWING: "This Agreement will take effect of the Effective Date and, subject to the termination provisions of Sections 9.2 and 9.3, including C1's right to terminate this Agreement for Omnicell.com's non-payment of transaction revenue share amounts, the Agreement shall continue on a perpetual basis."

SECTION 9.3. TERMINATION BY C1. THE FINAL PARAGRAPH OF SECTION 9.3 IS HEREBY DELETED AND REPLACED BY THE FOLLOWING:

If any Termination Event occurs, termination will become effective immediately or on the date set forth in the written notice of termination. The following Sections will survive termination of this Agreement for any reason: 2.1 ("License Grant"), 2.2(b) ("Source Code Escrow"), 2.6 ("Trademark License") 3
("License Restrictions") 4 ("License Fee"), 6.1(a) ("Warranty"); 6.1(b)
("Harmful Code"), 6.1(c) ("Year 2000 Compliance"), 6.2 ("Disclaimer"), 6.3 ("Limitation of Liability"), 6.4 ("No Other Warranty"), 6.5 ("Licensee Indemnity"), 7 ("Indemnification for Infringement"), 8 ("Confidential Information"), 9 ("Term and Termination"), 10 ("Non-assignment/Binding Agreement"), 11 ("Notices") and 12 ("Miscellaneous"). Termination of this Agreement will not affect the provisions regarding Licensee's or C1's treatment of Confidential Information, provisions relating to the payment of amounts due, or provisions limiting or disclaiming liability, which provisions will survive termination of this Agreement.

SCHEDULE A. ADDITIONAL TERMS AND CONDITIONS. 1. HOSTED BUYSITE AND BRANDED MARKET SITE.

THE FIRST SENTENCE OF SUBSECTION (c) SHALL HEREBY BE REVISED TO READ AS FOLLOWS:
"For a period of 12 months from the contract execution date, Commerce One agrees not to solicit business from or enter into any license agreement relating to Hosted BuySite and/or Branded MarketSite with, the following companies:"

THE NUMBERING OF SUBSECTION (a) FOLLOWING SUBSECTION (c) AND THE FIRST SENTENCE OF SUCH SUBSECTION SHALL BE REVISED AS FOLLOWS:
"(d) For a period of 9 months from the contract execution date, Commerce One agrees not to solicit business from or enter into any license agreement with the following companies, relating to the Branded MarketSite only:"


EXTENSION OF MAINTENANCE AND SUPPORT OPTION. Pursuant to and consistent with the letter agreement dated, September 24, 1999, from Rob Tarkoff, Vice President Corporate Development and General Counsel of Commerce One to Jeff Arbuckle, Vice President of E-Commerce Development for Omnicell.com, the parties hereby reconfirm their intentions to renew and extend, under and subject to the terms and conditions set forth in the Agreement, the maintenance and support option of the Agreement and the revenue share terms and conditions of Schedule D of the Agreement, through August 21, 2005.

All other terms and conditions of the Agreement remain unmodified and continue with full force and effect as set forth therein.

IN WITNESS WHEREOF, the parties have executed this Amendment on this 18th day of April, 2000.

COMMERCE ONE, INC.                              OMNICELL.COM

By: /s/ Robert Y. Newell, IV                    By: /s/ Peter Pervere
   ----------------------------                    ----------------------------
Name: Robert Y. Newell, IV                      Name: Peter Pervere
     --------------------------                      --------------------------
Title: VP and CFO                               Title: SVP and CFO

      -------------------------                       -------------------------


EXHIBIT 10.12

INDEMNITY AGREEMENT

THIS AGREEMENT is made and entered into this ____ day of _________, 1998 by and between OMNICELL TECHNOLOGIES, INC. a Delaware corporation (the "Corporation"), and ____________ ("Agent").

RECITALS

WHEREAS, Agent performs a valuable service to the Corporation in his/her capacity as _______________ of the Corporation;

WHEREAS, the stockholders of the Corporation have adopted bylaws (the "Bylaws") providing for the indemnification of the directors, officers, employees and other agents of the Corporation, including persons serving at the request of the Corporation in such capacities with other corporations or enterprises, as authorized by the Delaware General Corporation Law, as amended (the "Code");

WHEREAS, the Bylaws and the Code, by their non-exclusive nature, permit contracts between the Corporation and its agents, officers, employees and other agents with respect to indemnification of such persons; and

WHEREAS, in order to induce Agent to continue to serve as ______________ of the Corporation, the Corporation has determined and agreed to enter into this Agreement with Agent;

NOW, THEREFORE, in consideration of Agent's continued service as _______________ after the date hereof, the parties hereto agree as follows:

AGREEMENT

1. SERVICES TO THE CORPORATION. Agent will serve, at the will of the Corporation or under separate contract, if any such contract exists, as ______________ of the Corporation or as a director, officer or other fiduciary of an affiliate of the Corporation (including any employee benefit plan of the Corporation) faithfully and to the best of his ability so long as he is duly elected and qualified in accordance with the provisions of the Bylaws or other applicable charter documents of the Corporation or such affiliate; PROVIDED, HOWEVER, that Agent may at any time and for any reason resign from such position (subject to any contractual obligation that Agent may have assumed apart from this Agreement) and that the Corporation or any affiliate shall have no obligation under this Agreement to continue Agent in any such position.

2. INDEMNITY OF AGENT. The Corporation hereby agrees to hold harmless and indemnify Agent to the fullest extent authorized or permitted by the provisions of the Bylaws and the Code, as the same may be amended from time to time (but, only to the extent that such amendment permits the Corporation to provide broader indemnification rights than the Bylaws or the Code permitted prior to adoption of such amendment).

1.


3. ADDITIONAL INDEMNITY. In addition to and not in limitation of the indemnification otherwise provided for herein, and subject only to the exclusions set forth in Section 4 hereof, the Corporation hereby further agrees to hold harmless and indemnify Agent:

(a) against any and all expenses (including attorneys' fees), witness fees, damages, judgments, fines and amounts paid in settlement and any other amounts that Agent becomes legally obligated to pay because of any claim or claims made against or by him in connection with any threatened, pending or completed action, suit or proceeding, whether civil, criminal, arbitrational, administrative or investigative (including an action by or in the right of the Corporation) to which Agent is, was or at any time becomes a party, or is threatened to be made a party, by reason of the fact that Agent is, was or at any time becomes a director, officer, employee or other agent of Corporation, or is or was serving or at any time serves at the request of the Corporation as a director, officer, employee or other agent of another corporation, partnership, joint venture, trust, employee benefit plan or other enterprise; and

(b) otherwise to the fullest extent as may be provided to Agent by the Corporation under the non-exclusivity provisions of the Code and Section 43 of the Bylaws.

4. LIMITATIONS ON ADDITIONAL INDEMNITY. No indemnity pursuant to
Section 3 hereof shall be paid by the Corporation:

(a) on account of any claim against Agent for an accounting of profits made from the purchase or sale by Agent of securities of the Corporation pursuant to the provisions of Section 16(b) of the Securities Exchange Act of 1934 and amendments thereto or similar provisions of any federal, state or local statutory law;

(b) on account of Agent's conduct that was knowingly fraudulent or deliberately dishonest or that constituted willful misconduct;

(c) on account of Agent's conduct that constituted a breach of Agent's duty of loyalty to the Corporation or resulted in any personal profit or advantage to which Agent was not legally entitled;

(d) for which payment is actually made to Agent under a valid and collectible insurance policy or under a valid and enforceable indemnity clause, bylaw or agreement, except in respect of any excess beyond payment under such insurance, clause, bylaw or agreement;

(e) if indemnification is not lawful (and, in this respect, both the Corporation and Agent have been advised that the Securities and Exchange Commission believes that indemnification for liabilities arising under the federal securities laws is against public policy and is, therefore, unenforceable and that claims for indemnification should be submitted to appropriate courts for adjudication); or

(f) in connection with any proceeding (or part thereof) initiated by Agent, or any proceeding by Agent against the Corporation or its directors, officers, employees or other agents, unless (i) such indemnification is expressly required to be made by law, (ii) the proceeding was authorized by the Board of Directors of the Corporation, (iii) such indemnification is provided by the Corporation, in its sole discretion, pursuant to the powers

2.


vested in the Corporation under the Code, or (iv) the proceeding is initiated pursuant to Section 9 hereof.

5. CONTINUATION OF INDEMNITY. All agreements and obligations of the Corporation contained herein shall continue during the period Agent is a director, officer, employee or other agent of the Corporation (or is or was serving at the request of the Corporation as a director, officer, employee or other agent of another corporation, partnership, joint venture, trust, employee benefit plan or other enterprise) and shall continue thereafter so long as Agent shall be subject to any possible claim or threatened, pending or completed action, suit or proceeding, whether civil, criminal, arbitrational, administrative or investigative, by reason of the fact that Agent was serving in the capacity referred to herein.

6. PARTIAL INDEMNIFICATION. Agent shall be entitled under this Agreement to indemnification by the Corporation for a portion of the expenses (including attorneys' fees), witness fees, damages, judgments, fines and amounts paid in settlement and any other amounts that Agent becomes legally obligated to pay in connection with any action, suit or proceeding referred to in Section 3 hereof even if not entitled hereunder to indemnification for the total amount thereof, and the Corporation shall indemnify Agent for the portion thereof to which Agent is entitled.

7. NOTIFICATION AND DEFENSE OF CLAIM. Not later than thirty (30) days after receipt by Agent of notice of the commencement of any action, suit or proceeding, Agent will, if a claim in respect thereof is to be made against the Corporation under this Agreement, notify the Corporation of the commencement thereof; but the omission so to notify the Corporation will not relieve it from any liability which it may have to Agent otherwise than under this Agreement. With respect to any such action, suit or proceeding as to which Agent notifies the Corporation of the commencement thereof:

(a) the Corporation will be entitled to participate therein at its own expense;

(b) except as otherwise provided below, the Corporation may, at its option and jointly with any other indemnifying party similarly notified and electing to assume such defense, assume the defense thereof, with counsel reasonably satisfactory to Agent. After notice from the Corporation to Agent of its election to assume the defense thereof, the Corporation will not be liable to Agent under this Agreement for any legal or other expenses subsequently incurred by Agent in connection with the defense thereof except for reasonable costs of investigation or otherwise as provided below. Agent shall have the right to employ separate counsel in such action, suit or proceeding but the fees and expenses of such counsel incurred after notice from the Corporation of its assumption of the defense thereof shall be at the expense of Agent unless (i) the employment of counsel by Agent has been authorized by the Corporation, (ii) Agent shall have reasonably concluded that there may be a conflict of interest between the Corporation and Agent in the conduct of the defense of such action or (iii) the Corporation shall not in fact have employed counsel to assume the defense of such action, in each of which cases the fees and expenses of Agent's separate counsel shall be at the expense of the Corporation. The Corporation shall not be entitled to assume the defense of any action, suit or proceeding brought by or on behalf of the Corporation or as to which Agent shall have made the conclusion provided for in clause (ii) above; and

3.


(c) the Corporation shall not be liable to indemnify Agent under this Agreement for any amounts paid in settlement of any action or claim effected without its written consent, which shall not be unreasonably withheld. The Corporation shall be permitted to settle any action except that it shall not settle any action or claim in any manner which would impose any penalty or limitation on Agent without Agent's written consent, which may be given or withheld in Agent's sole discretion.

8. EXPENSES. The Corporation shall advance, prior to the final disposition of any proceeding, promptly following request therefor, all expenses incurred by Agent in connection with such proceeding upon receipt of an undertaking by or on behalf of Agent to repay said amounts if it shall be determined ultimately that Agent is not entitled to be indemnified under the provisions of this Agreement, the Bylaws, the Code or otherwise.

9. ENFORCEMENT. Any right to indemnification or advances granted by this Agreement to Agent shall be enforceable by or on behalf of Agent in any court of competent jurisdiction if (i) the claim for indemnification or advances is denied, in whole or in part, or (ii) no disposition of such claim is made within ninety (90) days of request therefor. Agent, in such enforcement action, if successful in whole or in part, shall be entitled to be paid also the expense of prosecuting his claim. It shall be a defense to any action for which a claim for indemnification is made under Section 3 hereof (other than an action brought to enforce a claim for expenses pursuant to Section 8 hereof, provided that the required undertaking has been tendered to the Corporation) that Agent is not entitled to indemnification because of the limitations set forth in Section 4 hereof. Neither the failure of the Corporation (including its Board of Directors or its stockholders) to have made a determination prior to the commencement of such enforcement action that indemnification of Agent is proper in the circumstances, nor an actual determination by the Corporation (including its Board of Directors or its stockholders) that such indemnification is improper shall be a defense to the action or create a presumption that Agent is not entitled to indemnification under this Agreement or otherwise.

10. SUBROGATION. In the event of payment under this Agreement, the Corporation shall be subrogated to the extent of such payment to all of the rights of recovery of Agent, who shall execute all documents required and shall do all acts that may be necessary to secure such rights and to enable the Corporation effectively to bring suit to enforce such rights.

11. NON-EXCLUSIVITY OF RIGHTS. The rights conferred on Agent by this Agreement shall not be exclusive of any other right which Agent may have or hereafter acquire under any statute, provision of the Corporation's Certificate of Incorporation or Bylaws, agreement, vote of stockholders or directors, or otherwise, both as to action in his official capacity and as to action in another capacity while holding office.

4.


12. SURVIVAL OF RIGHTS.

(a) The rights conferred on Agent by this Agreement shall continue after Agent has ceased to be a director, officer, employee or other agent of the Corporation or to serve at the request of the Corporation as a director, officer, employee or other agent of another corporation, partnership, joint venture, trust, employee benefit plan or other enterprise and shall inure to the benefit of Agent's heirs, executors and administrators.

(b) The Corporation shall require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business or assets of the Corporation, expressly to assume and agree to perform this Agreement in the same manner and to the same extent that the Corporation would be required to perform if no such succession had taken place.

13. SEPARABILITY. Each of the provisions of this Agreement is a separate and distinct agreement and independent of the others, so that if any provision hereof shall be held to be invalid for any reason, such invalidity or unenforceability shall not affect the validity or enforceability of the other provisions hereof. Furthermore, if this Agreement shall be invalidated in its entirety on any ground, then the Corporation shall nevertheless indemnify Agent to the fullest extent provided by the Bylaws, the Code or any other applicable law.

14. GOVERNING LAW. This Agreement shall be interpreted and enforced in accordance with the laws of the State of Delaware.

15. AMENDMENT AND TERMINATION. No amendment, modification, termination or cancellation of this Agreement shall be effective unless in writing signed by both parties hereto.

16. IDENTICAL COUNTERPARTS. This Agreement may be executed in one or more counterparts, each of which shall for all purposes be deemed to be an original but all of which together shall constitute but one and the same Agreement. Only one such counterpart need be produced to evidence the existence of this Agreement.

17. HEADINGS. The headings of the sections of this Agreement are inserted for convenience only and shall not be deemed to constitute part of this Agreement or to affect the construction hereof.

18. NOTICES. All notices, requests, demands and other communications hereunder shall be in writing and shall be deemed to have been duly given (i) upon delivery if delivered by hand to the party to whom such communication was directed or (ii) upon the third business day after the date on which such communication was mailed if mailed by certified or registered mail with postage prepaid:

(a) If to Agent, at the address indicated on the signature page hereof.

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(b) If to the Corporation, to

OmniCell Technologies, Inc.
1101 East Meadow Drive
Palo Alto, CA 94303

or to such other address as may have been furnished to Agent by the Corporation.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement on and as of the day and year first above written.

OMNICELL TECHNOLOGIES, INC.

By:

Title:

AGENT


Address:



6.


EXHIBIT 10.13

OMNICELL TECHNOLOGIES, INC.

1992 INCENTIVE STOCK PLAN,
AS AMENDED THROUGH JUNE 20, 1996

1. Purposes of the Plan. The purposes of this Incentive Stock Plan are to attract and retain the best available personnel, to provide additional incentive to the employees of OmniCell Technologies, Inc. (the "Company") and to promote the success of the Company's business.

Options granted hereunder may be either Incentive Stock Options or Nonstatutory Stock Options, at the discretion of the Board and as reflected in the terms of the written option agreement. The Board also has the discretion to grant Stock Purchase Rights.

2. Definitions. As used herein, the following definitions shall apply:

(a) "Board" shall mean the Committee, if one has been appointed, or the Board of Directors of the Company, if no Committee is appointed.

(b) "Code" shall mean the Internal Revenue Code of 1986, as amended.

(c) "Committee" shall mean the Committee appointed by the Board of Directors in accordance with Section 4(a) of the Plan, if one is appointed.

(d) "Common Stock" shall mean the Common Stock of the Company.

(e) "Company" shall mean OmniCell Technologies, Inc., a California corporation.

(f) "Consultant" shall mean any person who is engaged by the Company or any Parent or Subsidiary to render consulting services and is compensated for such consulting services, and any director of the Company whether compensated for such services or not; provided that if and in the event the Company registers any class of any equity security pursuant to Section 12 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), the term Consultant shall thereafter not include directors who are not compensated for their services or are paid only a director's fee by the Company.

(g) "Continuous Status as an Employee or Consultant" shall mean the absence of any interruption or termination of service as an Employee or Consultant, as applicable. Continuous Status as an Employee or Consultant shall not be considered interrupted in the case of sick leave, military leave, or any other leave of absence approved by the Board; provided that such leave is for a period of not more than 90 days or reemployment upon the expiration of such leave is guaranteed by contract or statute.


(h) "Employee" shall mean any person, including officers and directors, employed by the Company or any Parent or Subsidiary of the Company. The payment of a director's fee by the Company shall not be sufficient to constitute "employment" by the Company.

(i) "Incentive Stock Option" shall mean an Option intended to qualify as an incentive stock option within the meaning of Section 422A of the Code.

(j) "Nonstatutory Stock Option" shall mean an Option not intended to qualify as an Incentive Stock Option.

(k) "Option" shall mean a stock option granted pursuant to the Plan.

(l) "Optioned Stock" shall mean the Common Stock subject to an Option.

(m) "Optionee" shall mean an Employee or Consultant who receives an Option.

(n) "Parent" shall mean a "parent corporation whether now or hereafter existing", as defined in Section 425(e) of the Code.

(o) "Plan" shall mean this 1992 Incentive Stock Plan.

(p) "Purchaser" shall mean an Employee or Consultant who exercises a Stock Purchase Right.

(q) "Share" shall mean a share of the Common Stock, as adjusted in accordance with Section 11 of the Plan.

(r) "Stock Purchase Right" shall mean a right to purchase Common Stock pursuant to the Plan or the right to receive a bonus of Common Stock for past services.

(s) "Subsidiary" shall mean a "subsidiary corporation," whether now or hereafter existing, as defined in Section 425(f) of the Code.

3. Stock Subject to the Plan. Subject to the provisions of Section 11 of the Plan, the maximum aggregate number of shares under the Plan is 5,410,000 shares of Common Stock. The Shares may be authorized, but unissued, or reacquired Common Stock.

If an Option or Stock Purchase Right should expire or become unexercisable for any reason without having been exercised in full, then the unpurchased Shares which were subject thereto shall, unless the Plan shall have been terminated, become available for future grant or sale under the Plan. Notwithstanding any other provision of the Plan, shares issued under the Plan and later repurchased by the Company shall not become available for future grant or sale under the Plan.

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4. Administration of the Plan.

(a) Procedure. The Plan shall be administered by the Board of Directors of the Company.

(i) Subject to subparagraph (ii), the Board of Directors may appoint a Committee consisting of not less than two members of the Board of Directors to administer the Plan on behalf of the Board of Directors, subject to such terms and conditions as the Board of Directors may prescribe. Once appointed, the Committee shall continue to serve until otherwise directed by the Board of Directors. Members of the Board who are either eligible for Options and/or Stock Purchase Rights or have been granted Options and/or Stock Purchase Rights may vote on any matters affecting the administration of the Plan or the grant of any Options and/or Stock Purchase Rights pursuant to the Plan, except that no such member shall act upon the granting of an Option and/or Stock Purchase Right to such member, but any such member may be counted in determining the existence of a quorum at any meeting of the Board during which action is taken with respect to the granting of Options and/or Stock Purchase Rights to the member.

(ii) Notwithstanding the foregoing subparagraph (i), if and in any event the Company registers any class of any equity security pursuant to
Section 12 of the Exchange Act, from the effective date of such registration until six months after the termination of such registration, any grants of Options and/or Stock Purchase Rights to officers or directors shall only be made by the Board of Directors; provided, however, that if a majority of the Board of Directors is eligible to participate in this Plan or any other stock option or other stock plan of the Company or any of its affiliates, or has been eligible at any time during the prior one-year period (or, if shorter, the period following the initial registration of the Company's equity securities under
Section 12 of the Exchange Act) any grants of Options and/or Stock Purchase Rights to directors must be made by, or only in accordance with the recommendation of, a Committee consisting of three or more persons, who may but need not be directors or employees of the Company, appointed by the Board of Directors and having full authority to act in the matter, none of whom is eligible to participate in this Plan or any other stock option or other stock plan of the Company or any of its affiliates, or has been eligible at any time during the prior one-year period (or, if shorter, the period following the initial registration of the Company's equity securities under Section 12 of the Exchange Act). Any Committee administering the Plan with respect to grants to officers who are not also directors shall conform to the requirements of the preceding sentence. Once appointed, the Committee shall continue to serve until otherwise directed by the Board of Directors.

(iii) Subject to the foregoing subparagraphs (i) and (ii), from time to time the Board of Directors may increase the size of the Committee and appoint additional members thereof, remove members (with or without cause) and appoint new members in substitution therefor, fill vacancies however caused, or remove all members of the Committee and thereafter directly administer the Plan.

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(b) Powers of the Board. Subject to the provisions of the Plan, the Board shall have the authority, in its discretion: (i) to grant Incentive Stock Options, Nonstatutory Stock Options or Stock Purchase Rights; (ii) to determine, upon review of relevant information and in accordance with Section 7 of the Plan, the fair market value of the Common Stock; (iii) to determine the exercise price per share of Options or Stock Purchase Rights, to be granted, which exercise price shall be determined in accordance with Section 7 of the Plan;
(iv) to determine the Employees or Consultants to whom, and the time or times at which, Options or Stock Purchase Rights shall be granted and the number of shares to be represented by each Option or Stock Purchase Right; (v) to interpret the Plan; (vi) to prescribe, amend and rescind rules and regulations relating to the Plan; (vii) to determine the terms and provisions of each Option and Stock Purchase Right granted (which need not be identical) and, with the consent of the holder thereof, modify or amend any provisions (including provisions relating to exercise price) of any Option or Stock Purchase Right;
(viii) to accelerate or defer (with the consent of the Optionee) the exercise date of any Option, consistent with the provisions of Section 5 of the Plan;
(ix) to authorize any person to execute on behalf of the Company any instrument required to effectuate the grant of an Option or Stock Purchase Right previously granted by the Board; and (x) to make all other determinations deemed necessary or advisable for the administration of the Plan.

(c) Effect of Board's Decision. All decisions, determinations and interpretations of the Board shall be final and binding on all Optionees, Purchasers and any other holders of any Options or Stock Purchase Rights granted under the Plan.

5. Eligibility.

(a) Options and Stock Purchase Rights may be granted to Employees and Consultants, provided that Incentive Stock Options may only be granted to Employees. An Employee or Consultant who has been granted an Option or Stock Purchase Right may, if such Employee or Consultant is otherwise eligible, be granted additional Option(s) or Stock Purchase Right(s).

(b) Each Option shall be designated in the written option agreement as either an Incentive Stock Option or a Nonstatutory Stock Option. However, notwithstanding such designations, to the extent that the aggregate fair market value of the Shares with respect to which Options designated as Incentive Stock Options are exercisable for the first time by any Optionee during any calendar year (under all plans of the Company) exceeds $100,000, such Options shall be treated as Nonstatutory Stock Options.

(c) For purposes of Section 5(b), Options shall be taken into account in the order in which they were granted, and the fair market value of the Shares shall be determined as of the time the Option with respect to such Shares is granted.

(d) The Plan shall not confer upon any Optionee or holder of a Stock Purchase Right any right with respect to continuation of employment by or the rendition of consulting services to the Company, nor shall it interfere in any way with his or her right or the Company's right to terminate his or her employment or services at any time, with or without cause.

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6. Term of Plan. The Plan shall become effective upon the earlier to occur of its adoption by the Board of Directors or its approval by vote of the holders of a majority of the outstanding shares of the Company entitled to vote on the adoption of the Plan. It shall continue in effect for a term of ten (10) years unless sooner terminated under Section 14 of the Plan.

7. Exercise Price and Consideration.

(a) The per Share exercise price for the Shares to be issued pursuant to exercise of an Option or Stock Purchase Right shall be such price as is determined by the Board, but shall be subject to the following:

(i) In the case of an Incentive Stock Option

(A) granted to an Employee who, at the time of the grant of such Incentive Stock Option, owns stock representing more than ten percent (10%) of the voting power of all classes of stock of the Company or any Parent or Subsidiary, the per Share exercise price shall be no less than 110% of the fair market value per Share on the date of grant.

(B) granted to any Employee, the per Share exercise price shall be no less than 100% of the fair market value per Share on the date of grant.

(ii) In the case of a Nonstatutory Stock Option or a Stock Purchase Right

(A) granted to a person who, at the time of the grant of such Option, owns stock representing more than ten percent (10%) of the voting power of all classes of stock of the Company or any Parent or Subsidiary, the per Share exercise price shall be no less than 110% of the fair market value per Share on the date of the grant.

(B) granted to any person, the per Share exercise price shall be no less than 85% of the fair market value per Share on the date of grant.

For purposes of this Section 7(a), in the event that an Option or Stock Purchase Right is amended to reduce the exercise price, the date of grant of such Option or Stock Purchase Right shall thereafter be considered to be the date of such amendment.

(b) The fair market value shall be determined by the Board in its discretion; provided, however, that where there is a public market for the Common Stock, the fair market value per Share shall be the mean of the bid and asked prices (or the closing price per share if the Common Stock is listed on the National Association of Securities Dealers Automated Quotation ("NASDAQ") National Market System) of the Common Stock for the date of grant, as reported in the Wall Street Journal (or, if not so reported, as otherwise reported by the NASDAQ System) or, in the event the Common Stock is listed on a stock exchange, the fair market value per Share shall be the closing price on such exchange on the date of grant of the Option or Stock Purchase Right, as reported in the Wall Street Journal.

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(c) The consideration to be paid for the Shares to be issued upon exercise of an Option or Stock Purchase Right, including the method of payment, shall be determined by the Board and may consist entirely of cash, check, promissory note, other Shares of Common Stock which (i) either have been owned by the Optionee for more than six (6) months on the date of surrender or were not acquired directly or indirectly, from the Company, and (ii) have a fair market value on the date of surrender equal to the aggregate exercise price of the Shares as to which said Option shall be exercised, or any combination of such methods of payment, or such other consideration and method of payment for the issuance of Shares to the extent permitted under Sections 408 and 409 of the California General Corporation Law. In making its determination as to the type of consideration to accept, the Board shall consider if acceptance of such consideration may be reasonably expected to benefit the Company (Section 315(b) of the California General Corporation Law).

8. Options.

(a) Term of Option. The term of each Incentive Stock Option shall be ten (10) years from the date of grant thereof or such shorter term as may be provided in the Incentive Stock Option Agreement. The term of each Option that is not an Incentive Stock Option shall be ten (10) years and one (1) day from the date of grant thereof or such shorter term as may be provided in the Stock Option Agreement. However, in the case of an Option granted to an Optionee who, at the time the Option is granted, owns stock representing more than ten percent (10%) of the voting power of all classes of stock of the Company or any Parent or Subsidiary, (i) if the Option is an Incentive Stock Option, the term of the Option shall be five (5) years from the date of grant thereof or such shorter time as may be provided in the Stock Option Agreement, or (ii) if the Option is a Nonstatutory Stock Option, the term of the Option shall be five (5) years and one (1) day from the date of grant thereof or such other term as may be provided in the Stock Option Agreement.

(b) Exercise of Option.

(i) Procedure for Exercise; Rights as a Shareholder. Any Option granted hereunder shall be exercisable at such times and under such conditions as determined by the Board, including performance criteria with respect to the Company and/or the Optionee, and as shall be permissible under the terms of the Plan.

An Option may not be exercised for a fraction of a Share.

An Option shall be deemed to be exercised when written notice of such exercise has been given to the Company in accordance with the terms of the Option by the person entitled to exercise the Option and full payment for the Shares with respect to which the Option is exercised has been received by the Company. Full payment may, as authorized by the Board, consist of any consideration and method of payment allowable under Section 7 of the Plan. Until the issuance (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company) of the stock certificate evidencing such Shares, no right to vote or receive dividends or any other rights as a shareholder shall exist with

6

respect to the Optioned Stock, notwithstanding the exercise of the Option. The Company shall issue (or cause to be issued) such stock certificate promptly upon exercise of the Option. In the event that the exercise of an Option is treated in part as the exercise of an Incentive Stock Option and in part as the exercise of a Nonstatutory Stock Option pursuant to Section 5(b), the Company shall issue a separate stock certificate evidencing the Shares treated as acquired upon exercise of an Incentive Stock Option and a separate stock certificate evidencing the Shares treated as acquired upon exercise of a Nonstatutory Stock Option and shall identify each such certificate accordingly in its stock transfer records. No adjustment will be made for a dividend or other right for which the record date is prior to the date the stock certificate is issued, except as provided in Section 11 of the Plan.

Exercise of an Option in any manner shall result in a decrease in the number of Shares which thereafter may be available, both for purposes of the Plan and for sale under the Option, by the number of Shares as to which the Option is exercised.

(ii) Termination of Status as an Employee or Consultant. In the event of termination of an Optionee's Continuous Status as an Employee or Consultant (as the case may be), such Optionee may, but only within thirty (30) days (or such other period of time not exceeding three (3) months in the case of an Incentive Stock Option or six (6) months in the case of a Nonstatutory Stock Option, as is determined by the Board, with such determination in the case of an Incentive Stock Option being made at the time of grant of the Option) after the date of such termination (but in no event later than the date of expiration of the term of such Option as set forth in the Option Agreement, exercise the Option to the extent that such Employee or Consultant was entitled to exercise it at the date of such termination. To the extent that such Employee or Consultant was not entitled to exercise the Option at the date of such termination, or if such Employee or Consultant does not exercise such Option (which such Employee or Consultant was entitled to exercise) within the time specified herein, the Option shall terminate.

(iii) Disability of Optionee. Notwithstanding the provisions of
Section 8(b)(ii) above, in the event of termination of an Optionee's Continuous Status as an Employee or Consultant as a result of such Employee's or Consultant's disability, such Employee or Consultant may, but only within six
(6) months (or such other period of time not exceeding twelve (12) months as is determined by the Board, with such determination in the case of an Incentive Stock Option being made at the time of grant of the Option) from the date of such termination (but in no event later than the date of expiration of the term of such Option as set forth in the Option Agreement), exercise the Option to the extent such Employee or Consultant was entitled to exercise it at the date of such termination. To the extent that such Employee or Consultant was not entitled to exercise the Option at the date of termination, or if such Employee or Consultant does not exercise such Option (which such Employee or Consultant was entitled to exercise) within the time specified herein, the Option shall terminate.

(iv) Death of Optionee. In the event of the death of an Optionee:

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(A) during the term of the Option who is at the time of his or her death an Employee or Consultant of the Company and who shall have been in Continuous Status as an Employee or Consultant since the date of grant of the Option, the Option may be exercised, at any time within six (6) months (but in no event later than the date of expiration of the term of such Option as set forth in the Option Agreement), by Optionee's estate or by a person who acquired the right to exercise the Option by bequest or inheritance, but only to the extent of the right to exercise that would have accrued had the Optionee continued living and remained in Continuous Status as an Employee or Consultant six (6) months (or such other period of time as is determined by the Board at the time of grant of the Option) after the date of death; or

(B) within thirty (30) days (or such other period of time not exceeding three (3) months as is determined by the Board, with such determination in the case of an Incentive Stock Option being made at the time of grant of the Option) after the termination of Continuous Status as an Employee or Consultant, the Option may be exercised, at any time within six (6) months (or such other period of time as is determined by the Board at the time of grant of the Option) following the date of death (but in no event later than the date of expiration of the term of such Option as set forth in the Option Agreement), by the Optionee's estate or by a person who acquired the right to exercise the Option by bequest or inheritance, but only to the extent of the right to exercise that had accrued at the date of termination.

9. Stock Purchase Rights.

(a) Rights to Purchase. After the Board of Directors determines that it will offer an Employee or Consultant a Stock Purchase Right, it shall deliver to the offeree a stock purchase agreement or stock bonus agreement, as the case may be, setting forth the terms, conditions and restrictions relating to the offer, including the number of Shares which such person shall be entitled to purchase, and the time within which such person must accept such offer, which shall in no event exceed six (6) months from the date upon which the Board of Directors or its Committee made the determination to grant the Stock Purchase Right. The offer shall be accepted by execution of a stock purchase agreement or stock bonus agreement in the form determined by the Board of Directors.

(b) Issuance of Shares. Forthwith after payment therefor, the Shares purchased shall be duly issued; provided, however, that the Board may require that the Purchaser make adequate provision for any Federal and State withholding obligations of the Company as a condition to the Purchaser purchasing such Shares.

(c) Repurchase Option. Unless the Board determines otherwise, the stock purchase agreement or stock bonus agreement shall grant the Company a repurchase option exercisable upon the voluntary or involuntary termination of the Purchaser's employment with the Company for any reason (including death or disability). If the Board so determines, the purchase price for shares repurchased may be paid by cancellation of any indebtedness of the Purchaser to the Company. The repurchase option shall lapse at such rate as the Board may determine.

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(d) Other Provisions. The stock purchase agreement or stock bonus agreement shall contain such other terms, provisions and conditions not inconsistent with the Plan as may be determined by the Board of Directors.

10. Non-Transferability of Options and Stock Purchase Rights. The Options and Stock Purchase Rights may not be sold, pledged, assigned, hypothecated, transferred, or disposed of in any manner other than by will or by the laws of descent or distribution and may be exercised, during the lifetime of the Optionee or Purchaser, only by the Optionee or Purchaser.

11. Adjustments Upon Changes in Capitalization or Merger. Subject to any required action by the shareholders of the Company, the number of shares of Common Stock covered by each outstanding Option and Stock Purchase Right, and the number of shares of Common Stock which have been authorized for issuance under the Plan but as to which no Options or Stock Purchase Rights have yet been granted or which have been returned to the Plan upon cancellation or expiration of an Option or Stock Purchase Right, or repurchase of Shares from a Purchaser upon termination of employment, as well as the price per share of Common Stock covered by each such outstanding Option or Stock Purchase Right, shall be proportionately adjusted for any increase or decrease in the number of issued shares of Common Stock resulting from a stock split, reverse stock split, stock dividend, combination or reclassification of the Common Stock of the Company or the payment of a stock dividend with respect to the Common Stock or any other increase or decrease in the number of issued shares of Common Stock effected without receipt of consideration by the Company; provided, however, that conversion of any convertible securities of the Company shall not be deemed to have been "effected without receipt of consideration." Such adjustment shall be made by the Board, whose determination in that respect shall be final, binding and conclusive. Except as expressly provided herein, no issuance by the Company of shares of stock of any class, or securities convertible into shares of stock of any class, shall affect, and no adjustment by reason thereof shall be made with respect to, the number or price of shares of Common Stock subject to an Option or Stock Purchase Right.

In the event of the proposed dissolution or liquidation of the Company, the Board shall notify the Optionee at least fifteen (15) days prior to such proposed action. To the extent it has not been previously exercised, the Option will terminate immediately prior to the consummation of such proposed action. In the event of a merger of the Company with or into another corporation, the Option shall be assumed or an equivalent option shall be substituted by such successor corporation or a parent or subsidiary of such successor corporation.

12. Time of Granting Options. The date of grant of an Option or Stock Purchase Right shall, for all purposes, be the date on which the Board makes the determination granting such Option or Stock Purchase Right. Notice of the determination shall be given to each Employee or Consultant to whom an Option or Stock Purchase Right is so granted within a reasonable time after the date of such grant.

13. Amendment and Termination of the Plan.

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(a) Amendment and Termination. The Board may amend or terminate the Plan from time to time in such respects as the Board may deem advisable; provided that, the following revisions or amendments shall require approval of the shareholders of the Company in the manner described in Section 17 of the Plan:

(i) any increase in the number of Shares subject to the Plan, other than in connection with an adjustment under Section 11 of the Plan;

(ii) any change in the designation of the class of persons eligible to be granted Options and Stock Purchase Rights; or

(iii) if the Company has a class of equity securities registered under Section 12 of the Exchange Act at the time of such revision or amendment, any material increase in the benefits accruing to participants under the Plan.

(b) Shareholder Approval. If any amendment requiring shareholder approval under Section 13(a) of the Plan is made subsequent to the first registration of any class of equity securities by the Company under Section 12 of the Exchange Act, such shareholder approval shall be solicited as described in Section 17 of the Plan.

(c) Effect of Amendment or Termination. Any such amendment or termination of the Plan shall not affect Options or Stock Purchase Rights already granted and such Options or Stock Purchase Rights shall remain in full force and effect as if this Plan had not been amended or terminated, unless mutually agreed otherwise between the Optionee or Purchaser (as the case may be) and the Board, which agreement must be in writing and signed by the Optionee or Purchaser (as the case may be) and the Company.

14. Conditions Upon Issuance of Shares. Shares shall not be issued pursuant to the exercise of an Option or Stock Purchase Rights unless the exercise of such Option or Stock Purchase Rights and the issuance and delivery of such Shares pursuant thereto shall comply with all relevant provisions of law, including, without limitation, the Securities Act of 1933, as amended, the Exchange Act, the rules and regulations promulgated thereunder, and the requirements of any stock exchange upon which the Shares may then be listed, and shall be further subject to the approval of counsel for the Company with respect to such compliance.

As a condition to the exercise of an Option or Stock Purchase Rights, the Company may require the person exercising such Option or Stock Purchase Rights to represent and warrant at the time of any such exercise that the Shares are being purchased only for investment and without any present intention to sell or distribute such Shares if, in the opinion of counsel for the Company, such a representation is required by any of the aforementioned relevant provisions of law.

15. Reservation of Shares. The Company, during the term of this Plan, will at all times reserve and keep available such number of Shares as shall be sufficient to satisfy the requirements of the Plan.

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The inability of the Company to obtain authority from any regulatory body having jurisdiction, which authority is deemed by the Company's counsel to be necessary to the lawful issuance and sale of any Shares hereunder, shall relieve the Company of any liability in respect of the failure to issue or sell such Shares as to which such requisite authority shall not have been obtained.

16. Option, Stock Purchase and Stock Bonus Agreements. Options shall be evidenced by written option agreements in such form as the Board shall approve. Upon the exercise of Stock Purchase Rights, the Purchaser shall sign a stock purchase agreement or stock bonus agreement in such form as the Board shall approve.

17. Shareholder Approval.

(a) Continuance of the Plan shall be subject to approval by the shareholders of the Company within twelve (12) months before or after the date the Plan is adopted. If such shareholder approval is obtained at a duly held shareholders' meeting, it must be obtained by the affirmative vote of the holders of a majority of the outstanding shares of the Company, or if such shareholder approval is obtained by written consent, it may be obtained by the written consent of the holders of a majority of the outstanding shares of the Company's capital stock entitled to vote.

(b) If and in the event that the Company registers any class of equity securities pursuant to Section 12 of the Exchange Act, any required approval of the shareholders of the Company obtained after such registration shall be solicited substantially in accordance with Section 14(a) of the Exchange Act and the rules and regulations promulgated thereunder.

(c) If any required approval by the shareholders of the Plan itself or of any amendment thereto is solicited at any time otherwise than in the manner described in Section 17(b) hereof, then the Company shall, at or prior to the first annual meeting of shareholders held subsequent to the later of (1) the first registration of any class of equity securities of the Company under
Section 12 of the Exchange Act or (2) the granting of an Option hereunder to an officer or director after such registration, do the following:

(i) furnish in writing to the holders entitled to vote for the Plan substantially the same information which would be required (if proxies to be voted with respect to approval or disapproval of the Plan or amendment were then being solicited) by the rules and regulations in effect under Section 14(a) of the Exchange Act at the time such information is furnished; and

(ii) file with, or mail for filing to, the Securities and Exchange Commission four copies of the written information referred to in subsection (i) hereof not later than the date on which such information is first sent or given to shareholders.

18. Information to Optionees and Purchasers. The Company shall provide to each Optionee and Purchaser, during the period for which such Optionee or Purchaser has one or

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more Options or Stock Purchase Rights outstanding, a balance sheet and an income statement at least annually. The Company shall not be required to provide such information to key employees whose duties in connection with the Company assure their access to equivalent information.

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EXHIBIT 10.14

OMNICELL TECHNOLOGIES, INC.

1995 MANAGEMENT STOCK OPTION PLAN

ADOPTED DECEMBER 13, 1995
AS AMENDED THROUGH JUNE 20 ,1996

1. Purposes.

(a) The purpose of the Plan is to provide a means by which selected Employees and Directors of and Consultants to the Company, and its Affiliates, may be given an opportunity to purchase stock of the Company.

(b) The Company, by means of the Plan, seeks to retain the services of persons who are now Employees or Directors of or Consultants to the Company or its Affiliates, to secure and retain the services of new Employees, Directors and Consultants, and to provide incentives for such persons to exert maximum efforts for the success of the Company and its Affiliates.

(c) The Company intends that the Options issued under the Plan shall, in the discretion of the Board or any Committee to which responsibility for administration of the Plan has been delegated pursuant to subsection 3(c), be either Incentive Stock Options or Nonstatutory Stock Options. All Options shall be separately designated Incentive Stock Options or Nonstatutory Stock Options at the time of grant, and in such form as issued pursuant to Section 6, and a separate certificate or certificates will be issued for shares purchased on exercise of each type of Option.

2. Definitions.

(a) "Affiliate" means any parent corporation or subsidiary corporation, whether now or hereafter existing, as those terms are defined in Sections 424(e) and (f) respectively, of the Code.

(b) "Board" means the Board of Directors of the Company.

(c) "Code" means the Internal Revenue Code of 1986, as amended.

(d) "Committee" means a Committee appointed by the Board in accordance with subsection 3(c) of the Plan.

(e) "Company" means OmniCell Technologies, Inc., a California corporation.

(f) "Consultant" means any person, including an advisor, engaged by the Company or an Affiliate to render consulting services and who is compensated for such services, provided


that the term "Consultant" shall not include Directors who are paid only a director's fee by the Company or who are not compensated by the Company for their services as Directors.

(g) "Continuous Status as an Employee, Director or Consultant" means the individual's service for the Company, whether as an Employee, Director or Consultant, is not interrupted or terminated. The Board, in its sole discretion, may determine whether Continuous Status as an Employee, Director or Consultant shall be considered interrupted in the case of: (i) any leave of absence approved by the Board, including sick leave, military leave, or any other personal leave; or (ii) transfers between locations of the Company or between the Company, Affiliates or their successors.

(h) "Covered Employee" means the chief executive officer and the four (4) other highest compensated officers of the Company for whom total compensation is required to be reported to shareholders under the Exchange Act, as determined for purposes of Section 162(m) of the Code.

(i) "Director" means a member of the Board.

(j) "Disinterested Person" means a Director who either (i) was not during the one year prior to service as an administrator of the Plan granted or awarded equity securities pursuant to the Plan or any other plan of the Company or any Affiliate entitling the participants therein to acquire equity securities of the Company or any Affiliate except as permitted by Rule 16b-3(c)(2)(i); or (ii) is otherwise considered to be a "disinterested person" in accordance with Rule 16b-
3(c)(2)(i), or any other applicable rules, regulations or interpretations of the Securities and Exchange Commission.

(k) "Employee" means any person, including Officers and Directors, employed by the Company or any Affiliate of the Company. Neither service as a Director nor payment of a director's fee by the Company shall be sufficient to constitute "employment" by the Company.

(l) "Exchange Act" means the Securities Exchange Act of 1934, as amended.

(m) "Fair Market Value" means, as of any date, the value of the common stock of the Company determined as follows:

(1) If the common stock is listed on any established stock exchange or a national market system, including without limitation the National Market System of the National Association of Securities Dealers, Inc. Automated Quotation ("Nasdaq") System, the Fair Market Value of a share of common stock shall be the closing sales price for such stock (or the closing bid, if no sales were reported) as quoted on such system or exchange (or the exchange with the greatest volume of trading in common stock) on the last market trading day prior to the day of determination, as reported in the Wall Street Journal or such other source as the Board deems reliable;

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(2) If the common stock is quoted on the Nasdaq System (but not on the National Market thereof) or is regularly quoted by a recognized securities dealer but selling prices are not reported, the Fair Market Value of a share of common stock shall be the mean between the bid and asked prices for the common stock on the last market trading day prior to the day of determination, as reported in the Wall Street Journal or such other source as the Board deems reliable;

(3) In the absence of an established market for the common stock, the Fair Market Value shall be determined in good faith by the Board.

(n) "Incentive Stock Option" means an Option intended to qualify as an incentive stock option within the meaning of Section 422 of the Code and the regulations promulgated thereunder.

(o) "Nonstatutory Stock Option" means an Option not intended to qualify as an Incentive Stock Option.

(p) "Officer" means a person who is an officer of the Company within the meaning of Section 16 of the Exchange Act and the rules and regulations promulgated thereunder.

(q) "Option" means a stock option granted pursuant to the Plan.

(r) "Option Agreement" means a written agreement between the Company and an Optionee evidencing the terms and conditions of an individual Option grant. Each Option Agreement shall be subject to the terms and conditions of the Plan.

(s) "Optionee" means an Employee, Director or Consultant who holds an outstanding Option.

(t) "Outside Director" means a Director who either (i) is not a current employee of the Company or an "affiliated corporation" (within the meaning of the Treasury regulations promulgated under Section 162(m) of the Code), is not a former employee of the Company or an "affiliated corporation" receiving compensation for prior services (other than benefits under a tax qualified pension plan), was not an officer of the Company or an "affiliated corporation" at any time, and is not currently receiving direct or indirect remuneration from the Company or an "affiliated corporation" for services in any capacity other than as a Director, or (ii) is otherwise considered an "outside director" for purposes of Section 162(m) of the Code.

(u) "Plan" means this OmniCell Technologies, Inc. 1995 Management Stock Option Plan.

(v) "Rule 16b-3" means Rule 16b-3 of the Exchange Act or any successor to Rule 16b-3, as in effect when discretion is being exercised with respect to the Plan.

3. Administration.

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(a) The Plan shall be administered by the Board unless and until the Board delegates administration to a Committee, as provided in subsection 3(c).

(b) The Board shall have the power, subject to, and within the limitations of, the express provisions of the Plan:

(1) To determine from time to time which of the persons eligible under the Plan shall be granted Options; when and how each Option shall be granted; whether an Option will be an Incentive Stock Option or a Nonstatutory Stock Option; the provisions of each Option granted (which need not be identical), including the time or times such Option may be exercised in whole or in part; and the number of shares for which an Option shall be granted to each such person.

(2) To construe and interpret the Plan and Options granted under it, and to establish, amend and revoke rules and regulations for its administration. The Board, in the exercise of this power, may correct any defect, omission or inconsistency in the Plan or in any Option Agreement, in a manner and to the extent it shall deem necessary or expedient to make the Plan fully effective.

(3) To amend the Plan or an Option as provided in Section 11.

(4) Generally, to exercise such powers and to perform such acts as the Board deems necessary or expedient to promote the best interests of the Company which are not in conflict with the provisions of the Plan.

(c) The Board may delegate administration of the Plan to a committee composed of not fewer than two (2) members (the "Committee"), all of the members of which Committee shall be Disinterested Persons and may also be, in the discretion of the Board, Outside Directors. If administration is delegated to a Committee, the Committee shall have, in connection with the administration of the Plan, the powers theretofore possessed by the Board (and references in this Plan to the Board shall thereafter be to the Committee), subject, however, to such resolutions, not inconsistent with the provisions of the Plan, as may be adopted from time to time by the Board. The Board may abolish the Committee at any time and revest in the Board the administration of the Plan. Additionally, prior to the date of the first registration of an equity security of the Company under Section 12 of the Exchange Act, and notwithstanding anything to the contrary contained herein, the Board may delegate administration of the Plan to a committee of one or more individuals (in the event that the Company's state of incorporation becomes the State of Delaware, such individuals shall be members of the Board) and the term "Committee" shall apply to any person or persons to whom such authority has been delegated. Notwithstanding anything in this Section 3 to the contrary, at any time the Board or the Committee may delegate to a committee of one or more individuals (in the event that the Company's state of incorporation becomes the State of Delaware, such individuals shall be members of the Board) the authority to grant Options to eligible persons who (1) are not then subject to Section 16 of the Exchange Act and/or (2) are either (i) not then Covered Employees and are not expected to be Covered

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Employees at the time of recognition of income resulting from such Option, or
(ii) not persons with respect to whom the Company wishes to comply with Section 162(m) of the Code.

(d) Any requirement that an administrator of the Plan be a Disinterested Person shall not apply (i) prior to the date of the first registration of an equity security of the Company under Section 12 of the Exchange Act, or (ii) if the Board or the Committee expressly declares that such requirement shall not apply. Any Disinterested Person shall otherwise comply with the requirements of Rule 16b-3.

4. Shares Subject To The Plan.

(a) Subject to the provisions of Section 10 relating to adjustments upon changes in stock, the stock that may be sold pursuant to Options shall not exceed in the aggregate Five Million Four Hundred Ten Thousand (5,410,000) shares of the Company's common stock, reduced by the number of shares of the Company's common stock which are either issued or then subject to an option granted under the Company's 1992 Incentive Stock Plan. If any Option shall for any reason expire or otherwise terminate, in whole or in part, without having been exercised in full, the stock not purchased under such Option shall revert to and again become available for issuance under the Plan.

(b) The stock subject to the Plan may be unissued shares or reacquired shares, bought on the market or otherwise.

5. Eligibility.

(a) Incentive Stock Options may be granted only to Employees. Nonstatutory Stock Options may be granted only to Employees, Directors or Consultants. However, no Option shall be granted if the grant of such Option or the issuance of shares of the Company's common stock is not exempt from the securities qualification requirements of the California Corporations Code.

(b) A Director shall in no event be eligible for the benefits of the Plan unless at the time discretion is exercised in the selection of the Director as a person to whom Options may be granted, or in the determination of the number of shares which may be covered by Options granted to the Director: (i) the Board has delegated its discretionary authority over the Plan to a Committee which consists solely of Disinterested Persons; or (ii) the Plan otherwise complies with the requirements of Rule 16b-3. The Board shall otherwise comply with the requirements of Rule 16b-3. This subsection 5(b) shall not apply (i) prior to the date of the first registration of an equity security of the Company under
Section 12 of the Exchange Act, or (ii) if the Board or Committee expressly declares that it shall not apply.

(c) No person shall be eligible for the grant of an Incentive Stock Option if, at the time of grant, such person owns (or is deemed to own pursuant to
Section 424(d) of the Code) stock possessing more than ten percent (10%) of the total combined voting power of all classes of stock of the Company or of any of its Affiliates unless the exercise price of such Incentive Stock Option is at least one hundred ten percent (110%) of the Fair Market Value of such stock

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at the date of grant and the Incentive Stock Option is not exercisable after the expiration of five (5) years from the date of grant.

6. Option Provisions.

Each Option shall be in such form and shall contain such terms and conditions as the Board shall deem appropriate. The provisions of separate Options need not be identical, but each Option shall include (through incorporation of provisions hereof by reference in the Option or otherwise) the substance of each of the following provisions:

(a) Term. No Option shall be exercisable after the expiration of ten (10) years from the date it was granted.

(b) Price. The exercise price of each Incentive Stock Option shall be not less than one hundred percent (100%) of the Fair Market Value of the stock subject to the Option on the date the Option is granted. The exercise price of each Nonstatutory Stock Option shall be determined by the Board. Notwithstanding the foregoing, the Board or the Committee may grant an Option with an exercise price lower than that set forth above if such Option is granted as part of a transaction to which section 424(a) of the Code applies.

(c) Consideration. The purchase price of stock acquired pursuant to an Option shall be paid, to the extent permitted by applicable statutes and regulations, either (i) in cash at the time the Option is exercised, or (ii) at the discretion of the Board or the Committee, at the time of the grant of the Option for Incentive Stock Options and at any time prior to exercise of the Option for Nonstatutory Stock Options, (A) by delivery to the Company of other common stock of the Company, (B) according to a deferred payment or other arrangement (which may include, without limiting the generality of the foregoing, the use of other common stock of the Company) with the person to whom the Option is granted or to whom the Option is transferred pursuant to subsection 6(d), or (C) in any other form of legal consideration that may be acceptable to the Board.

In the case of any deferred payment arrangement, interest shall be payable at least annually and shall be charged at the minimum rate of interest necessary to avoid the treatment as interest, under any applicable provisions of the Code, of any amounts other than amounts stated to be interest under the deferred payment arrangement.

(d) Transferability. An Incentive Stock Option shall not be transferable except by will or by the laws of descent and distribution, and shall be exercisable during the lifetime of the person to whom the Incentive Stock Option is granted only by such person. A Nonstatutory Stock Option shall not be transferable except by will or by the laws of descent and distribution or pursuant to a qualified domestic relations order satisfying the requirements of Rule 16b-3 and the rules thereunder (a "QDRO"), and shall be exercisable during the lifetime of the person to whom the Option is granted only by such person or any transferee pursuant to a QDRO. The person to whom the Option is granted may, by delivering written notice to the Company, in a

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form satisfactory to the Company, designate a third party who, in the event of the death of the Optionee, shall thereafter be entitled to exercise the Option.

(e) Vesting. The total number of shares of stock subject to an Option may, but need not, be allotted in periodic installments (which may, but need not, be equal). The Option Agreement may provide that from time to time during each of such installment periods, the Option may become exercisable ("vest") with respect to some or all of the shares allotted to that period, and may be exercised with respect to some or all of the shares allotted to such period and/or any prior period as to which the Option became vested but was not fully exercised. The Option may be subject to such other terms and conditions on the time or times when it may be exercised (which may be based on performance or other criteria) as the Board may deem appropriate. The provisions of this subsection 6(e) are subject to any Option provisions governing the minimum number of shares as to which an Option may be exercised.

(f) Securities Law Compliance. The Company may require any Optionee, or any person to whom an Option is transferred under subsection 6(d), as a condition of exercising any such Option, (1) to give written assurances satisfactory to the Company as to the Optionee's knowledge and experience in financial and business matters and/or to employ a purchaser representative reasonably satisfactory to the Company who is knowledgeable and experienced in financial and business matters, and that he or she is capable of evaluating, alone or together with the purchaser representative, the merits and risks of exercising the Option; and (2) to give written assurances satisfactory to the Company stating that such person is acquiring the stock subject to the Option for such person's own account and not with any present intention of selling or otherwise distributing the stock. The foregoing requirements, and any assurances given pursuant to such requirements, shall be inoperative if (i) the issuance of the shares upon the exercise of the Option has been registered under a then currently effective registration statement under the Securities Act of 1933, as amended (the "Securities Act"), or (ii) as to any particular requirement, a determination is made by counsel for the Company that such requirement need not be met in the circumstances under the then applicable securities laws. The Company may, upon advice of counsel to the Company, place legends on stock certificates issued under the Plan as such counsel deems necessary or appropriate in order to comply with applicable securities laws, including, but not limited to, legends restricting the transfer of the stock.

(g) Termination of Employment or Relationship as a Director or Consultant. In the event an Optionee's Continuous Status as an Employee, Director or Consultant terminates (other than upon the Optionee's death or disability), the Optionee may exercise his or her Option (to the extent that the Optionee was entitled to exercise it at the date of termination) but only within such period of time ending on the earlier of (i) the date three (3) months after the termination of the Optionee's Continuous Status as an Employee, Director or Consultant, or such longer or shorter period specified in the Option Agreement, or (ii) the expiration of the term of the Option as set forth in the Option Agreement. If, after termination, the Optionee does not exercise his or her Option within the time specified in the Option Agreement, the Option shall terminate, and the shares covered by such Option shall revert to and again become available for issuance under the Plan. An Optionee's Option Agreement may also provide that if the exercise of the Option following the termination of the Optionee's Continuous Status as an Employee,

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Director, or Consultant (other than upon the Optionee's death or disability) would result in liability under Section 16(b) of the Exchange Act, then the Option shall terminate on the earlier of (i) the expiration of the term of the Option set forth in the Option Agreement, or (ii) the tenth (10th) day after the last date in which such exercise would result in such liability under Section 16(b) of the Exchange Act. Finally, an Optionee's Option Agreement may also provide that if the exercise of the Option following the termination of the Optionee's Continuous Status as an Employee, Director or Consultant (other than upon the Optionee's death or disability) would be prohibited at any time solely because the issuance of shares would violate the registration requirements under the Act, then the Option shall terminate on the earlier of (i) the expiration of the term of the Option set forth in the first paragraph of this section 7, or
(ii) the expiration of a period of three (3) months after the termination of the Optionee's Continuous Status as an Employee, Director or Consultant during which the exercise of the Option would not be in violation of such registration requirements.

(h) Disability of Optionee. In the event an Optionee's Continuous Status as an Employee, Director or Consultant terminates as a result of the Optionee's disability, the Optionee may exercise his or her Option (to the extent that the Optionee was entitled to exercise it at the date of termination), but only within such period of time ending on the earlier of (i) the date twelve (12) months following such termination (or such longer or shorter period specified in the Option Agreement), or (ii) the expiration of the term of the Option as set forth in the Option Agreement. If, at the date of termination, the Optionee is not entitled to exercise his or her entire Option, the shares covered by the unexercisable portion of the Option shall revert to and again become available for issuance under the Plan. If, after termination, the Optionee does not exercise his or her Option within the time specified herein, the Option shall terminate, and the shares covered by such Option shall revert to and again become available for issuance under the Plan.

(i) Death of Optionee. In the event of the death of an Optionee during, or within a period specified in the Option after the termination of, the Optionee's Continuous Status as an Employee, Director or Consultant, the Option may be exercised (to the extent the Optionee was entitled to exercise the Option at the date of death) by the Optionee's estate, by a person who acquired the right to exercise the Option by bequest or inheritance or by a person designated to exercise the option upon the Optionee's death pursuant to subsection 6(d), but only within the period ending on the earlier of (i) the date eighteen (18) months following the date of death (or such longer or shorter period specified in the Option Agreement), or (ii) the expiration of the term of such Option as set forth in the Option Agreement. If, at the time of death, the Optionee was not entitled to exercise his or her entire Option, the shares covered by the unexercisable portion of the Option shall revert to and again become available for issuance under the Plan. If, after death, the Option is not exercised within the time specified herein, the Option shall terminate, and the shares covered by such Option shall revert to and again become available for issuance under the Plan.

(j) Early Exercise. The Option may, but need not, include a provision whereby the Optionee may elect at any time while an Employee, Director or Consultant to exercise the Option as to any part or all of the shares subject to the Option prior to the full vesting of the Option.

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Any unvested shares so purchased may be subject to a repurchase right in favor of the Company or to any other restriction the Board determines to be appropriate.

(k) Withholding. To the extent provided by the terms of an Option Agreement, the Optionee may satisfy any federal, state or local tax withholding obligation relating to the exercise of such Option by any of the following means or by a combination of such means: (1) tendering a cash payment; (2) authorizing the Company to withhold shares from the shares of the common stock otherwise issuable to the participant as a result of the exercise of the Option; or (3) delivering to the Company owned and unencumbered shares of the common stock of the Company.

7. Covenants Of The Company.

(a) During the terms of the Options, the Company shall keep available at all times the number of shares of stock required to satisfy such Options.

(b) The Company shall seek to obtain from each regulatory commission or agency having jurisdiction over the Plan such authority as may be required to issue and sell shares of stock upon exercise of the Options; provided, however, that this undertaking shall not require the Company to register under the Securities Act either the Plan, any Option or any stock issued or issuable pursuant to any such Option. If, after reasonable efforts, the Company is unable to obtain from any such regulatory commission or agency the authority which counsel for the Company deems necessary for the lawful issuance and sale of stock under the Plan, the Company shall be relieved from any liability for failure to issue and sell stock upon exercise of such Options unless and until such authority is obtained.

8. Use Of Proceeds From Stock.

Proceeds from the sale of stock pursuant to Options shall constitute general funds of the Company.

9. Miscellaneous.

(a) The Board shall have the power to accelerate the time at which an Option may first be exercised or the time during which an Option or any part thereof will vest pursuant to subsection 6(e), notwithstanding the provisions in the Option stating the time at which it may first be exercised or the time during which it will vest.

(b) Neither an Optionee nor any person to whom an Option is transferred under subsection 6(d) shall be deemed to be the holder of, or to have any of the rights of a holder with respect to, any shares subject to such Option unless and until such person has satisfied all requirements for exercise of the Option pursuant to its terms.

(c) Nothing in the Plan or any instrument executed or Option granted pursuant thereto shall confer upon any Employee, Director, Consultant or Optionee any right to continue in the employ of the Company or any Affiliate (or to continue acting as a Director or Consultant) or

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shall affect the right of the Company or any Affiliate to terminate the employment of any Employee with or without cause, the right of the Company's Board of Directors and/or the Company's shareholders to remove any Director pursuant to the terms of the Company's By-Laws and the provisions of the California Corporations Code (or the laws of the Company's state of incorporation if changed from California), or the right to terminate the relationship of any Consultant pursuant to the terms of such Consultant's agreement with the Company or Affiliate.

(d) To the extent that the aggregate Fair Market Value (determined at the time of grant) of stock with respect to which Incentive Stock Options are exercisable for the first time by any Optionee during any calendar year under all plans of the Company and its Affiliates exceeds one hundred thousand dollars ($100,000), the Options or portions thereof which exceed such limit (according to the order in which they were granted) shall be treated as Nonstatutory Stock Options.

(e) The Board or the Committee shall have the authority to effect, at any time and from time to time (i) the repricing of any outstanding Options under the Plan and/or (ii) with the consent of the affected holders of Options, the cancellation of any outstanding Options and the grant in substitution therefor of new Options under the Plan covering the same or different numbers of shares of Common Stock, but having an exercise price per share not less than one hundred percent (100%) of the Fair Market Value in the case of an Incentive Stock Option or, in the case of an Incentive Stock Option granted to a ten percent (10%) shareholder (as defined in subsection 5(c)), not less than one hundred and ten percent (110%) of the Fair Market Value per share of Common Stock on the new grant date. Notwithstanding the foregoing, the Board or the Committee may grant an Option with an exercise price lower than that set forth above if such Option is granted as part of a transaction to which section 424(a) of the Code applies.

10. Adjustments Upon Changes In Stock.

(a) If any change is made in the stock subject to the Plan, or subject to any Option (through merger, consolidation, reorganization, reincorporation, recapitalization, stock dividend, dividend in property other than cash, stock split, liquidating dividend, combination of shares, exchange of shares, change in corporate structure or other transaction not involving the receipt of consideration by the Company), the Plan will be appropriately adjusted in the class(es) and maximum number of shares subject to the Plan pursuant to subsection 4(a), and the outstanding Options will be appropriately adjusted in the class(es) and number of shares and price per share of stock subject to such outstanding Options. Such adjustments shall be made by the Board or Committee, the determination of which shall be final, binding and conclusive. (The conversion of any convertible securities of the Company shall not be treated as a "transaction not involving the receipt of consideration by the Company.")

(b) In the event of: (1) a dissolution, liquidation, or sale of substantially all of the assets of the Company; (2) a merger or consolidation in which the Company is not the surviving corporation and the shareholders of the Company immediately prior to the merger are not beneficial owners of at least a majority of the voting securities of the surviving corporation (or a parent of such corporation) immediately following the merger; or (3) a reverse merger in which

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the Company is the surviving corporation but the shares of the Company's common stock outstanding immediately preceding the merger are converted by virtue of the merger into other property, whether in the form of securities, cash or otherwise, then to the extent permitted by applicable law: (i) any surviving, acquiring or successor corporation or an Affiliate of such corporation shall assume any Options outstanding under the Plan or shall substitute similar Options for those outstanding under the Plan, or (ii) such Options shall continue in full force and effect. In the event any surviving, acquiring or successor corporation and its Affiliates refuse to assume or continue such Options, or to substitute similar options for those outstanding under the Plan, then, with respect to Options held by persons then performing services as Employees, Directors or Consultants, the time during which such Options may be exercised shall be accelerated and the Options terminated if not exercised prior to such event.

(c) In the event that any such accelerated option vesting or lapse of the Company's repurchase rights received or to be received by an Optionee pursuant to subsection 10(b) (the "Benefit") would (i) constitute a "parachute payment" within the meaning of Section 280G of the Code and (ii) but for this subsection
10(c), be subject to the excise tax imposed by Section 4999 of the Code (the "Excise Tax"), then such Benefit shall be reduced to the extent necessary so that no portion of the Benefit would be subject to the Excise Tax, as determined in good faith by the Company; provided, however, that if, in the absence of any such reduction (or after such reduction), the Optionee believes that the Benefit or any portion thereof (as reduced, if applicable) would be subject to the Excise Tax, the Benefit shall be reduced (or further reduced) to the extent determined by the Optionee in the Optionee's discretion so that the Excise Tax would not apply. If, notwithstanding any such reduction (or in the absence of such reduction), the Internal Revenue Service ("IRS") determines that the Optionee is liable for the Excise Tax as a result of the Benefit, then the Optionee shall be obligated to return to the Company, within thirty (30) days of such determination by the IRS, a portion of the Benefit sufficient such that none of the Benefit retained by the Optionee constitutes a "parachute payment" within the meaning of Section 280G of the Code that is subject to the Excise Tax.

11. Amendment of the Plan and Options.

(a) The Board at any time, and from time to time, may amend the Plan. However, except as provided in Section 10 relating to adjustments upon changes in stock, no amendment shall be effective unless approved by the shareholders of the Company within twelve (12) months before or after the adoption of the amendment, where the amendment will:

(1) Increase the number of shares reserved for Options under the Plan;

(2) Modify the requirements as to eligibility for participation in the Plan (to the extent such modification requires shareholder approval in order for the Plan to satisfy the requirements of Section 422 of the Code); or

(3) Modify the Plan in any other way if such modification requires shareholder approval in order for the Plan to satisfy the requirements of
Section 422 of the Code or to comply with the requirements of Rule 16b-3.

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(b) The Board may in its sole discretion submit any other amendment to the Plan for shareholder approval, including, but not limited to, amendments to the Plan intended to satisfy the requirements of Section 162(m) of the Code and the regulations promulgated thereunder regarding the exclusion of performance-based compensation from the limit on corporate deductibility of compensation paid to certain executive officers.

(c) It is expressly contemplated that the Board may amend the Plan in any respect the Board deems necessary or advisable to provide Optionees with the maximum benefits provided or to be provided under the provisions of the Code and the regulations promulgated thereunder relating to Incentive Stock Options and/or to bring the Plan and/or Incentive Stock Options granted under it into compliance therewith.

(d) Rights and obligations under any Option granted before amendment of the Plan shall not be impaired by any amendment of the Plan unless (i) the Company requests the consent of the person to whom the Option was granted and
(ii) such person consents in writing.

(e) The Board at any time, and from time to time, may amend the terms of any one or more Options; provided, however, that the rights and obligations under any Option shall not be impaired by any such amendment unless (i) the Company requests the consent of the person to whom the Option was granted and
(ii) such person consents in writing.

12. Termination Or Suspension Of The Plan.

(a) The Board may suspend or terminate the Plan at any time. Unless sooner terminated, the Plan shall terminate on December 12, 2005, which shall be within ten (10) years from the date the Plan is adopted by the Board or approved by the shareholders of the Company, whichever is earlier. No Options may be granted under the Plan while the Plan is suspended or after it is terminated.

(b) Rights and obligations under any Option granted while the Plan is in effect shall not be altered or impaired by suspension or termination of the Plan, except with the consent of the person to whom the Option was granted.

13. Effective Date Of Plan.

The Plan shall become effective as determined by the Board, but no Options granted under the Plan shall be exercised unless and until the Plan has been approved by the shareholders of the Company, which approval shall be within twelve (12) months before or after the date the Plan is adopted by the Board.

12

OMNICELL.COM
AMENDED AND RESTATED
1997 EMPLOYEE STOCK PURCHASE PLAN

ADOPTED BY THE BOARD OF DIRECTORS MARCH 18, 1997
APPROVED BY STOCKHOLDERS MARCH 6, 1998
AMENDED BY THE BOARD OF DIRECTORS APRIL __, 2000
AMENDMENT APPROVED BY STOCKHOLDERS ____, 2000

1. PURPOSE.

(a) The purpose of the Plan is to provide a means by which Employees of the Company and certain designated Affiliates may be given an opportunity to purchase shares of the Common Stock of the Company.

(b) The Company, by means of the Plan, seeks to retain the services of such Employees, to secure and retain the services of new Employees and to provide incentives for such persons to exert maximum efforts for the success of the Company and its Affiliates.

(c) The Company intends that the Rights to purchase shares of the Common Stock granted under the Plan be considered options issued under an "employee stock purchase plan," as that term is defined in Section 423(b) of the Code.

2. DEFINITIONS.

(a) "AFFILIATE" means any parent corporation or subsidiary corporation, whether now or hereafter existing, as those terms are defined in Sections 424(e) and (f), respectively, of the Code.

(b) "BOARD" means the Board of Directors of the Company.

(c) "CODE" means the Internal Revenue Code of 1986, as amended.

(d) "COMMITTEE" means a Committee appointed by the Board in accordance with subparagraph 3(c) of the Plan.

(e) "COMMON STOCK" means the Common Stock of OmniCell.Com.

(f) "COMPANY" means OmniCell.Com, a California corporation.

(g) "DIRECTOR" means a member of the Board.

(h) "ELIGIBLE EMPLOYEE" means an Employee who meets the requirements set forth in the Offering for eligibility to participate in the Offering.

1.


(i) "EMPLOYEE" means any person, including Officers and Directors, employed by the Company or an Affiliate of the Company. Neither service as a Director nor payment of a director's fee shall be sufficient to constitute "employment" by the Company or the Affiliate.

(j) "EMPLOYEE STOCK PURCHASE PLAN" means a plan that grants rights intended to be options issued under an "employee stock purchase plan," as that term is defined in Section 423(b) of the Code.

(k) "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.

(l) "FAIR MARKET VALUE" means the value of a security, as determined in good faith by the Board. If the security is listed on any established stock exchange or traded on the Nasdaq National Market or the Nasdaq SmallCap Market, then, except as otherwise provided in the Offering, the Fair Market Value of the security shall be the closing sales price (rounded up where necessary to the nearest whole cent) for such security (or the closing bid, if no sales were reported) as quoted on such exchange or market (or the exchange or market with the greatest volume of trading in the relevant security of the Company) on the relevant determination date, as reported in THE WALL STREET JOURNAL or such other source as the Board deems reliable, or if such date is not a trading day, then on the next preceding trading day.

(m) "NON-EMPLOYEE DIRECTOR" means a Director who either (i) is not a current Employee or Officer of the Company or its parent or subsidiary, does not receive compensation (directly or indirectly) from the Company or its parent or subsidiary for services rendered as a consultant or in any capacity other than as a Director (except for an amount as to which disclosure would not be required under Item 404(a) of Regulation S-K promulgated pursuant to the Securities Act ("Regulation S-K")), does not possess an interest in any other transaction as to which disclosure would be required under Item 404(a) of Regulation S-K, and is not engaged in a business relationship as to which disclosure would be required under Item 404(b) of Regulation S-K; or (ii) is otherwise considered a "non-employee director" for purposes of Rule 16b-3.

(n) "OFFERING" means the grant of Rights to purchase shares of the Common Stock under the Plan to Eligible Employees.

(o) "OFFERING DATE" means a date selected by the Board for an Offering to commence.

(p) "OUTSIDE DIRECTOR" means a Director who either (i) is not a current employee of the Company or an "affiliated corporation" (within the meaning of the Treasury regulations promulgated under Section 162(m) of the Code), is not a former employee of the Company or an "affiliated corporation" receiving compensation for prior services (other than benefits under a tax qualified pension plan), was not an officer of the Company or an "affiliated corporation" at any time, and is not currently receiving direct or indirect remuneration from the Company or an "affiliated corporation" for services in any capacity other than as a Director, or (ii) is otherwise considered an "outside director" for purposes of Section 162(m) of the Code.

(q) "PARTICIPANT" means an Eligible Employee who holds an outstanding Right granted pursuant to the Plan or, if applicable, such other person who holds an outstanding Right granted under the Plan.

2.


(r) "PLAN" means this OmniCell.Com Amended and Restated 1997 Employee Stock Purchase Plan.

(s) "PURCHASE DATE" means one or more dates established by the Board during an Offering on which Rights granted under the Plan shall be exercised and purchases of shares of the Common Stock carried out in accordance with such Offering.

(t) "RIGHT" means an option to purchase shares of the Common Stock granted pursuant to the Plan.

(u) "RULE 16b-3" means Rule 16b-3 of the Exchange Act or any successor to Rule 16b-3 as in effect with respect to the Company at the time discretion is being exercised regarding the Plan.

(v) "SECURITIES ACT" means the Securities Act of 1933, as amended.

3. ADMINISTRATION.

(a) The Board shall administer the Plan unless and until the Board delegates administration to a Committee, as provided in subparagraph 3(c). Whether or not the Board has delegated administration, the Board shall have the final power to determine all questions of policy and expediency that may arise in the administration of the Plan.

(b) The Board (or the Committee) shall have the power, subject to, and within the limitations of, the express provisions of the Plan:

(i) To determine when and how Rights to purchase shares of the Common Stock shall be granted and the provisions of each Offering of such Rights (which need not be identical).

(ii) To designate from time to time which Affiliates of the Company shall be eligible to participate in the Plan.

(iii) To construe and interpret the Plan and Rights granted under it, and to establish, amend and revoke rules and regulations for its administration. The Board, in the exercise of this power, may correct any defect, omission or inconsistency in the Plan, in a manner and to the extent it shall deem necessary or expedient to make the Plan fully effective.

(iv) To amend the Plan as provided in paragraph 14.

(v) To terminate or suspend the Plan as provided in paragraph

(vi) Generally, to exercise such powers and to perform such acts as it deems necessary or expedient to promote the best interests of the Company and its Affiliates and to carry out the intent that the Plan be treated as an Employee Stock Purchase Plan.

(c) The Board may delegate administration of the Plan to a Committee of the Board composed of two (2) or more members, all of the members of which Committee may be, in the

3.


discretion of the Board, Non-Employee Directors and/or Outside Directors. If administration is delegated to a Committee, the Committee shall have, in connection with the administration of the Plan, the powers theretofore possessed by the Board, including the power to delegate to a subcommittee of two (2) or more Outside Directors any of the administrative powers the Committee is authorized to exercise (and references in this Plan to the Board shall thereafter be to the Committee or such a subcommittee), subject, however, to such resolutions, not inconsistent with the provisions of the Plan, as may be adopted from time to time by the Board. The Board may abolish the Committee at any time and revest in the Board the administration of the Plan.

4. SHARES SUBJECT TO THE PLAN.

(a) Subject to the provisions of paragraph 13 relating to adjustments upon changes in securities, the shares of the Common Stock that may be sold pursuant to Rights granted under the Plan shall not exceed in the aggregate seven hundred fifty thousand (750,000) shares of the Common Stock (the "Reserved Shares"). As of each January 1, beginning with the annual stockholders' meeting in 2000, and continuing through and including January 1, 2007, the number of Reserved Shares will be increased automatically by the lesser of (i) one and a half percent (1.5%) of the total number of shares of the Common Stock outstanding on such January 1 or (ii) seven hundred fifty thousand (750,000) shares. Notwithstanding the foregoing, the Board may designate a smaller number of shares to be added to the share reserve as of a particular January 1. If any Right granted under the Plan shall for any reason terminate without having been exercised, the shares of the Common Stock not purchased under such Right shall again become available for the Plan.

(b) The shares of the Common Stock subject to the Plan may be unissued shares of the Common Stock or shares of the Common Stock that have been bought on the open market at prevailing market prices or otherwise.

5. GRANT OF RIGHTS; OFFERING.

The Board may from time to time grant or provide for the grant of Rights to purchase shares of the Common Stock under the Plan to Eligible Employees in an Offering on an Offering Date or Dates selected by the Board. Each Offering shall be in such form and shall contain such terms and conditions as the Board shall deem appropriate, which shall comply with the requirements of
Section 423(b)(5) of the Code that all Employees granted Rights to purchase shares of the Common Stock under the Plan shall have the same rights and privileges. The terms and conditions of an Offering shall be incorporated by reference into the Plan and treated as part of the Plan. The provisions of separate Offerings need not be identical, but each Offering shall include (through incorporation of the provisions of this Plan by reference in the document comprising the Offering or otherwise) the period during which the Offering shall be effective, which period shall not exceed twenty-seven (27) months beginning with the Offering Date, and the substance of the provisions contained in paragraphs 6 through 9, inclusive.

6. ELIGIBILITY.

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(a) Rights may be granted only to Employees of the Company or, as the Board may designate as provided in subparagraph 3(b), to Employees of an Affiliate. Except as provided in subparagraph 6(b), an Employee shall not be eligible to be granted Rights under the Plan unless, on the Offering Date, such Employee has been in the employ of the Company or the Affiliate, as the case may be, for such continuous period preceding such grant as the Board may require, but in no event shall the required period of continuous employment be greater than two (2) years; provided, however, that Employees who are employed by the Company as of the Effective Date of this Plan, as amended and restated, who would otherwise be Eligible Employees if not for the required period of continuous employment with the Company shall be eligible to participate in the Plan with respect to the first Offering Period beginning with or immediately following the Effective Date of this Plan, as amended and restated, without regard to their period of prior continuous employment with the Company provided that they remain in continuous employment through the end of the first Offering Period.

(b) The Board may provide that each person who, during the course of an Offering, first becomes an Eligible Employee will, on a date or dates specified in the Offering which coincides with the day on which such person becomes an Eligible Employee or which occurs thereafter, receive a Right under that Offering, which Right shall thereafter be deemed to be a part of that Offering. Such Right shall have the same characteristics as any Rights originally granted under that Offering, as described herein, except that:

(i) the date on which such Right is granted shall be the "Offering Date" of such Right for all purposes, including determination of the exercise price of such Right;

(ii) the period of the Offering with respect to such Right shall begin on its Offering Date and end coincident with the end of such Offering; and

(iii) the Board may provide that if such person first becomes an Eligible Employee within a specified period of time before the end of the Offering, he or she will not receive any Right under that Offering.

(c) No Employee shall be eligible for the grant of any Rights under the Plan if, immediately after any such Rights are granted, such Employee owns stock possessing five percent (5%) or more of the total combined voting power or value of all classes of stock of the Company or of any Affiliate. For purposes of this subparagraph 6(c), the rules of Section 424(d) of the Code shall apply in determining the stock ownership of any Employee, and stock which such Employee may purchase under all outstanding rights and options shall be treated as stock owned by such Employee.

(d) An Eligible Employee may be granted Rights under the Plan only if such Rights, together with any other Rights granted under all Employee Stock Purchase Plans of the Company and any Affiliates, as specified by Section 423(b)(8) of the Code, do not permit such Eligible Employee's rights to purchase shares of the Common Stock or any Affiliate to accrue at a rate which exceeds twenty five thousand dollars ($25,000) of the fair market value of such shares of the Common Stock (determined at the time such Rights are granted) for each calendar year in which such Rights are outstanding at any time.

5.


(e) The Board may provide in an Offering that Employees who are highly compensated Employees within the meaning of Section 423(b)(4)(D) of the Code shall not be eligible to participate.

7. RIGHTS; PURCHASE PRICE.

(a) On each Offering Date, each Eligible Employee, pursuant to an Offering made under the Plan, shall be granted the Right to purchase up to the number of shares of the Common Stock purchasable either:

(i) with a percentage designated by the Board not exceeding fifteen percent (15%) of such Employee's Earnings (as defined by the Board in each Offering) during the period which begins on the Offering Date (or such later date as the Board determines for a particular Offering) and ends on the date stated in the Offering, which date shall be no later than the end of the Offering; or

(ii) with a maximum dollar amount designated by the Board that, as the Board determines for a particular Offering, (1) shall be withheld, in whole or in part, from such Employee's Earnings (as defined by the Board in each Offering) during the period which begins on the Offering Date (or such later date as the Board determines for a particular Offering) and ends on the date stated in the Offering, which date shall be no later than the end of the Offering and/or (2) shall be contributed, in whole or in part, by such Employee during such period.

(b) The Board shall establish one or more Purchase Dates during an Offering on which Rights granted under the Plan shall be exercised and purchases of shares of the Common Stock carried out in accordance with such Offering.

(c) In connection with each Offering made under the Plan, the Board may specify a maximum number of shares of the Common Stock that may be purchased by any Participant as well as a maximum aggregate number of shares of the Common Stock that may be purchased by all Participants pursuant to such Offering. In addition, in connection with each Offering that contains more than one Purchase Date, the Board may specify a maximum aggregate number of shares of the Common Stock which may be purchased by all Participants on any given Purchase Date under the Offering. If the aggregate purchase of shares of the Common Stock upon exercise of Rights granted under the Offering would exceed any such maximum aggregate amount, the Board shall make a pro rata allocation of the shares of the Common Stock available in as nearly a uniform manner as shall be practicable and as it shall deem to be equitable.

(d) The purchase price of shares of the Common Stock acquired pursuant to Rights granted under the Plan shall be not less than the lesser of:

(i) an amount equal to eighty-five percent (85%) of the fair market value of the shares of the Common Stock on the Offering Date; or

(ii) an amount equal to eighty-five percent (85%) of the fair market value of the shares of the Common Stock on the Purchase Date.

6.


8. PARTICIPATION; WITHDRAWAL; TERMINATION.

(a) An Eligible Employee may become a Participant in the Plan pursuant to an Offering by delivering a participation agreement to the Company within the time specified in the Offering, in such form as the Company provides. Each such agreement shall authorize payroll deductions of up to the maximum percentage specified by the Board of such Employee's Earnings during the Offering (as defined in each Offering). The payroll deductions made for each Participant shall be credited to a bookkeeping account for such Participant under the Plan and either may be deposited with the general funds of the Company or may be deposited in a separate account in the name of, and for the benefit of, such Participant with a financial institution designated by the Company. To the extent provided in the Offering, a Participant may reduce (including to zero) or increase such payroll deductions. To the extent provided in the Offering, a Participant may begin such payroll deductions after the beginning of the Offering. A Participant may make additional payments into his or her account only if specifically provided for in the Offering and only if the Participant has not already had the maximum permitted amount withheld during the Offering.

(b) At any time during an Offering, a Participant may terminate his or her payroll deductions under the Plan and withdraw from the Offering by delivering to the Company a notice of withdrawal in such form as the Company provides. Such withdrawal may be elected at any time prior to the end of the Offering except as provided by the Board in the Offering. Upon such withdrawal from the Offering by a Participant, the Company shall distribute to such Participant all of his or her accumulated payroll deductions (reduced to the extent, if any, such deductions have been used to acquire shares of the Common Stock for the Participant) under the Offering, without interest unless otherwise specified in the Offering, and such Participant's interest in that Offering shall be automatically terminated. A Participant's withdrawal from an Offering will have no effect upon such Participant's eligibility to participate in any other Offerings under the Plan but such Participant will be required to deliver a new participation agreement in order to participate in subsequent Offerings under the Plan.

(c) Rights granted pursuant to any Offering under the Plan shall terminate immediately upon cessation of any participating Employee's employment with the Company or a designated Affiliate for any reason (subject to any post-employment participation period required by law) or other lack of eligibility. The Company shall distribute to such terminated Employee all of his or her accumulated payroll deductions (reduced to the extent, if any, such deductions have been used to acquire shares of the Common Stock for the terminated Employee) under the Offering, without interest unless otherwise specified in the Offering. If the accumulated payroll deductions have been deposited with the Company's general funds, then the distribution shall be made from the general funds of the Company, without interest. If the accumulated payroll deductions have been deposited in a separate account with a financial institution as provided in subparagraph 8(a), then the distribution shall be made from the separate account, without interest unless otherwise specified in the Offering.

(d) Rights granted under the Plan shall not be transferable by a Participant otherwise than by will or the laws of descent and distribution, or by a beneficiary designation as provided in paragraph 15 and, otherwise during his or her lifetime, shall be exercisable only by the person to whom such Rights are granted.

7.


9. EXERCISE.

(a) On each Purchase Date specified therefor in the relevant Offering, each Participant's accumulated payroll deductions and other additional payments specifically provided for in the Offering (without any increase for interest) will be applied to the purchase of shares of the Common Stock up to the maximum number of shares of the Common Stock permitted pursuant to the terms of the Plan and the applicable Offering, at the purchase price specified in the Offering. No fractional shares of the Common Stock shall be issued upon the exercise of Rights granted under the Plan unless specifically provided for in the Offering.

(b) Unless otherwise specifically provided in the Offering, the amount, if any, of accumulated payroll deductions remaining in any Participant's account after the purchase of shares of the Common Stock that is equal to the amount required to purchase one or more whole shares of the Common Stock on the final Purchase Date of the Offering shall be distributed in full to the Participant at the end of the Offering, without interest. If the accumulated payroll deductions have been deposited with the Company's general funds, then the distribution shall be made from the general funds of the Company, without interest. If the accumulated payroll deductions have been deposited in a separate account with a financial institution as provided in subparagraph 8(a), then the distribution shall be made from the separate account, without interest unless otherwise specified in the Offering. The amount of accumulated payroll deductions remaining in any Participant's account that is less than the amount required to purchase one whole share of Common Stock on the final Purchase Date of the Offering shall be carried over to the next Offering or shall, if the Participant requests or does not participate in the next Offering, be refunded.

(c) No Rights granted under the Plan may be exercised to any extent unless the shares of the Common Stock to be issued upon such exercise under the Plan (including Rights granted thereunder) are covered by an effective registration statement pursuant to the Securities Act and the Plan is in material compliance with all applicable state, foreign and other securities and other laws applicable to the Plan. If on a Purchase Date in any Offering hereunder the Plan is not so registered or in such compliance, no Rights granted under the Plan or any Offering shall be exercised on such Purchase Date, and the Purchase Date shall be delayed until the Plan is subject to such an effective registration statement and such compliance, except that the Purchase Date shall not be delayed more than twelve (12) months and the Purchase Date shall in no event be more than twenty-seven (27) months from the Offering Date. If, on the Purchase Date of any Offering hereunder, as delayed to the maximum extent permissible, the Plan is not registered and in such compliance, no Rights granted under the Plan or any Offering shall be exercised and all payroll deductions accumulated during the Offering (reduced to the extent, if any, such deductions have been used to acquire Shares) shall be distributed to the Participants, without interest unless otherwise specified in the Offering. If the accumulated payroll deductions have been deposited with the Company's general funds, then the distribution shall be made from the general funds of the Company, without interest. If the accumulated payroll deductions have been deposited in a separate account with a financial institution as provided in subparagraph 8(a), then the distribution shall be made from the separate account, without interest unless otherwise specified in the Offering.

8.


10. COVENANTS OF THE COMPANY.

(a) During the terms of the Rights granted under the Plan, the Company shall ensure that the number of shares of the Common Stock required to satisfy such Rights are available.

(b) The Company shall seek to obtain from each federal, state, foreign or other regulatory commission or agency having jurisdiction over the Plan such authority as may be required to issue and sell shares of the Common Stock upon exercise of the Rights granted under the Plan. If, after reasonable efforts, the Company is unable to obtain from any such regulatory commission or agency the authority which counsel for the Company deems necessary for the lawful issuance and sale of shares of the Common Stock under the Plan, the Company shall be relieved from any liability for failure to issue and sell shares of the Common Stock upon exercise of such Rights unless and until such authority is obtained.

11. USE OF PROCEEDS FROM SHARES.

Proceeds from the sale of shares of the Common Stock pursuant to Rights granted under the Plan shall constitute general funds of the Company.

12. RIGHTS AS A STOCKHOLDER.

A Participant shall not be deemed to be the holder of, or to have any of the rights of a holder with respect to, shares of the Common Stock subject to Rights granted under the Plan unless and until the Participant's shares of the Common Stock acquired upon exercise of Rights under the Plan are recorded in the books of the Company.

13. ADJUSTMENTS UPON CHANGES IN SECURITIES.

(a) If any change is made in the shares of the Common Stock subject to the Plan, or subject to any Right, without the receipt of consideration by the Company (through merger, consolidation, reorganization, recapitalization, reincorporation, stock dividend, dividend in property other than cash, stock split, liquidating dividend, combination of shares, exchange of shares, change in corporate structure or other transaction not involving the receipt of consideration by the Company), the Plan will be appropriately adjusted in the class(es) and maximum number of shares of the Common Stock subject to the Plan pursuant to subparagraph 4(a), and the outstanding Rights will be appropriately adjusted in the class(es), number of shares of the Common Stock and purchase limits of such outstanding Rights. The Board shall make such adjustments, and its determination shall be final, binding and conclusive. (The conversion of any convertible securities of the Company shall not be treated as a transaction that does not involve the receipt of consideration by the Company.)

(b) In the event of: (i) a dissolution, liquidation, or sale of all or substantially all of the assets of the Company; (ii) a merger or consolidation in which the Company is not the surviving corporation; or (iii) a reverse merger in which the Company is the surviving corporation but the shares of the Common Stock outstanding immediately preceding the merger are converted by virtue of the merger into other property, whether in the form of securities, cash or otherwise, then: (1) any surviving or acquiring corporation may assume Rights outstanding under the Plan or may substitute similar rights (including a right to acquire the same

9.


consideration paid to the Company's stockholders in the transaction described in this subparagraph 13(b)) for those outstanding under the Plan, or (2) in the event any surviving or acquiring corporation does not assume such Rights or substitute similar rights for those outstanding under the Plan, then, as determined by the Board in its sole discretion, such Rights may continue in full force and effect or the Participants' accumulated payroll deductions (exclusive of any accumulated interest which cannot be applied toward the purchase of shares of the Common Stock under the terms of the Offering) may be used to purchase shares of the Common Stock immediately prior to the transaction described above under the ongoing Offering and the Participants' Rights under the ongoing Offering thereafter terminated.

14. AMENDMENT OF THE PLAN.

(a) The Board at any time, and from time to time, may amend the Plan. However, except as provided in paragraph 13 relating to adjustments upon changes in securities and except as to minor amendments to benefit the administration of the Plan, to take account of a change in legislation or to obtain or maintain favorable tax, exchange control or regulatory treatment for Participants or the Company or any Affiliate, no amendment shall be effective unless approved by the stockholders of the Company to the extent stockholder approval is necessary for the Plan to satisfy the requirements of Section 423 of the Code, Rule 16b-3 under the Exchange Act and any Nasdaq or other securities exchange listing requirements. Currently under the Code, stockholder approval within twelve (12) months before or after the adoption of the amendment is required where the amendment will:

(i) Increase the number of shares of the Common Stock reserved for Rights under the Plan;

(ii) Modify the provisions as to eligibility for participation in the Plan to the extent such modification requires stockholder approval in order for the Plan to obtain employee stock purchase plan treatment under
Section 423 of the Code or to comply with the requirements of Rule 16b-3; or

(iii) Modify the Plan in any other way if such modification requires stockholder approval in order for the Plan to obtain employee stock purchase plan treatment under Section 423 of the Code or to comply with the requirements of Rule 16b-3.

(b) It is expressly contemplated that the Board may amend the Plan in any respect the Board deems necessary or advisable to provide Employees with the maximum benefits provided or to be provided under the provisions of the Code and the regulations promulgated thereunder relating to Employee Stock Purchase Plans and/or to bring the Plan and/or Rights granted under it into compliance therewith.

(c) Rights and obligations under any Rights granted before amendment of the Plan shall not be impaired by any amendment of the Plan, except with the consent of the person to whom such Rights were granted, or except as necessary to comply with any laws or governmental regulations, or except as necessary to ensure that the Plan and/or Rights granted under the Plan comply with the requirements of Section 423 of the Code.

10.


15. DESIGNATION OF BENEFICIARY.

(a) A Participant may file a written designation of a beneficiary who is to receive any shares of the Common Stock and/or cash, if any, from the Participant's account under the Plan in the event of such Participant's death subsequent to the end of an Offering but prior to delivery to the Participant of such shares of the Common Stock and cash. In addition, a Participant may file a written designation of a beneficiary who is to receive any cash from the Participant's account under the Plan in the event of such Participant's death during an Offering.

(b) The Participant may change such designation of beneficiary at any time by written notice. In the event of the death of a Participant and in the absence of a beneficiary validly designated under the Plan who is living at the time of such Participant's death, the Company shall deliver such shares of the Common Stock and/or cash to the executor or administrator of the estate of the Participant, or if no such executor or administrator has been appointed (to the knowledge of the Company), the Company, in its sole discretion, may deliver such shares of the Common Stock and/or cash to the spouse or to any one or more dependents or relatives of the Participant, or if no spouse, dependent or relative is known to the Company, then to such other person as the Company may designate.

16. TERMINATION OR SUSPENSION OF THE PLAN.

(a) The Board in its discretion may suspend or terminate the Plan at any time. Unless sooner terminated, the Plan shall terminate at the time that all of the shares of the Common Stock subject to the Plan's reserve, as increased and/or adjusted from time to time, have been issued under the terms of the Plan. No Rights may be granted under the Plan while the Plan is suspended or after it is terminated.

(b) Rights and obligations under any Rights granted while the Plan is in effect shall not be impaired by suspension or termination of the Plan, except as expressly provided in the Plan or with the consent of the person to whom such Rights were granted, or except as necessary to comply with any laws or governmental regulation, or except as necessary to ensure that the Plan and/or Rights granted under the Plan comply with the requirements of Section 423 of the Code.

17. EFFECTIVE DATE OF PLAN.

The Plan shall become effective simultaneously with the effectiveness of the Company's registration statement under the Securities Act with respect to the initial public offering of shares of the Company's Common Stock (the "Effective Date"), but no Rights granted under the Plan shall be exercised unless and until the Plan has been approved by the stockholders of the Company within twelve (12) months before or after the date the Plan, as amended and restated, is adopted by the Board, which date may be prior to the Effective Date.

11.


OMNICELL.COM

1999 EQUITY INCENTIVE PLAN

ADOPTED SEPTEMBER 1, 1999
AMENDED AND RESTATED ____, 2000
TERMINATION DATE: AUGUST 30, 2009

1. PURPOSES.

(a) ELIGIBLE STOCK AWARD RECIPIENTS. The persons eligible to receive Stock Awards are the Employees, Directors and Consultants of the Company and its Affiliates.

(b) AVAILABLE STOCK AWARDS. The purpose of the Plan is to provide a means by which eligible recipients of Stock Awards may be given an opportunity to benefit from increases in value of the Common Stock through the granting of the following Stock Awards: (i) Incentive Stock Options, (ii) Nonstatutory Stock Options, (iii) stock bonuses and (iv) rights to acquire restricted stock. The Plan also provides for non-discretionary grants of Nonstatutory Stock Options to Non-Employee Directors of the Company.

(c) GENERAL PURPOSE. The Company, by means of the Plan, seeks to retain the services of the group of persons eligible to receive Stock Awards, to secure and retain the services of new members of this group and to provide incentives for such persons to exert maximum efforts for the success of the Company and its Affiliates.

2. DEFINITIONS.

(a) "AFFILIATE" means any parent corporation or subsidiary corporation of the Company, whether now or hereafter existing, as those terms are defined in Sections 424(e) and (f), respectively, of the Code.

(b) "BOARD" means the Board of Directors of the Company.

(c) "CODE" means the Internal Revenue Code of 1986, as amended.

(d) "COMMITTEE" means a committee of one or more members of the Board appointed by the Board in accordance with subsection 3(c).

(e) "COMMON STOCK" means the common stock of the Company.

(f) "COMPANY" means OmniCell.Com, a California corporation.

(g) "CONSULTANT" means any person, including an advisor, (i) engaged by the Company or an Affiliate to render consulting or advisory services and who is compensated for such services or (ii) who is a member of the Board of Directors of an Affiliate. However, the

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term "Consultant" shall not include either Directors who are not compensated by the Company for their services as Directors or Directors who are merely paid a director's fee by the Company for their services as Directors.

(h) "CONTINUOUS SERVICE" means that the Participant's service with the Company or an Affiliate, whether as an Employee, Director or Consultant, is not interrupted or terminated. The Participant's Continuous Service shall not be deemed to have terminated merely because of a change in the capacity in which the Participant renders service to the Company or an Affiliate as an Employee, Consultant or Director or a change in the entity for which the Participant renders such service, provided that there is no interruption or termination of the Participant's Continuous Service. For example, a change in status from an Employee of the Company to a Consultant of an Affiliate or a Director will not constitute an interruption of Continuous Service. The Board or the chief executive officer of the Company, in that party's sole discretion, may determine whether Continuous Service shall be considered interrupted in the case of any leave of absence approved by that party, including sick leave, military leave or any other personal leave.

(i) "COVERED EMPLOYEE" means the chief executive officer and the four
(4) other highest compensated officers of the Company for whom total compensation is required to be reported to shareholders under the Exchange Act, as determined for purposes of Section 162(m) of the Code.

(j) "DIRECTOR" means a member of the Board of Directors of the Company.

(k) "DISABILITY" means (i) before the Listing Date, the inability of a person, in the opinion of a qualified physician acceptable to the Company, to perform the major duties of that person's position with the Company or an Affiliate of the Company because of the sickness or injury of the person and
(ii) after the Listing Date, the permanent and total disability of a person within the meaning of Section 22(e)(3) of the Code.

(l) "EMPLOYEE" means any person employed by the Company or an Affiliate. Mere service as a Director or payment of a director's fee by the Company or an Affiliate shall not be sufficient to constitute "employment" by the Company or an Affiliate.

(m) "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.

(n) "FAIR MARKET VALUE" means, as of any date, the value of the Common Stock determined as follows:

(i) If the Common Stock is listed on any established stock exchange or traded on the Nasdaq National Market or the Nasdaq SmallCap Market, the Fair Market Value of a share of Common Stock shall be the closing sales price for such stock (or the closing bid, if no sales were reported) as quoted on such exchange or market (or the exchange or market with the greatest volume of trading in the Common Stock) on the last market trading day prior to the day of determination, as reported in THE WALL STREET JOURNAL or such other source as the Board deems reliable.

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(ii) In the absence of such markets for the Common Stock, the Fair Market Value shall be determined in good faith by the Board.

(iii) Prior to the Listing Date, the value of the Common Stock shall be determined in a manner consistent with Section 260.140.50 of Title 10 of the California Code of Regulations.

(o) "INCENTIVE STOCK OPTION" means an Option intended to qualify as an incentive stock option within the meaning of Section 422 of the Code and the regulations promulgated thereunder.

(p) "IPO DATE" means the effective date of the initial public offering of the Company's Common Stock.

(q) "LISTING DATE" means the first date upon which any security of the Company is listed (or approved for listing) upon notice of issuance on any securities exchange or designated (or approved for designation) upon notice of issuance as a national market security on an interdealer quotation system if such securities exchange or interdealer quotation system has been certified in accordance with the provisions of Section 25100(o) of the California Corporate Securities Law of 1968.

(r) "NON-EMPLOYEE DIRECTOR" means a Director who either (i) is not a current Employee or Officer of the Company or its parent or a subsidiary, does not receive compensation (directly or indirectly) from the Company or its parent or a subsidiary for services rendered as a consultant or in any capacity other than as a Director (except for an amount as to which disclosure would not be required under Item 404(a) of Regulation S-K promulgated pursuant to the Securities Act ("Regulation S-K")), does not possess an interest in any other transaction as to which disclosure would be required under Item 404(a) of Regulation S-K and is not engaged in a business relationship as to which disclosure would be required under Item 404(b) of Regulation S-K; or (ii) is otherwise considered a "non-employee director" for purposes of Rule 16b-3.

(s) "NON-EMPLOYEE DIRECTOR OPTION" means a Non-Statutory Stock Option granted pursuant to Section 7 hereof.

(t) "NON-EMPLOYEE DIRECTOR OPTION AGREEMENT" means a written agreement between the Company and a Non-Employee Director evidencing the terms and conditions of a Non-Employee Director Option grant. Each Non-Employee Director Option Agreement shall be subject to the terms and conditions of the Plan.

(u) "NONSTATUTORY STOCK OPTION" means an Option not intended to qualify as an Incentive Stock Option.

(v) "OFFICER" means (i) before the Listing Date, any person designated by the Company as an officer and (ii) on and after the Listing Date, a person who is an officer of the Company within the meaning of Section 16 of the Exchange Act and the rules and regulations promulgated thereunder.

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(w) "OPTION" means an Incentive Stock Option or a Nonstatutory Stock Option granted pursuant to the Plan.

(x) "OPTION AGREEMENT" means a written agreement between the Company and an Optionholder evidencing the terms and conditions of an individual Option grant. Each Option Agreement shall be subject to the terms and conditions of the Plan.

(y) "OPTIONHOLDER" means a person to whom an Option is granted pursuant to the Plan or, if applicable, such other person who holds an outstanding Option.

(z) "OUTSIDE DIRECTOR" means a Director who either (i) is not a current employee of the Company or an "affiliated corporation" (within the meaning of Treasury Regulations promulgated under Section 162(m) of the Code), is not a former employee of the Company or an "affiliated corporation" receiving compensation for prior services (other than benefits under a tax qualified pension plan), was not an officer of the Company or an "affiliated corporation" at any time and is not currently receiving direct or indirect remuneration from the Company or an "affiliated corporation" for services in any capacity other than as a Director or (ii) is otherwise considered an "outside director" for purposes of Section 162(m) of the Code.

(aa) "PARTICIPANT" means a person to whom a Stock Award is granted pursuant to the Plan or, if applicable, such other person who holds an outstanding Stock Award.

(bb) "PLAN" means this OmniCell.Com 1999 Equity Incentive Plan.

(cc) "RULE 16b-3" means Rule 16b-3 promulgated under the Exchange Act or any successor to Rule 16b-3, as in effect from time to time.

(dd) "SECURITIES ACT" means the Securities Act of 1933, as amended.

(ee) "STOCK AWARD" means any right granted under the Plan, including an Option, a stock bonus and a right to acquire restricted stock.

(ff) "STOCK AWARD AGREEMENT" means a written agreement between the Company and a holder of a Stock Award evidencing the terms and conditions of an individual Stock Award grant. Each Stock Award Agreement shall be subject to the terms and conditions of the Plan.

(gg) "TEN PERCENT SHAREHOLDER" means a person who owns (or is deemed to own pursuant to Section 424(d) of the Code) stock possessing more than ten percent (10%) of the total combined voting power of all classes of stock of the Company or of any of its Affiliates.

3. ADMINISTRATION.

(a) ADMINISTRATION BY BOARD. The Board shall administer the Plan unless and until the Board delegates administration to a Committee, as provided in subsection 3(c).

(b) POWERS OF BOARD. The Board shall have the power, subject to, and within the limitations of, the express provisions of the Plan:

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(i) To determine from time to time which of the persons eligible under the Plan shall be granted Stock Awards; when and how each Stock Award shall be granted; what type or combination of types of Stock Award shall be granted; the provisions of each Stock Award granted (which need not be identical), including the time or times when a person shall be permitted to receive Common Stock pursuant to a Stock Award; and the number of shares of Common Stock with respect to which a Stock Award shall be granted to each such person.

(ii) To construe and interpret the Plan and Stock Awards granted under it, and to establish, amend and revoke rules and regulations for its administration. The Board, in the exercise of this power, may correct any defect, omission or inconsistency in the Plan or in any Stock Award Agreement, in a manner and to the extent it shall deem necessary or expedient to make the Plan fully effective.

(iii) To amend the Plan or a Stock Award as provided in
Section 13.

(iv) Generally, to exercise such powers and to perform such acts as the Board deems necessary or expedient to promote the best interests of the Company which are not in conflict with the provisions of the Plan.

(c) DELEGATION TO COMMITTEE.

(i) GENERAL. The Board may delegate administration of the Plan to a Committee or Committees of one (1) or more members of the Board, and the term "Committee" shall apply to any person or persons to whom such authority has been delegated. If administration is delegated to a Committee, the Committee shall have, in connection with the administration of the Plan, the powers theretofore possessed by the Board, including the power to delegate to a subcommittee any of the administrative powers the Committee is authorized to exercise (and references in this Plan to the Board shall thereafter be to the Committee or subcommittee), subject, however, to such resolutions, not inconsistent with the provisions of the Plan, as may be adopted from time to time by the Board. The Board may abolish the Committee at any time and revest in the Board the administration of the Plan.

(ii) COMMITTEE COMPOSITION WHEN COMMON STOCK IS PUBLICLY TRADED. At such time as the Common Stock is publicly traded, in the discretion of the Board, a Committee may consist solely of two or more Outside Directors, in accordance with Section 162(m) of the Code, and/or solely of two or more Non-Employee Directors, in accordance with Rule 16b-3. Within the scope of such authority, the Board or the Committee may (1) delegate to a committee of one or more members of the Board who are not Outside Directors the authority to grant Stock Awards to eligible persons who are either (a) not then Covered Employees and are not expected to be Covered Employees at the time of recognition of income resulting from such Stock Award or (b) not persons with respect to whom the Company wishes to comply with Section 162(m) of the Code and/or (2) delegate to a committee of one or more members of the Board who are not Non-Employee Directors the authority to grant Stock Awards to eligible persons who are not then subject to Section 16 of the Exchange Act.

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(d) EFFECT OF BOARD'S DECISION. All determinations, interpretations and constructions made by the Board in good faith shall not be subject to review by any person and shall be final, binding and conclusive on all persons.

4. SHARES SUBJECT TO THE PLAN.

(a) SHARE RESERVE. Subject to the provisions of Section 12 relating to adjustments upon changes in Common Stock, the Common Stock that may be issued pursuant to Stock Awards shall not exceed in the aggregate five million (5,000,000) shares of Common Stock, plus an annual increase to be added each January 1, beginning January 1, 2001, equal to the lesser of
(i) five percent (5%) of the total number of shares of Common Stock outstanding on such January 1 or (ii) three million (3,000,000) shares of Common Stock. Notwithstanding the foregoing, the Board may designate a smaller number of shares of Common Stock to be added to the share reserve as of a particular January 1. The shares that may be issuable under incentive stock options shall be limited to the above maximum number of shares reserved under the Plan.

(b) REVERSION OF SHARES TO THE SHARE RESERVE. If any Stock Award shall for any reason expire or otherwise terminate, in whole or in part, without having been exercised in full, the shares of Common Stock not acquired under such Stock Award shall revert to and again become available for issuance under the Plan. In addition, if any stock award issued under the Company's 1992 Incentive Stock Option Plan and 1995 Management Stock Option Plan shall for any reason expire or otherwise terminate, in whole or in part, without having been exercised in full, the shares of Common Stock not acquired under such stock award shall revert to and again become available for issuance under this Plan provided such shares shall not be issuable under an incentive stock option.

(c) SOURCE OF SHARES. The shares of Common Stock subject to the Plan may be unissued shares or reacquired shares, bought on the market or otherwise.

(d) SHARE RESERVE LIMITATION. Prior to the Listing Date and to the extent then required by Section 260.140.45 of Title 10 of the California Code of Regulations, the total number of shares of Common Stock issuable upon exercise of all outstanding Options and the total number of shares of Common Stock provided for under any stock bonus or similar plan of the Company shall not exceed the applicable percentage as calculated in accordance with the conditions and exclusions of Section 260.140.45 of Title 10 of the California Code of Regulations, based on the shares of Common Stock of the Company that are outstanding at the time the calculation is made.

5. ELIGIBILITY.

(a) ELIGIBILITY FOR SPECIFIC STOCK AWARDS. Incentive Stock Options may be granted only to Employees. Stock Awards other than Incentive Stock Options may be granted to Employees, Directors and Consultants.

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(b) TEN PERCENT SHAREHOLDERS.

(i) A Ten Percent Shareholder shall not be granted an Incentive Stock Option unless the exercise price of such Option is at least one hundred ten percent (110%) of the Fair Market Value of the Common Stock at the date of grant and the Option is not exercisable after the expiration of five (5) years from the date of grant.

(ii) Prior to the Listing Date, a Ten Percent Shareholder shall not be granted a Nonstatutory Stock Option unless the exercise price of such Option is at least (i) one hundred ten percent (110%) of the Fair Market Value of the Common Stock at the date of grant or (ii) such lower percentage of the Fair Market Value of the Common Stock at the date of grant as is permitted by Section 260.140.41 of Title 10 of the California Code of Regulations at the time of the grant of the Option.

(iii) Prior to the Listing Date, a Ten Percent Shareholder shall not be granted a restricted stock award unless the purchase price of the restricted stock is at least (i) one hundred percent (100%) of the Fair Market Value of the Common Stock at the date of grant or (ii) such lower percentage of the Fair Market Value of the Common Stock at the date of grant as is permitted by Section 260.140.41 of Title 10 of the California Code of Regulations at the time of the grant of the Option.

(c) SECTION 162(m) LIMITATION. Subject to the provisions of Section 12 relating to adjustments upon changes in the shares of Common Stock, no Employee shall be eligible to be granted Options covering more than one million two hundred thousand (1,200,000) shares of Common Stock during any calendar year. This subsection 5(c) shall not apply prior to the Listing Date and, following the Listing Date, this subsection 5(c) shall not apply until (i) the earliest of: (1) the first material modification of the Plan (including any increase in the number of shares of Common Stock reserved for issuance under the Plan in accordance with Section 4); (2) the issuance of all of the shares of Common Stock reserved for issuance under the Plan; (3) the expiration of the Plan; or
(4) the first meeting of shareholders at which Directors are to be elected that occurs after the close of the third calendar year following the calendar year in which occurred the first registration of an equity security under Section 12 of the Exchange Act; or (ii) such other date required by Section 162(m) of the Code and the rules and regulations promulgated thereunder.

(d) CONSULTANTS.

(i) Prior to the Listing Date, a Consultant shall not be eligible for the grant of a Stock Award if, at the time of grant, either the offer or the sale of the Company's securities to such Consultant is not exempt under Rule 701 of the Securities Act ("Rule 701") because of the nature of the services that the Consultant is providing to the Company, or because the Consultant is not a natural person, or as otherwise provided by Rule 701, unless the Company determines that such grant need not comply with the requirements of Rule 701 and will satisfy another exemption under the Securities Act as well as comply with the securities laws of all other relevant jurisdictions.

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(ii) From and after the Listing Date, a Consultant shall not be eligible for the grant of a Stock Award if, at the time of grant, a Form S-8 Registration Statement under the Securities Act ("Form S-8") is not available to register either the offer or the sale of the Company's securities to such Consultant because of the nature of the services that the Consultant is providing to the Company, or because the Consultant is not a natural person, or as otherwise provided by the rules governing the use of Form S-8, unless the Company determines both (i) that such grant (A) shall be registered in another manner under the Securities Act (E.G., on a Form S-3 Registration Statement) or (B) does not require registration under the Securities Act in order to comply with the requirements of the Securities Act, if applicable, and (ii) that such grant complies with the securities laws of all other relevant jurisdictions.

(iii) Rule 701 and Form S-8 generally are available to consultants and advisors only if (i) they are natural persons; (ii) they provide bona fide services to the issuer, its parents, its majority-owned subsidiaries or majority-owned subsidiaries of the issuer's parent; and (iii) the services are not in connection with the offer or sale of securities in a capital-raising transaction, and do not directly or indirectly promote or maintain a market for the issuer's securities.

6. OPTION PROVISIONS.

Each Option shall be in such form and shall contain such terms and conditions as the Board shall deem appropriate. All Options shall be separately designated Incentive Stock Options or Nonstatutory Stock Options at the time of grant, and, if certificates are issued, a separate certificate or certificates will be issued for shares of Common Stock purchased on exercise of each type of Option. The provisions of separate Options need not be identical, but each Option shall include (through incorporation of provisions hereof by reference in the Option or otherwise) the substance of each of the following provisions:

(a) TERM. Subject to the provisions of subsection 5(b) regarding Ten Percent Shareholders, no Option granted prior to the Listing Date shall be exercisable after the expiration of ten (10) years from the date it was granted, and no Incentive Stock Option granted on or after the Listing Date shall be exercisable after the expiration of ten (10) years from the date it was granted.

(b) EXERCISE PRICE OF AN INCENTIVE STOCK OPTION. Subject to the provisions of subsection 5(b) regarding Ten Percent Shareholders, the exercise price of each Incentive Stock Option shall be not less than one hundred percent (100%) of the Fair Market Value of the Common Stock subject to the Option on the date the Option is granted. Notwithstanding the foregoing, an Incentive Stock Option may be granted with an exercise price lower than that set forth in the preceding sentence if such Option is granted pursuant to an assumption or substitution for another option in a manner satisfying the provisions of Section 424(a) of the Code.

(c) EXERCISE PRICE OF A NONSTATUTORY STOCK OPTION. Subject to the provisions of subsection 5(b) regarding Ten Percent Shareholders, the exercise price of each Nonstatutory Stock Option granted prior to the Listing Date shall be not less than eighty-five percent (85%) of the Fair Market Value of the Common Stock subject to the Option on the date the Option is granted. The exercise price of each Nonstatutory Stock Option granted on or after the Listing Date shall be not less than eighty-five percent (85%) of the Fair Market Value of the Common Stock subject to the Option on the date the Option is

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granted. Notwithstanding the foregoing, a Nonstatutory Stock Option may be granted with an exercise price lower than that set forth in the preceding sentence if such Option is granted pursuant to an assumption or substitution for another option in a manner satisfying the provisions of Section 424(a) of the Code.

(d) CONSIDERATION. The purchase price of Common Stock acquired pursuant to an Option shall be paid, to the extent permitted by applicable statutes and regulations, either (i) in cash at the time the Option is exercised or (ii) at the discretion of the Board at the time of the grant of the Option (or subsequently in the case of a Nonstatutory Stock Option) (1) by delivery to the Company of other Common Stock, (2) according to a deferred payment or other similar arrangement with the Optionholder or (3) in any other form of legal consideration that may be acceptable to the Board. Unless otherwise specifically provided in the Option, the purchase price of Common Stock acquired pursuant to an Option that is paid by delivery to the Company of other Common Stock acquired, directly or indirectly from the Company, shall be paid only by shares of the Common Stock of the Company that have been held for more than six (6) months (or such longer or shorter period of time required to avoid a charge to earnings for financial accounting purposes). At any time that the Company is incorporated in Delaware, payment of the Common Stock's "par value," as defined in the Delaware General Corporation Law, shall not be made by deferred payment.

In the case of any deferred payment arrangement, interest shall be compounded at least annually and shall be charged at the minimum rate of interest necessary to avoid the treatment as interest, under any applicable provisions of the Code, of any amounts other than amounts stated to be interest under the deferred payment arrangement.

(e) TRANSFERABILITY OF AN INCENTIVE STOCK OPTION. An Incentive Stock Option shall not be transferable except by will or by the laws of descent and distribution and shall be exercisable during the lifetime of the Optionholder only by the Optionholder. Notwithstanding the foregoing, the Optionholder may, by delivering written notice to the Company, in a form satisfactory to the Company, designate a third party who, in the event of the death of the Optionholder, shall thereafter be entitled to exercise the Option.

(f) TRANSFERABILITY OF A NONSTATUTORY STOCK OPTION. A Nonstatutory Stock Option granted prior to the Listing Date shall not be transferable except by will or by the laws of descent and distribution and, to the extent provided in the Option Agreement, to such further extent as permitted by Section 260.140.41(d) of Title 10 of the California Code of Regulations at the time of the grant of the Option, and shall be exercisable during the lifetime of the Optionholder only by the Optionholder. A Nonstatutory Stock Option granted on or after the Listing Date shall be transferable to the extent provided in the Option Agreement. If the Nonstatutory Stock Option does not provide for transferability, then the Nonstatutory Stock Option shall not be transferable except by will or by the laws of descent and distribution and shall be exercisable during the lifetime of the Optionholder only by the Optionholder. Notwithstanding the foregoing, the Optionholder may, by delivering written notice to the Company, in a form satisfactory to the

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Company, designate a third party who, in the event of the death of the Optionholder, shall thereafter be entitled to exercise the Option.

(g) VESTING GENERALLY. The total number of shares of Common Stock subject to an Option may, but need not, vest and therefore become exercisable in periodic installments that may, but need not, be equal. The Option may be subject to such other terms and conditions on the time or times when it may be exercised (which may be based on performance or other criteria) as the Board may deem appropriate. The vesting provisions of individual Options may vary. The provisions of this subsection 6(g) are subject to any Option provisions governing the minimum number of shares of Common Stock as to which an Option may be exercised.

(h) MINIMUM VESTING PRIOR TO THE LISTING DATE. Notwithstanding the foregoing subsection 6(g), to the extent that the following restrictions on vesting are required by Section 260.140.41(f) of Title 10 of the California Code of Regulations at the time of the grant of the Option, then:

(i) Options granted prior to the Listing Date to an Employee who is not an Officer, Director or Consultant shall provide for vesting of the total number of shares of Common Stock at a rate of at least twenty percent (20%) per year over five (5) years from the date the Option was granted, subject to reasonable conditions such as continued employment; and

(ii) Options granted prior to the Listing Date to Officers, Directors or Consultants may be made fully exercisable, subject to reasonable conditions such as continued employment, at any time or during any period established by the Company.

(i) TERMINATION OF CONTINUOUS SERVICE. In the event an Optionholder's Continuous Service terminates (other than upon the Optionholder's death or Disability), the Optionholder may exercise his or her Option (to the extent that the Optionholder was entitled to exercise such Option as of the date of termination) but only within such period of time ending on the earlier of (i) the date three (3) months following the termination of the Optionholder's Continuous Service (or such longer or shorter period specified in the Option Agreement, which period shall not be less than thirty (30) days for Options granted prior to the Listing Date unless such termination is for cause), or (ii) the expiration of the term of the Option as set forth in the Option Agreement. If, after termination, the Optionholder does not exercise his or her Option within the time specified in the Option Agreement, the Option shall terminate.

(j) EXTENSION OF TERMINATION DATE. An Optionholder's Option Agreement may also provide that if the exercise of the Option following the termination of the Optionholder's Continuous Service (other than upon the Optionholder's death or Disability) would be prohibited at any time solely because the issuance of shares of Common Stock would violate the registration requirements under the Securities Act, then the Option shall terminate on the earlier of (i) the expiration of the term of the Option set forth in subsection 6(a) or (ii) the expiration of a period of three (3) months after the termination of the Optionholder's Continuous Service during which the exercise of the Option would not be in violation of such registration requirements.

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(k) DISABILITY OF OPTIONHOLDER. In the event that an Optionholder's Continuous Service terminates as a result of the Optionholder's Disability, the Optionholder may exercise his or her Option (to the extent that the Optionholder was entitled to exercise such Option as of the date of termination), but only within such period of time ending on the earlier of (i) the date twelve (12) months following such termination (or such longer or shorter period specified in the Option Agreement, which period shall not be less than six (6) months for Options granted prior to the Listing Date) or (ii) the expiration of the term of the Option as set forth in the Option Agreement. If, after termination, the Optionholder does not exercise his or her Option within the time specified herein, the Option shall terminate.

(l) DEATH OF OPTIONHOLDER. In the event (i) an Optionholder's Continuous Service terminates as a result of the Optionholder's death or (ii) the Optionholder dies within the period (if any) specified in the Option Agreement after the termination of the Optionholder's Continuous Service for a reason other than death, then the Option may be exercised (to the extent the Optionholder was entitled to exercise such Option as of the date of death) by the Optionholder's estate, by a person who acquired the right to exercise the Option by bequest or inheritance or by a person designated to exercise the option upon the Optionholder's death pursuant to subsection 6(e) or 6(f), but only within the period ending on the earlier of (1) the date eighteen (18) months following the date of death (or such longer or shorter period specified in the Option Agreement, which period shall not be less than six (6) months for Options granted prior to the Listing Date) or (2) the expiration of the term of such Option as set forth in the Option Agreement. If, after death, the Option is not exercised within the time specified herein, the Option shall terminate.

(m) EARLY EXERCISE. The Option may, but need not, include a provision whereby the Optionholder may elect at any time before the Optionholder's Continuous Service terminates to exercise the Option as to any part or all of the shares of Common Stock subject to the Option prior to the full vesting of the Option. Subject to the "Repurchase Limitation" in subsection 11(h), any unvested shares of Common Stock so purchased may be subject to a repurchase option in favor of the Company or to any other restriction the Board determines to be appropriate. Provided that the "Repurchase Limitation" in subsection 11(h) is not violated, the Company will not exercise its repurchase option until at least six (6) months (or such longer or shorter period of time required to avoid a charge to earnings for financial accounting purposes) have elapsed following exercise of the Option unless the Board otherwise specifically provides in the Option.

(n) RIGHT OF REPURCHASE. Subject to the "Repurchase Limitation" in subsection 11(h), the Option may, but need not, include a provision whereby the Company may elect, prior to the Listing Date, to repurchase all or any part of the vested shares of Common Stock acquired by the Optionholder pursuant to the exercise of the Option. Provided that the "Repurchase Limitation" in subsection 11(h) is not violated, the Company will not exercise its repurchase option until at least six (6) months (or such longer or shorter period of time required to avoid a charge to earnings for financial accounting purposes) have elapsed following exercise of the Option unless the Board otherwise specifically provides in the Option.

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(o) RIGHT OF FIRST REFUSAL. The Option may, but need not, include a provision whereby the Company may elect, prior to the Listing Date, to exercise a right of first refusal following receipt of notice from the Optionholder of the intent to transfer all or any part of the shares of Common Stock received upon the exercise of the Option. Except as expressly provided in this subsection
6(o), such right of first refusal shall otherwise comply with any applicable provisions of the Bylaws of the Company.

(p) RE-LOAD OPTIONS.

(i) Without in any way limiting the authority of the Board to make or not to make grants of Options hereunder, the Board shall have the authority (but not an obligation) to include as part of any Option Agreement a provision entitling the Optionholder to a further Option (a "Re-Load Option") in the event the Optionholder exercises the Option evidenced by the Option Agreement, in whole or in part, by surrendering other shares of Common Stock in accordance with this Plan and the terms and conditions of the Option Agreement. Unless otherwise specifically provided in the Option, the Optionholder shall not surrender shares of Common Stock acquired, directly or indirectly from the Company, unless such shares have been held for more than six (6) months (or such longer or shorter period of time required to avoid a charge to earnings for financial accounting purposes).

(ii) Any such Re-Load Option shall (1) provide for a number of shares of Common Stock equal to the number of shares of Common Stock surrendered as part or all of the exercise price of such Option; (2) have an expiration date which is the same as the expiration date of the Option the exercise of which gave rise to such Re-Load Option; and (3) have an exercise price which is equal to one hundred percent (100%) of the Fair Market Value of the Common Stock subject to the Re-Load Option on the date of exercise of the original Option. Notwithstanding the foregoing, a Re-Load Option shall be subject to the same exercise price and term provisions heretofore described for Options under the Plan.

(iii) Any such Re-Load Option may be an Incentive Stock Option or a Nonstatutory Stock Option, as the Board may designate at the time of the grant of the original Option; provided, however, that the designation of any Re-Load Option as an Incentive Stock Option shall be subject to the one hundred thousand dollar ($100,000) annual limitation on the exercisability of Incentive Stock Options described in subsection 11(d) and in Section 422(d) of the Code. There shall be no Re-Load Options on a Re-Load Option. Any such Re-Load Option shall be subject to the availability of sufficient shares of Common Stock under subsection 4(a) and the "Section 162(m) Limitation" on the grants of Options under subsection 5(c) and shall be subject to such other terms and conditions as the Board may determine which are not inconsistent with the express provisions of the Plan regarding the terms of Options.

7. NON-EMPLOYEE DIRECTOR STOCK OPTIONS.

Without any further action of the Board, each Non-Employee Director shall be granted Nonstatutory Stock Options as described in subsections 7(a) and
7(b) (collectively, "Non-Employee Director Options"). Each Non-Employee Director Option shall include the substance of the terms set forth in subsections 7(c) through 7(k).

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(a) STOCK OPTION GRANTS.

(i) INITIAL GRANTS. After the IPO Date, each person who is elected or appointed for the first time to be a Non-Employee Director automatically shall, upon the date of his or her initial election or appointment to be a Non-Employee Director by the Board or stockholders of the Company, be granted an Initial Grant to purchase forty thousand (40,000) shares of Common Stock on the terms and conditions set forth herein; provided, that a Non-Employee Director who is one the Board on the IPO Date shall be granted his or her Initial Grant on that date.

(ii) ANNUAL GRANTS. After the IPO Date, each person who is a Non-Employee Director on the Board shall automatically as of the day following the date of the annual shareholders' meeting be granted an Annual Grant to purchase ten thousand (10,000) shares of Common Stock on the terms and conditions set forth herein.

(b) TERM. Each Non-Employee Director Option shall have a term of ten
(10) years from the date it is granted.

(c) EXERCISE PRICE. The exercise price of each Non-Employee Director Option shall be one hundred percent (100%) of the Fair Market Value of the stock subject to the Non-Employee Director Option on the date of grant. Notwithstanding the foregoing, a Non-Employee Director Option may be granted with an exercise price lower than that set forth in the preceding sentence if such Non-Employee Director Option is granted pursuant to an assumption or substitution for another option in a manner satisfying the provisions of Section 424(a) of the Code.

(d) VESTING.

(i) INITIAL GRANTS. Initial Grants shall vest one-thirty-sixth (1/36th) for each month of Continuous Service of the Non-Employee Director from the date of the stock option grant.

(ii) ANNUAL GRANTS. Annual Grants shall vest one-twelfth (1/12th) for each month of Continuous Service of the Non-Employee Director from the date of the stock option grant.

(e) CONSIDERATION. The purchase price of stock acquired pursuant to a Non-Employee Director Option may be paid, to the extent permitted by applicable statutes and regulations, in any combination of (i) cash or check, (ii) delivery to the Company of other Common Stock, (ii) deferred payment or (iv) any other form of legal consideration that may be acceptable to the Board and provided in the Non-Employee Director Option Agreement; provided, however, that at any time that the Company is incorporated in Delaware, payment of the Common Stock's "par value," as defined in the Delaware General Corporation Law, shall not be made by deferred payment. In the case of any deferred payment arrangement, interest shall be compounded at least annually and shall be charged at the minimum rate of interest necessary to

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avoid the treatment as interest, under any applicable provisions of the Code, of any amounts other than amounts stated to be interest under the deferred payment arrangement.

(f) TRANSFERABILITY. A Non-Employee Director Option shall not be transferable except by will or by the laws of descent and distribution and shall be exercisable during the lifetime of the Non-Employee Director only by the Non-Employee Director. Notwithstanding the foregoing, the Non-Employee Director may, by delivering written notice to the Company, in a form satisfactory to the Company, designate a third party who, in the event of the death of the Non-Employee Director, shall thereafter be entitled to exercise the Non-Employee Director Option.

(g) TERMINATION OF CONTINUOUS SERVICE. In the event a Non-Employee Director's Continuous Service terminates (other than upon the Non-Employee Director's death or Disability), the Non-Employee Director may exercise his or her Non-Employee Director Option (to the extent that the Non-Employee Director was entitled to exercise it as of the date of termination) but only within such period of time ending on the earlier of (i) the date three (3) months following the termination of the Non-Employee Director's Continuous Service, or (ii) the expiration of the term of the Non-Employee Director Option as set forth in the Non-Employee Director Option Agreement. If, after termination, the Non-Employee Director does not exercise his or her Non-Employee Director Option within the time specified in the Non-Employee Director Option Agreement, the Non-Employee Director Option shall terminate.

(h) EXTENSION OF TERMINATION DATE. If the exercise of the Non-Employee Director Option following the termination of the Non-Employee Director's Continuous Service (other than upon the Non-Employee Director's death or Disability) would be prohibited at any time solely because the issuance of shares would violate the registration requirements under the Securities Act, then the Non-Employee Director Option shall terminate on the earlier of (i) the expiration of the term of the Non-Employee Director Option set forth in subsection 7(c) or (ii) the expiration of a period of three (3) months after the termination of the Non-Employee Director's Continuous Service during which the exercise of the Non-Employee Director Option would not violate such registration requirements.

(i) DISABILITY OF NON-EMPLOYEE DIRECTOR. In the event a Non-Employee Director's Continuous Service terminates as a result of the Non-Employee Director's Disability, the Non-Employee Director may exercise his or her Non-Employee Director Option (to the extent that the Non-Employee Director was entitled to exercise it as of the date of termination), but only within such period of time ending on the earlier of (i) the date twelve (12) months following such termination or (ii) the expiration of the term of the Non-Employee Director Option as set forth in the Non-Employee Director Option Agreement. If, after termination, the Non-Employee Director does not exercise his or her Non-Employee Director Option within the time specified herein, the Non-Employee Director Option shall terminate.

(j) DEATH OF NON-EMPLOYEE DIRECTOR. In the event (i) a Non-Employee Director's Continuous Service terminates as a result of the Non-Employee Director's death or (ii) the Non-Employee Director dies within the three-month period after the termination of the Non-Employee Director's Continuous Service for a reason other than death, then the Non-Employee

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Director Option may be exercised (to the extent the Non-Employee Director was entitled to exercise the Non-Employee Director Option as of the date of death) by the Non-Employee Director's estate, by a person who acquired the right to exercise the Non-Employee Director Option by bequest or inheritance or by a person designated to exercise the Non-Employee Director Option upon the Non-Employee Director's death, but only within the period ending on the earlier of (1) the date eighteen (18) months following the date of death or (2) the expiration of the term of such Non-Employee Director Option as set forth in the Non-Employee Director Option Agreement. If, after death, the Non-Employee Director Option is not exercised within the time specified herein, the Non-Employee Director Option shall terminate.

8. PROVISIONS OF STOCK AWARDS OTHER THAN OPTIONS.

(a) STOCK BONUS AWARDS. Each stock bonus agreement shall be in such form and shall contain such terms and conditions as the Board shall deem appropriate. The terms and conditions of stock bonus agreements may change from time to time, and the terms and conditions of separate stock bonus agreements need not be identical, but each stock bonus agreement shall include (through incorporation of provisions hereof by reference in the agreement or otherwise) the substance of each of the following provisions:

(i) CONSIDERATION. A stock bonus may be awarded in consideration for past services actually rendered to the Company or an Affiliate for its benefit.

(ii) VESTING. Subject to the "Repurchase Limitation" in subsection 11(h), shares of Common Stock awarded under the stock bonus agreement may, but need not, be subject to a share repurchase option in favor of the Company in accordance with a vesting schedule to be determined by the Board.

(iii) TERMINATION OF PARTICIPANT'S CONTINUOUS SERVICE. Subject to the "Repurchase Limitation" in subsection 11(h), in the event a Participant's Continuous Service terminates, the Company may reacquire any or all of the shares of Common Stock held by the Participant which have not vested as of the date of termination under the terms of the stock bonus agreement.

(iv) TRANSFERABILITY. For a stock bonus award made before the Listing Date, rights to acquire shares of Common Stock under the stock bonus agreement shall not be transferable except by will or by the laws of descent and distribution and shall be exercisable during the lifetime of the Participant only by the Participant. For a stock bonus award made on or after the Listing Date, rights to acquire shares of Common Stock under the stock bonus agreement shall be transferable by the Participant only upon such terms and conditions as are set forth in the stock bonus agreement, as the Board shall determine in its discretion, so long as Common Stock awarded under the stock bonus agreement remains subject to the terms of the stock bonus agreement.

(b) RESTRICTED STOCK AWARDS. Each restricted stock purchase agreement shall be in such form and shall contain such terms and conditions as the Board shall deem appropriate. The terms and conditions of the restricted stock purchase agreements may change from time to time,

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and the terms and conditions of separate restricted stock purchase agreements need not be identical, but each restricted stock purchase agreement shall include (through incorporation of provisions hereof by reference in the agreement or otherwise) the substance of each of the following provisions:

(i) PURCHASE PRICE. Subject to the provisions of subsection 5(b) regarding Ten Percent Shareholders, the purchase price under each restricted stock purchase agreement shall be such amount as the Board shall determine and designate in such restricted stock purchase agreement. For restricted stock awards made prior to the Listing Date, the purchase price shall not be less than eighty-five percent (85%) of the Common Stock's Fair Market Value on the date such award is made or at the time the purchase is consummated. For restricted stock awards made on or after the Listing Date, the purchase price shall not be less than eighty-five percent (85%) of the Common Stock's Fair Market Value on the date such award is made or at the time the purchase is consummated.

(ii) CONSIDERATION. The purchase price of Common Stock acquired pursuant to the restricted stock purchase agreement shall be paid either: (i) in cash at the time of purchase; (ii) at the discretion of the Board, according to a deferred payment or other similar arrangement with the Participant; or (iii) in any other form of legal consideration that may be acceptable to the Board in its discretion; provided, however, that at any time that the Company is incorporated in Delaware, then payment of the Common Stock's "par value," as defined in the Delaware General Corporation Law, shall not be made by deferred payment.

(iii) VESTING. Subject to the "Repurchase Limitation" in subsection 11(h), shares of Common Stock acquired under the restricted stock purchase agreement may, but need not, be subject to a share repurchase option in favor of the Company in accordance with a vesting schedule to be determined by the Board.

(iv) TERMINATION OF PARTICIPANT'S CONTINUOUS SERVICE. Subject to the "Repurchase Limitation" in subsection 11(h), in the event a Participant's Continuous Service terminates, the Company may repurchase or otherwise reacquire any or all of the shares of Common Stock held by the Participant which have not vested as of the date of termination under the terms of the restricted stock purchase agreement.

(v) TRANSFERABILITY. For a restricted stock award made before the Listing Date, rights to acquire shares of Common Stock under the restricted stock purchase agreement shall not be transferable except by will or by the laws of descent and distribution and shall be exercisable during the lifetime of the Participant only by the Participant. For a restricted stock award made on or after the Listing Date, rights to acquire shares of Common Stock under the restricted stock purchase agreement shall be transferable by the Participant only upon such terms and conditions as are set forth in the restricted stock purchase agreement, as the Board shall determine in its discretion, so long as Common Stock awarded under the restricted stock purchase agreement remains subject to the terms of the restricted stock purchase agreement.

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9. COVENANTS OF THE COMPANY.

(a) AVAILABILITY OF SHARES. During the terms of the Stock Awards, the Company shall keep available at all times the number of shares of Common Stock required to satisfy such Stock Awards.

(b) SECURITIES LAW COMPLIANCE. The Company shall seek to obtain from each regulatory commission or agency having jurisdiction over the Plan such authority as may be required to grant Stock Awards and to issue and sell shares of Common Stock upon exercise of the Stock Awards; provided, however, that this undertaking shall not require the Company to register under the Securities Act the Plan, any Stock Award or any Common Stock issued or issuable pursuant to any such Stock Award. If, after reasonable efforts, the Company is unable to obtain from any such regulatory commission or agency the authority which counsel for the Company deems necessary for the lawful issuance and sale of Common Stock under the Plan, the Company shall be relieved from any liability for failure to issue and sell Common Stock upon exercise of such Stock Awards unless and until such authority is obtained.

10. USE OF PROCEEDS FROM STOCK.

Proceeds from the sale of Common Stock pursuant to Stock Awards shall constitute general funds of the Company.

11. MISCELLANEOUS.

(a) ACCELERATION OF EXERCISABILITY AND VESTING. The Board shall have the power to accelerate the time at which a Stock Award may first be exercised or the time during which a Stock Award or any part thereof will vest in accordance with the Plan, notwithstanding the provisions in the Stock Award stating the time at which it may first be exercised or the time during which it will vest.

(b) SHAREHOLDER RIGHTS. No Participant shall be deemed to be the holder of, or to have any of the rights of a holder with respect to, any shares of Common Stock subject to such Stock Award unless and until such Participant has satisfied all requirements for exercise of the Stock Award pursuant to its terms.

(c) NO EMPLOYMENT OR OTHER SERVICE RIGHTS. Nothing in the Plan or any instrument executed or Stock Award granted pursuant thereto shall confer upon any Participant any right to continue to serve the Company or an Affiliate in the capacity in effect at the time the Stock Award was granted or shall affect the right of the Company or an Affiliate to terminate (i) the employment of an Employee with or without notice and with or without cause, (ii) the service of a Consultant pursuant to the terms of such Consultant's agreement with the Company or an Affiliate or (iii) the service of a Director pursuant to the Bylaws of the Company or an Affiliate, and any applicable provisions of the corporate law of the state in which the Company or the Affiliate is incorporated, as the case may be.

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(d) INCENTIVE STOCK OPTION $100,000 LIMITATION. To the extent that the aggregate Fair Market Value (determined at the time of grant) of Common Stock with respect to which Incentive Stock Options are exercisable for the first time by any Optionholder during any calendar year (under all plans of the Company and its Affiliates) exceeds one hundred thousand dollars ($100,000), the Options or portions thereof which exceed such limit (according to the order in which they were granted) shall be treated as Nonstatutory Stock Options.

(e) INVESTMENT ASSURANCES. The Company may require a Participant, as a condition of exercising or acquiring Common Stock under any Stock Award, (i) to give written assurances satisfactory to the Company as to the Participant's knowledge and experience in financial and business matters and/or to employ a purchaser representative reasonably satisfactory to the Company who is knowledgeable and experienced in financial and business matters and that he or she is capable of evaluating, alone or together with the purchaser representative, the merits and risks of exercising the Stock Award; and (ii) to give written assurances satisfactory to the Company stating that the Participant is acquiring Common Stock subject to the Stock Award for the Participant's own account and not with any present intention of selling or otherwise distributing the Common Stock. The foregoing requirements, and any assurances given pursuant to such requirements, shall be inoperative if (1) the issuance of the shares of Common Stock upon the exercise or acquisition of Common Stock under the Stock Award has been registered under a then currently effective registration statement under the Securities Act or (2) as to any particular requirement, a determination is made by counsel for the Company that such requirement need not be met in the circumstances under the then applicable securities laws. The Company may, upon advice of counsel to the Company, place legends on stock certificates issued under the Plan as such counsel deems necessary or appropriate in order to comply with applicable securities laws, including, but not limited to, legends restricting the transfer of the Common Stock.

(f) WITHHOLDING OBLIGATIONS. To the extent provided by the terms of a Stock Award Agreement, the Participant may satisfy any federal, state or local tax withholding obligation relating to the exercise or acquisition of Common Stock under a Stock Award by any of the following means (in addition to the Company's right to withhold from any compensation paid to the Participant by the Company) or by a combination of such means: (i) tendering a cash payment; (ii) authorizing the Company to withhold shares of Common Stock from the shares of Common Stock otherwise issuable to the Participant as a result of the exercise or acquisition of Common Stock under the Stock Award, provided, however, that no shares of Common Stock are withheld with a value exceeding the minimum amount of tax required to be withheld by law; or (iii) delivering to the Company owned and unencumbered shares of Common Stock.

(g) INFORMATION OBLIGATION. Prior to the Listing Date, to the extent required by Section 260.140.46 of Title 10 of the California Code of Regulations, the Company shall deliver financial statements to Participants at least annually. This subsection 11(g) shall not apply to key Employees whose duties in connection with the Company assure them access to equivalent information.

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(h) REPURCHASE LIMITATION. The terms of any repurchase option shall be specified in the Stock Award and may be either at Fair Market Value at the time of repurchase or at not less than the original purchase price. To the extent required by Section 260.140.41 and Section 260.140.42 of Title 10 of the California Code of Regulations at the time a Stock Award is made, any repurchase option contained in a Stock Award granted prior to the Listing Date to a person who is not an Officer, Director or Consultant shall be upon the terms described below:

(i) FAIR MARKET VALUE. If the repurchase option gives the Company the right to repurchase the shares of Common Stock upon termination of employment at not less than the Fair Market Value of the shares of Common Stock to be purchased on the date of termination of Continuous Service, then (i) the right to repurchase shall be exercised for cash or cancellation of purchase money indebtedness for the shares of Common Stock within ninety (90) days of termination of Continuous Service (or in the case of shares of Common Stock issued upon exercise of Stock Awards after such date of termination, within ninety (90) days after the date of the exercise) or such longer period as may be agreed to by the Company and the Participant (for example, for purposes of satisfying the requirements of Section 1202(c)(3) of the Code regarding "qualified small business stock") and (ii) the right terminates when the shares of Common Stock become publicly traded.

(ii) ORIGINAL PURCHASE PRICE. If the repurchase option gives the Company the right to repurchase the shares of Common Stock upon termination of Continuous Service at the original purchase price, then (i) the right to repurchase at the original purchase price shall lapse at the rate of at least twenty percent (20%) of the shares of Common Stock per year over five (5) years from the date the Stock Award is granted (without respect to the date the Stock Award was exercised or became exercisable) and (ii) the right to repurchase shall be exercised for cash or cancellation of purchase money indebtedness for the shares of Common Stock within ninety (90) days of termination of Continuous Service (or in the case of shares of Common Stock issued upon exercise of Options after such date of termination, within ninety (90) days after the date of the exercise) or such longer period as may be agreed to by the Company and the Participant (for example, for purposes of satisfying the requirements of
Section 1202(c)(3) of the Code regarding "qualified small business stock").

12. ADJUSTMENTS UPON CHANGES IN STOCK.

(a) CAPITALIZATION ADJUSTMENTS. If any change is made in the Common Stock subject to the Plan, or subject to any Stock Award, without the receipt of consideration by the Company (through merger, consolidation, reorganization, recapitalization, reincorporation, stock dividend, dividend in property other than cash, stock split, liquidating dividend, combination of shares, exchange of shares, change in corporate structure or other transaction not involving the receipt of consideration by the Company), the Plan will be appropriately adjusted in the class(es) and maximum number of securities subject to the Plan pursuant to subsection 4(a) and the maximum number of securities subject to award to any person pursuant to subsection 5(c), and the outstanding Stock Awards will be appropriately adjusted in the class(es) and number of securities and price per share of Common Stock subject to such outstanding Stock Awards. The Board shall make such adjustments, and its determination shall be final, binding and conclusive.

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(The conversion of any convertible securities of the Company shall not be treated as a transaction "without receipt of consideration" by the Company.)

(b) CHANGE IN CONTROL. In the event of (i) a dissolution, liquidation or sale of substantially all of the assets of the Company, (ii) a merger or consolidation in which the Company is not the surviving corporation or (iii) a reverse merger in which the Company is the surviving corporation but the shares of Common Stock outstanding immediately preceding the merger are converted by virtue of the merger into other property, whether in the form of securities, cash or otherwise, then, to the extent permitted by applicable law: (i) any surviving corporation shall assume any Stock Awards outstanding under the Plan or shall substitute similar stock awards (including an award to acquire the same consideration paid to the stockholders in the transaction described in this subsection 12(c)) for those outstanding under the Plan, or (ii) such Stock Awards shall continue in full force and effect. In the event any surviving corporation refuses to assume or continue such Stock Awards, or to substitute similar stock awards for those outstanding under the Plan, then with respect to Stock Awards held by Participants whose Continuous Service has not terminated, the time during which such Stock Awards may be exercised shall be accelerated, and the Stock Awards terminated if not exercised prior to such event.

13. AMENDMENT OF THE PLAN AND STOCK AWARDS.

(a) AMENDMENT OF PLAN. The Board at any time, and from time to time, may amend the Plan. However, except as provided in Section 12 relating to adjustments upon changes in Common Stock, no amendment shall be effective unless approved by the shareholders of the Company to the extent shareholder approval is necessary to satisfy the requirements of Section 422 of the Code, Rule 16b-3 or any Nasdaq or securities exchange listing requirements.

(b) SHAREHOLDER APPROVAL. The Board may, in its sole discretion, submit any other amendment to the Plan for shareholder approval, including, but not limited to, amendments to the Plan intended to satisfy the requirements of
Section 162(m) of the Code and the regulations thereunder regarding the exclusion of performance-based compensation from the limit on corporate deductibility of compensation paid to certain executive officers.

(c) CONTEMPLATED AMENDMENTS. It is expressly contemplated that the Board may amend the Plan in any respect the Board deems necessary or advisable to provide eligible Employees with the maximum benefits provided or to be provided under the provisions of the Code and the regulations promulgated thereunder relating to Incentive Stock Options and/or to bring the Plan and/or Incentive Stock Options granted under it into compliance therewith.

(d) NO IMPAIRMENT OF RIGHTS. Rights under any Stock Award granted before amendment of the Plan shall not be impaired by any amendment of the Plan unless (i) the Company requests the consent of the Participant and (ii) the Participant consents in writing.

(e) AMENDMENT OF STOCK AWARDS. The Board at any time, and from time to time, may amend the terms of any one or more Stock Awards; provided, however, that the rights under

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any Stock Award shall not be impaired by any such amendment unless (i) the Company requests the consent of the Participant and (ii) the Participant consents in writing.

14. TERMINATION OR SUSPENSION OF THE PLAN.

(a) PLAN TERM. The Board may suspend or terminate the Plan at any time. Unless sooner terminated, the Plan shall terminate on the day before the tenth
(10th) anniversary of the date the Plan is adopted by the Board or approved by the shareholders of the Company, whichever is earlier. No Stock Awards may be granted under the Plan while the Plan is suspended or after it is terminated.

(b) NO IMPAIRMENT OF RIGHTS. Suspension or termination of the Plan shall not impair rights and obligations under any Stock Award granted while the Plan is in effect except with the written consent of the Participant.

15. EFFECTIVE DATE OF PLAN.

The Plan shall become effective as determined by the Board, but no Stock Award shall be exercised (or, in the case of a stock bonus, shall be granted) unless and until the Plan has been approved by the shareholders of the Company, which approval shall be within twelve (12) months before or after the date the Plan is adopted by the Board.

16. CHOICE OF LAW.

The law of the State of California shall govern all questions concerning the construction, validity and interpretation of this Plan, without regard to such state's conflict of laws rules.

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EXHIBIT 10.17

PROGRAM AGREEMENT

THIS PROGRAM AGREEMENT ("Agreement") is dated as of ___________, 1999 by and between GENERAL ELECTRIC COMPANY, acting through GE HEALTHCARE FINANCIAL SERVICES ("GE"), a New York corporation, with an address at Suite 300, 20225 Watertower Boulevard., Brookfield, WI 53045, and OMNICELL TECHNOLOGIES, INC. ("OMNICELL"), a California corporation, with its principal place of business and address at 1101 East Meadow Drive, Palo Alto, CA 94303, together with their respective permitted successors and assigns.

OMNICELL and GE are entering into this Agreement with the principal objective of providing a customer financing capability to support (i) the leasing of equipment ("Equipment"), and (ii) the licensing of software products related to the Equipment ("Software"), in each case manufactured or distributed by OMNICELL in the United States (the "Program"). The Equipment and the license of Software (if any) are hereinafter referred to as a "System".

NOW THEREFORE, in consideration of the above premises and of the representations, warranties and agreements contained herein, the parties hereby agree as follows:

1. DEFINITIONS.

a. "Agreement" means this Program Agreement and any riders, addenda, exhibits and written amendments hereto.

b. "Application" means an application (including credit and financial information concerning the Customer) and related documents required by GE in accordance with this Agreement to initiate its consideration of a proposed Transaction.

c. "Customer" means a customer of OMNICELL who is an obligor under a Transaction or a guarantor of such Customer (other than OMNICELL).

d. "Default by GE" means a material breach by GE of any term or condition of this Agreement or material breach of any agreement by which GE is bound in connection with a Transaction.

e. "Default by OMNICELL" means (i) a material breach by OMNICELL of any term or condition of this Agreement; or (ii) a material default of any agreement by which OMNICELL is bound in connection with a Transaction which leads to a Customer's failure to pay GE, and such failure to pay has a reasonable opportunity of being adjudicated as a justifiable non-payment because of OMNICELL's breach, or (iii) a material default under any guaranty by OMNICELL hereunder.

f. "Event of Cancellation" means (i) a Material Adverse Change of OMNICELL since the date of this Agreement or of a Customer since the date of the related Application, or (ii) the occurrence of an event which causes a representation made by OMNICELL or a Customer in connection with a Transaction to be false in any material respect when made, or (iii) a Default by OMNICELL, or (iv) notification by such Customer to OMNICELL or to GE of its intent to cancel all or any part of such Transaction or to refuse to accept any part of the related System.

g. "Final Document Package" means such properly completed and duly executed lease documentation, including a copy of the Master Rental Agreement, a copy of the Master Service Agreement, Supplement(s) to Rental Agreement, Supplement(s) to Service Agreement, UCCs, a purchase order from Customer or a mutually agreeable Customer billing reference number, a Certificate of Acceptance from the Customer, a Bill of Sale (as shown on Exhibit "F") and a Master Assignment Letter (as shown on Exhibit "D") as GE shall require in accordance with its standard procedures in order to finalize a Transaction and to pay the Purchase Price of the System to OMNICELL.

h. "Lease" means a Master Rental Agreement, Schedule(s), and if applicable, a Master Service Agreement between OMNICELL and a Customer, which have subsequently been assigned to GE, for a specified term during which GE shall be the owner of the relevant Equipment (not the Software) and the Customer shall be allowed the use of such Equipment and related Software.

i. "Material Adverse Change" means (i) a change with respect to OMNICELL or GE from the date of this Agreement that is materially adverse to
(a) the financial condition of OMNICELL or (b) the financial condition of GE, or (ii) as to OMNICELL or GE, its insolvency, inability to pay debts as they mature, failure to operate as a going concern, filing by it under Title 11 of the United States

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Code or any successor or similar federal or state statute, assignment for the benefit of creditors, appointment of a receiver, dissolution.

j. "Net Book Value" means the total of the following amounts due or to become due under a Transaction: (i) all accrued and unpaid sums due under the Transaction as of the date of default thereunder; plus (ii) the remaining payments due during the remainder of the term of the Transaction, with each such payment discounted to its present value from the due date thereof to the date of the default under such Transaction at the applicable Standard Rate; plus (iii) all accrued or unpaid property taxes due under the Transaction.

k. "Purchase Price" means the amount funded by GE to OMNICELL based on the discounted rental payments of the Lease and, if applicable, the Service Agreement.

l. "Remarketing Period" means a period of ninety (90) days (or such other period as the parties may agree upon in writing for a specific System) which shall commence upon the date that GE approves the applicable Out-Of-Pocket Costs (as defined herein) estimated by OMNICELL with respect to such System.

m. "Remarketing Proceeds" means the proceeds of the remarketing of a System, minus any applicable sales taxes.

n. "Standard Rates" means the lease discount rate applicable to Transactions as further described in Section 8.

o. "Termination Event" means a Default by GE or a Default by OMNICELL or a Material Adverse Change of GE or OMNICELL.

p. "Transaction" means the lease of a System by GE in the form of a Lease or other product offered under the Program.

q. "Transaction Default Amount" means: (i) the Net Book Value of the defaulted Transaction; plus (ii) all reasonable out-of-pocket expenses (including actual attorneys' fees, if any) incurred by GE with respect to such Transaction prior to GE's receipt of the Transaction Default Amount.

2. ORIGINATING TRANSACTIONS. OMNICELL agrees that during the term of this Agreement, OMNICELL will offer to its Customers GE as OMNICELL's financing partner; provided that nothing contained herein shall require OMNICELL to offer financing options through GE to any prospective customer who has requested that another company finance its acquisition of a System or who has not requested financing or impair OMNICELL's ability to seek third party financing for any prospective customer whose Application has been declined by GE or for which GE requires credit support from OMNICELL nor will it require OMNICELL to propose GE as a funding source in Transactions where the Customer is not a hospital. GE will be given first right of refusal on all new Transactions where the Customer is a hospital and has a Customer Credit Rating Category of "A". In cases where the hospital is adding to an existing Lease, OMNICELL reserves the right to place that Schedule with the original financing company.

3. DOCUMENTATION. OMNICELL will provide its sales representatives with OMNICELL's leasing or financing documentation, in a standard form approved to by GE, prepared by OMNICELL, suitable for the markets he or she serves. The approved documentation for the Master Rental Agreement and Master Service Agreement are attached to this Agreement as Exhibit "C". Notwithstanding the foregoing, OMNICELL may use other forms for Premier, UHC and GPO and may amend any approved documentation, with GE's consent. OMNICELL will prepare Uniform Commercial Code Financing Statements for each Transaction and ensure they are signed and filed with the proper authorities in a manner which ensures that GE obtains a perfected security interest. OMNICELL will also be responsible for completing the Uniform Commercial Code Financing Statement assigning the financing statements naming OMNICELL as secured party to GE upon receipt of the Purchase Price from GE. OMNICELL shall be responsible for any loss to GE arising from Uniform Commercial Code Financing Statements which are not filed in accordance herewith.

4. REVIEW. OMNICELL will, prior to document preparation, provide the name, address and Taxpayer Identification Number of the prospective Customer to GE. GE will attempt to complete its review based upon publicly available information. If insufficient information is publicly available, in the reasonable determination of GE, then GE may request that OMNICELL obtain additional reasonable credit information directly from the Customer and will notify OMNICELL within two (2) business days of its receipt of the name, address and Taxpayer ID number of the prospective Customer if such additional information is needed. To the extent they may legally do so, OMNICELL representatives will assist in providing any credit information regarding a prospective

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Customer which is reasonably requested by GE. Upon receipt thereof, GE will review and either approve or reject the Customer, at GE's sole discretion, and will notify OMNICELL of its determination and of the customer credit rating category (as shown on Exhibit "E"), if applicable, to which it has assigned the prospective Customer. It is anticipated that seventy-five percent (75%) of Customer Credit Rating Category, as a proportion of total dollar volume, will be classified as "A" or "B". Should the actual percentage fall below this percentage, then the Relationship Managers will meet to discuss changes to this Agreement they deem necessary to achieve this target. GE will complete its review (i) within three (3) business days after receipt of all information required to complete such review where the Transaction size is under $250,000; within five (5) business days in the case of any Transaction where the Transaction size is between $250,000 and $2,000,000 and within ten (10) business days in the case of any Transaction where the Transaction size is over $2,000,000 and (ii) as soon as practicable and in no event later than ten (10) business days after receipt of all information required to complete such review in the case of any Transaction where the prospective Customer is a nonhospital healthcare provider. If GE fails to meet these time frames on a Transaction, then OMNICELL may take that specific Transaction to another financing source. GE may suggest alternative financing structures which enable it to approve an Application. If GE determines that it cannot approve an Application without credit support from OMNICELL, GE shall notify OMNICELL of such determination and OMNICELL may, in its sole discretion, elect to provide GE with such credit support. If OMNICELL elects to provide GE with such credit support, OMNICELL will, prior to GE's financing of the applicable Transaction, execute a recourse letter in the form of Exhibit "A" hereto or such other form as OMNICELL and GE agree to from time to time. OMNICELL will advise the Customer of the approval or rejection of the proposed Transaction, and will deliver to GE the Final Document Package for each approved Transaction. GE will provide any notice required to be sent to a prospective Customer under the Equal Credit Opportunity Act and/or Regulation "B" or other applicable statute or regulation in the event of a rejected Application.

5. CONDITIONS OF APPROVAL. All approvals given by GE shall be valid up to ninety (90) days from the date such approval is given to OMNICELL. GE may revoke its agreement to enter into a Transaction or to purchase the related Equipment and finance the license of the related Software, and may transfer to OMNICELL any right, title or interest which it acquired in such Transaction or System if
(a) GE does not receive the Final Document Package within ninety (90) days after the date GE notifies OMNICELL of its approval of such Transaction; or (b) prior to GE's receipt of the Final Document Package or payment of the Purchase Price, GE determines, in its good faith judgment, that an Event of Cancellation has occurred. Upon receipt by OMNICELL of a written revocation of its agreement to enter into a Transaction or to purchase the related Equipment and finance the license of the related Software, GE shall have no further liability to the Customer or to OMNICELL in connection with such Transaction.

6. FUNDING. Provided that GE has not revoked its approval of a Transaction pursuant to Section 5, GE will pay OMNICELL the Purchase Price of the System, together with any amounts to be financed by GE related to the Master Service Agreement, within five (5) business days (or such other period as the parties mutually agree in writing) following GE's receipt of the Final Document Package.

7. EQUIPMENT TITLES AND WARRANTIES. (a) OMNICELL hereby (i) consents to the assignment to GE of and all warranty rights in connection with, the Equipment related to such Transaction, (ii) agrees that, upon the acceptance of the related System by the applicable Customer on behalf of GE, it will deliver to GE documentation showing that title to such Equipment has passed to GE and the related Software has been licensed to such Customer, in the case of Equipment, free and clear of all liens, claims and encumbrances, and (iii) agrees that GE will not be liable for any obligations of such Customer except the obligation to pay the Purchase Price of such System upon such Customer's acceptance. (b) OMNICELL will bear all risk of loss to the System until the date of its acceptance by the Customer. (c) In the event any Customer returns or fails to accept any part of the System for any reason whatsoever, GE may assign its rights to OMNICELL and thereafter will have no further liability to OMNICELL or to such Customer.

8. STANDARD RATES. The Purchase Price of each System will equal all amounts owed by Customer under a Lease discounted to the present value using the Standard Rate. The Standard Rate equals the sum of the rate shown on Exhibit B and the Three Year Treasuries rate as of the date of funding. The Standard Rate will be fixed based on Three Year Treasuries rate on the day of funding.

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9. SERVICE CONTRACTS. (a) OMNICELL will offer service contracts to prospective Customers which provide for Systems service and maintenance and updated versions of existing Software capabilities ("Service Agreements"). In the event that a prospective Customer agrees to enter into a Service Agreement, in conjunction with a Transaction, which OMNICELL would like GE to finance or bill and collect on OMNICELL's behalf, then OMNICELL shall notify GE of such event and shall provide GE with a copy of the applicable Service Agreement. Following consultation with OMNICELL, and provided OMNICELL has requested that GE do the following, and in any event within five (5) business days, GE shall, at its option, elect to: (i) bill and collect the Service Agreement on behalf of OMNICELL at no charge to OMNICELL or (ii) fund OMNICELL an amount equal to payments due under the Service Agreement over its initial term discounted from the due date thereof to the date of payment at the Standard Rate. (b) If GE elects to bill and collect the Service Agreement on behalf of OMNICELL, then GE shall provide its customary billing and collections services in connection with such Service Agreement and shall remit to OMNICELL all payments actually collected by GE with respect to such Service Agreement on or before the tenth day of each month following the month the money is collected. In the event that any customer makes a single payment to GE for amounts owed under the Transaction and amounts owed under the Service Agreement, then GE shall deduct from the single payment the amounts it is owed under the Transaction and remit the remaining amount to OMNICELL. GE shall have no liability or responsibility to OMNICELL for any default by the applicable Customer under the applicable Service Agreement or for any monies related to Service Agreements which are not actually received by GE. (c) If GE elects to fund OMNICELL the net present value of the payments due under the Service Agreement, then OMNICELL shall provide a contract to the applicable Customer in which such Customer shall be required to make a monthly payment for the System and a monthly payment for the Service Agreement. If GE finances a Service Agreement, any payment default on the Customer's part, whether it relates to the monthly payment for the System or the monthly payment for the Service Agreement shall entitle GE to exercise the remedies available to it in Section 16 hereof.

10. SYSTEM UPGRADES AND EARLY TERMINATIONS. Notwithstanding anything to the contrary, OMNICELL reserves the right to enter into additional Supplements with a Customer for whom GE has purchased other Supplements. (a) If any Customer notifies GE that it wishes to have GE finance the replacement of Equipment originally subject to a Transaction (the "Original Equipment") with new Equipment (the "Upgrade Equipment"), or the original Software ("Original Software") with Software which offers new capabilities (as opposed to an updated version of existing capabilities) (the "New Software"), GE will notify OMNICELL of the Customer's request. Following such notification, unless an Event of Cancellation has occurred and subject to credit approval, at GE's sole discretion, GE will finance the acquisition by such Customer of Upgrade Equipment and New Software (if applicable) which will replace, in whole or in part, the Original Equipment and Original Software (if applicable). (b) If the Original Equipment and Original Software (if applicable) will no longer be used by Customer, OMNICELL will pay GE the Net Book Value of the original Transaction upon such Customer's acceptance of the Upgrade Equipment and New Software and GE will pass title to the Original Equipment to OMNICELL (if applicable) and reassign any financing statements related thereto. Thereafter, OMNICELL will arrange with such Customer for the Original Equipment to be delivered to OMNICELL. Upon satisfaction of the conditions set forth in Section 5 hereof, GE will pay to OMNICELL the Purchase Price of the Upgrade Equipment and New Software (if applicable) and will enter into a new Transaction with the applicable Customer. GE will charge the Customer a one percent (1%) fee if the upgrade occurs during the first twelve months of the contract. (c) If the Upgrade Equipment and New Software (if applicable) replaces only in part the Equipment and Software originally subject to the Transaction, that portion of the Net Book Value of the original Transaction pertaining to Equipment and Software which has not been replaced will be added to the Purchase Price of the Upgrade Equipment and New Software (if applicable) to determine the payments due during the remainder of the term of the new Transaction. OMNICELL shall have no payment obligation to GE. (d) If any Customer notifies GE that it wishes GE to finance its acquisition of Upgrade Equipment and New Software, GE will notify OMNICELL of the Customer's request. If GE declines to finance the Customer's acquisition of such Upgrade Equipment and New Software, GE will permit the Customer to terminate the applicable Transaction without penalty upon the payment to GE of an amount equal to the Net Book Value of the applicable Transaction. (e) If any Customer notifies GE that it wishes to terminate any Transaction prior to its scheduled expiration date for any reason other than an upgrade, GE will notify OMNICELL of the Customer's request. Following such notification, GE will permit the Customer to terminate the applicable Transaction upon (i) the expiration of a thirty (30) day notice period and (ii) the payment to GE of an amount equal to the Net Book Value of the applicable Transaction, plus a fee for early termination of 5% of the amount funded if such termination occurs in the first year, 4% of the amount funded if such termination occurs in the second year, 3% of the amount funded if such termination occurs in the third year, 2% of the amount funded if such termination

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occurs in the fourth year and 1% of the amount funded if such termination occurs in the fifth year. Upon early termination, OMNICELL may purchase the related Equipment back from GE for one dollar ($1.00) free and clear of all liens attributable to GE.

11. RELATIONSHIP MANAGERS. GE and OMNICELL will each appoint a relationship manager ("Relationship Manager") to supervise the Program and to serve as the primary management contact between GE and OMNICELL under the Program. The Relationship Managers will be charged with managing the relationship between OMNICELL and GE, and ensuring compliance with the terms of this Agreement.

12. GENERAL ADMINISTRATIVE SERVICES. (a) The Program shall be administered by GE under the name of GE Healthcare Financial Services. GE will provide general administrative and operations services in connection with the Program, including but not limited to, credit investigation, billing and collections and customer service. GE will (i) maintain and operate systems which track the status of each Application and Transaction, (ii) invoice Customers, collect payments, process and apply funds, (iii) collect and pay all applicable property, sales, use or similar taxes pertaining to the System and prepare and file tax returns in connection therewith, and (b) GE personnel will be available to answer Customer and OMNICELL inquiries relating to the Program or Transactions on business days (via a toll free telephone line) between the hours of 8:00 a.m. and 5:00 p.m., Central Time in the United States. Customer inquiries received when no personnel are available will be recorded electronically and promptly responded to. GE will conduct its communications with Customers in a courteous, prompt and efficient manner. GE will endeavor to resolve all Customer complaints relating to Transactions within two business days of receipt and, failing that, will keep the affected Customer informed of the progress toward resolution on a regular basis; provided, however, that nothing in this Section 12 shall be deemed to require GE to resolve or endeavor to resolve any Customer complaints relating to the System, or the maintenance or servicing thereof, which shall remain the sole responsibility of OMNICELL. GE shall use its best efforts to immediately notify OMNICELL in writing of all Customer complaints relating to service, maintenance or the performance of the System. OMNICELL will take such actions it deems reasonable and appropriate in resolving such complaints, (c) OMNICELL hereby irrevocably appoints GE its attorney-in-fact to endorse or sign OMNICELL's name on any and all checks received, with regard to the Transactions and the related Systems.

13. REPORTING. GE will provide OMNICELL with periodic reports, in form and substance reasonably acceptable to OMNICELL, on (i) delinquencies under the Program; (ii) Application activity (including approvals, cancellations and rejections), (iii) volume of leasing activity under the Program, and (iv) other information reasonably requested by OMNICELL and able to be provided by GE.

14. REPRESENTATIONS AND WARRANTIES OF OMNICELL. OMNICELL hereby represents, warrants and covenants to GE, its permitted successors and assigns, as of the date hereof, of the Application and on each date that a Transaction is purchased by GE, that: (a) OMNICELL is a duly organized and validly existing corporation in its state of incorporation and has full power to enter into this Agreement and to carry out the transactions contemplated hereby. (b) The execution and delivery of this Agreement and the performance by OMNICELL of the transactions contemplated hereby have been duly authorized by all necessary corporate action. (c) This Agreement constitutes a legal, valid and binding obligation of OMNICELL enforceable in accordance with its terms. (d) Neither the execution of this Agreement nor the consummation of the transactions contemplated hereby will constitute (i) a violation or default of any material statute, rule, or decree of any court, administrative agency or governmental body to which OMNICELL is subject, or (ii) a material default with respect to any material indenture, loan agreement or other agreement to which OMNICELL is bound. (e) All documents relating to a Transaction to which OMNICELL is a party or by which it is bound will be genuine, legal, valid, and binding obligations of OMNICELL. (f) In all documents where OMNICELL is responsible for obtaining the Customer's signature, the signature of the named Customer is, to the best of OMNICELL's knowledge, genuine, and the individual signing on behalf of the Customer holds the office set forth below his signature. (g) OMNICELL will honor any agreements made or warranties given by OMNICELL or its agents to any Customer in connection with any Transaction, provided they are in writing and duly executed. (h) OMNICELL has not received and kept any rent or other monies from any Customer in respect of any Transaction (other than any required down payments) which is owed to GE and OMNICELL will immediately remit any funds owed to GE which it may receive. (i) GE will have good title to the Equipment free and clear of all liens, claims, and encumbrances on the date it is accepted by a Customer on behalf of GE. (j) Neither OMNICELL nor its agents have participated in or have any knowledge of any fraudulent act in connection with any Transaction or any Customer. (k) The System will be delivered to and

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accepted by the named Customer, properly installed and will be in good working order, condition and repair, conforming to specifications, reasonable wear and tear excepted, on the date title to said specific Equipment is transferred to GE. OMNICELL will license, service and maintain the System in compliance with any contracts it may have with the Customer. (l) All credit or other information, reasonably relevant to a credit decision concerning the Customer, known to OMNICELL and which can be lawfully provided by OMNICELL to GE will be disclosed to GE. (m) All sales, use, or property taxes applicable to the System assessed or imposed prior to the time GE pays the applicable Purchase Price, will have been paid or will be timely remitted by OMNICELL to the appropriate taxing authority and OMNICELL will on request provide GE with proof of such payment as promptly as possible. (n) As of the date hereof, there are no suits or proceedings pending or, to the knowledge of OMNICELL, threatened in any court or before any regulatory commission, or other administrative or governmental agency against or affecting OMNICELL which is reasonably likely to materially impair OMNICELL's ability to perform its obligations hereunder or in connection with any Transaction. (o) The financial statements of OMNICELL delivered to GE from time to time fairly present the financial position of OMNICELL as of the dates thereof and the results of operations of OMNICELL for the periods covered thereby, all in conformity with generally accepted accounting principles applied on a consistent basis, and since the date of the latest such financial statements, there has been no Material Adverse Change of OMNICELL. (p) OMNICELL will notify GE immediately upon becoming aware of a Material Adverse Change of OMNICELL and will deliver to GE within one hundred twenty (120) days of the close of each fiscal year, its audited financial statements or annual report, and, within ninety (90) days of the close of the second fiscal quarter, its six month unaudited interim financial report, certified by its chief financial officer. (q) OMNICELL has evaluated the System which is subject to any Transaction and has determined that such System will be Year 2000 Compliant. "Year 2000 Compliant" means that the functionality and the performance of the System will not be materially adversely affected as a result of the date change from the calendar year 1999 to the calendar year 2000, including leap year calculations, and that, to the extent applicable to the System's normal operating specifications, the System will accurately accept, store, retrieve, calculate, compare and otherwise process dates before and after January 1, 2000 in all material respects. (r) OMNICELL has a plan and organization in place to minimize any materially adverse effects on its business operations caused by the failure of any system or equipment which is material to OMNICELL's operations to be Year 2000 Compliant. OMNICELL is conscientiously implementing such plan. OMNICELL will, upon request from GE, provide GE with periodic updates on its implementation of such plan. (s) OMNICELL will provide written notice of a material change in a material portion of its stock or asset ownership.

15. REPRESENTATIONS AND WARRANTIES OF GE. GE hereby represents, warrants and covenants to OMNICELL, its permitted successors and assigns, as of the date hereof and throughout the term of any Transaction, that: (a) GE is a duly organized and validly existing corporation and has full power to enter into this Agreement and to carry out the transactions contemplated hereby. (b) The execution and delivery of this Agreement and the performance by GE of the transactions contemplated hereby have been duly authorized by all necessary corporate action. (c) This Agreement constitutes a legal, valid and binding obligation of GE enforceable in accordance with its terms. (d) Neither the execution of this Agreement nor the consummation of the transactions contemplated hereby will constitute (i) a violation or default of any statute, rule, or decree of any court, administrative agency or governmental body to which GE is or may be subject, or (ii) a material default with respect to any indenture, loan agreement or other agreement to which GE is bound. (e) GE will honor any agreements made or express warranties given by GE or its agents to any Customer in connection with any Transaction. (f) There are no suits or proceedings pending or, to the knowledge of GE, threatened in any court or before any regulatory commission, or other administrative or governmental agency against or affecting GE which could materially impair GE's ability to perform its obligations hereunder or in connection with any Transaction.

16. REMARKETING ASSISTANCE. (a) Upon the occurrence of a failure of a Customer to pay GE any amounts owed GE within sixty (60) days after the applicable due date, provided that GE has made the applicable Equipment legally available, OMNICELL will obtain physical possession of the System and pay all costs related to taking possession, including but not limited to deinstallation and transportation. OMNICELL will then have a first right of refusal to purchase the Equipment at GE's Net Book Value. Should OMNICELL choose not to purchase the Equipment, OMNICELL will promptly provide GE with a written estimate of its costs of repair, refurbishment, insurance and remarketing ("Out-Of-Pocket Costs"). If GE approves such Out-Of-Pocket Costs, OMNICELL will repair and refurbish the System, including replacing the existing Software configuration with its most recent available Software upgrades (if necessary), and attempt to remarket the System to a third party on a ninety (90) day basis during the Remarketing Period. During said time, OMNICELL agrees that if it sells

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refurbished Equipment, it will sell the GE Equipment first. If the Equipment has not been remarketed by OMNICELL within the ninety (90) day period, GE and OMNICELL may agree to continue to have OMNICELL remarket the equipment for additional period(s) or GE shall be able to remarket the equipment itself. GE will not be obligated to pay actual Out-Of-Pocket Costs which exceed the estimated Out-Of-Pocket Costs by more than five percent (5%). If GE does not approve such Out-Of-Pocket Costs, OMNICELL will promptly cause the System to be crated and safety delivered to a location selected by GE.

(b) In performing its remarketing responsibilities hereunder: (i) OMNICELL will not discriminate between the System and equipment and software owned by another party to whom OMNICELL may be bound to provide remarketing assistance;
(ii) OMNICELL will refurbish and upgrade the System and make available maintenance service to any subsequent purchaser or lessee of the Equipment and licensee of the Software at OMNICELL's then current market rates; (iii) OMNICELL will grant a valid license to the Software to any subsequent purchaser or lessee of the Equipment upon such purchaser's or lessee's acceptance of OMNICELL's standard software license agreement; (iv) OMNICELL will not permit any lien or encumbrance to attach to the System, and will waive any right or claim to the Equipment which may arise in connection with its remarketing services; (v) OMNICELL will warrant that the System that is delivered to customers will be in good working order, condition and repair, conforming to specifications according to OMNICELL's current warranty policy for used equipment and will meet all applicable governmental standards; and (vi) OMNICELL will not agree to any sales price or lease terms without GE's prior approval.

(c) If OMNICELL GE or any other party is able to remarket the System to a third party, the Remarketing Proceeds will be distributed in the following manner: (i) first, to OMNICELL, an amount equal to its approved Out-Of-Pocket Costs of refurbishment and remarketing; (ii) second, to GE, an amount equal to the applicable Transaction Default Amount; (iii) third, to GE and OMNICELL, any excess Remarketing Proceeds in equal amounts.

17. END-OF-TERM. Upon a Transaction reaching its end-of-term, provided all payments, late charges and property taxes have been paid, OMNICELL shall have the option to purchase the Equipment from GE on an "as-is where-is" basis for One Dollar ($1.00). GE makes no representations or warranties as to the condition of the Equipment, other than the Equipment will be free of all liens and encumbrances attributable to GE.

18. INDEMNIFICATION. (a) OMNICELL shall indemnify and hold harmless GE, its officers, directors, employees and agents, from any losses, claims, liabilities, demands and expenses, including reasonable attorneys' fees and additional tax liabilities arising out of actions against GE by any party other than a Customer resulting from (i) any breach by OMNICELL of its representations, warranties or obligations hereunder, or (ii) any act, failure to act, omission, representation or misrepresentation by OMNICELL, its employees or agents in connection with any Transaction or with the sale, use, operation, ownership, licensing, servicing or maintenance of the System, including any strict liability therefore, or (iii) the failure of the System to meet all federal and state standards applicable to the existence and operation of the System, or (iv) the expiration or earlier termination of any patent or copyright pertaining to any item of the System. (b) GE shall indemnify and hold harmless OMNICELL, its officers, directors, employees and agents, from any losses, claims, liabilities, demands and expenses, including without limitation reasonable attorneys' fees and additional tax liabilities resulting from the receipt by OMNICELL of indemnities pursuant hereto, arising out of (i) any breach by GE of its representations, warranties or obligations hereunder or (ii) any act, failure to act, omission, representation or misrepresentation by GE, its employees or agents in connection with any Transaction. (c) The indemnified party shall not be required as a condition to receipt of payments hereunder to contest or to permit the indemnifying party to participate in any contest in connection with the foregoing or to attempt to recover from any Customer through legal proceedings or otherwise. (d) All indemnities and obligations under this
Section 18 shall survive the expiration or termination of this Agreement and the expiration or termination of any Transaction, but shall not apply in the case of the indemnified party's negligence, gross negligence or intentional misconduct.
(e) In no event shall OMNICELL or GE indemnify the other party against liability for indirect, special, consequential or incidental damages including loss of use, revenue or profit regardless of the form of the cause of action. The liability of each party hereunder shall be limited to the amounts actually paid by GE to OMNICELL with respect to each applicable Transaction or Transaction(s).

19. TERM AND TERMINATION. This Agreement shall be effective upon execution by GE and OMNICELL and shall continue from such effective date for a period of five (5) years, unless sooner terminated by either party upon the occurrence of a Termination Event or without cause with ninety (90) days prior written notice. Upon the expiration or termination of this Agreement, the obligations of the parties with respect to Transactions not

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funded by GE shall cease, but all obligations with respect to Transactions which have been funded by GE shall survive. If this Agreement is terminated upon the occurrence of a Termination Event (other than a Termination Event caused by a material Adverse Change), (i) GE's sole remedy, in the case of a termination event caused by OmniCell, will be to require OMNICELL to repurchase all remaining amounts owed to GE by a Customer on all Transactions materially adversely affected by said Termination Event discounted to the present value using the Standard Rate used when the Transaction was purchased by GE.

20. ASSIGNMENT OF RIGHTS. The rights and obligations of GE and OMNICELL under this Agreement may not be assigned without the prior written consent of the other party; provided that GE may without prior written consent assign any of its rights hereunder or under any Transaction to an affiliate or other entity in which a majority of the common stock is owned directly or indirectly by GE, and OMNICELL may without prior written consent assign any of its rights to payment hereunder to any party. GE may, in its sole discretion, securitize or syndicate its rights under any Transaction including any recourse rights made available by OMNICELL in connection with such Transaction.

21. CONFIDENTIALITY. From time to time GE or OMNICELL may provide information to the other party which is plainly marked as "confidential". GE and OMNICELL will take reasonable steps to preserve the confidential nature of such information and to prevent its disclosure to third parties. Such information shall not be considered confidential if (i) it is already in the public domain, or (ii) it is obtained from an independent source who is not legally bound to refrain from such disclosure, or (iii) it is independently developed by the receiving party, as demonstrated by the receiving party's files and records immediately prior to the date of disclosure. GE and OMNICELL will fulfill their obligations hereunder if they exercise the same degree of care to preserve and safeguard such confidential information as they use to preserve and safeguard their own confidential information. GE and OMNICELL may disclose confidential information to their respective affiliates, and confidential information relating to specific Transactions may be disclosed by GE to its representatives and agents, in the event that such Transactions are referred for collection, and to any purchaser or administrator, in the event that such Transactions are syndicated or securitized, provided that the receiving party agrees to be bound by the terms hereof in writing. Nothing herein shall be deemed to prohibit disclosure of confidential information that is required by law, so long as the disclosing party, so far as practicable, consults with the other party prior to such disclosure and takes such steps as the other party may reasonably request to mitigate the effect of such disclosure.

22. MISCELLANEOUS. (a) GE and OMNICELL acknowledge that they are separate entities, each of which has entered into this Agreement for independent business reasons. (b) Except as provided for herein, OMNICELL shall have no right, and will not attempt, to accept collections, repossess or consent to the return of the System (other than for repairs) or modify the terms of any Transaction without the prior written consent of GE, which shall not be unreasonably withheld. (c) Notices to OMNICELL or GE under this Agreement shall be deemed to have been given if sent by (i) recognized overnight delivery or registered or certified mail, return receipt requested, or (ii) by telecopy (promptly confirmed in writing) to the Relationship Manager at the address or telecopy number first stated above or such other address or telecopy number as such party may have provided by notice. (d) The parties agree that this Agreement shall be governed by and construed in accordance with the laws (other than the choice of law provisions) of the State of New York. (e) If at any time any provision of this Agreement is held by any court of competent jurisdiction to be illegal, void or unenforceable, such provision shall be of no force and effect, but the illegality or unenforceability of such provision shall not impair the enforceability of any other provision of this Agreement. (f) This Agreement constitutes the entire agreement between the parties concerning the subject matter hereof. The terms may not be terminated or amended orally, but only by an instrument duly executed by each of the parties hereto. (g) In the event there is any conflict between this Agreement and any ancillary agreements with respect to any Transaction or System, the terms and conditions of this Agreement shall control. (h) THE PARTIES WAIVE, TO THE EXTENT PERMITTED BY LAW, ALL RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS HEREUNDER.

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

OMNICELL TECHNOLOGIES, INC.             GENERAL ELECTRIC COMPANY

By: /s/ Earl E. Fry                     By: /s/ R.B. Berger
   ------------------------------          ------------------------------
Name: Earl E. Fry                       Name: R.B. Berger
     ----------------------------            ----------------------------
Title: VP & CFO                         Title:
      ---------------------------             ---------------------------
Date: June 4, 1999                      Date: June 7, 1999
     ----------------------------            ----------------------------
                                       9.


RIDER NUMBER ONE
TO PROGRAM AGREEMENT
DATED AS OF June 7, 1999
(THE "PROGRAM AGREEMENT"),
BY AND BETWEEN
OMNICELL TECHNOLOGIES, INC., (OMNICELL)
AND
GENERAL ELECTRIC COMPANY,
ACTING THROUGH GE HEALTHCARE FINANCIAL SERVICES (GE)

1. GRANT AND SCOPE OF TRADEMARK LICENSE.

1.1 Grant of License. Subject to the limitations set forth below, OMNICELL grants to GE, and GE accepts, a non-exclusive, royalty-free license during the term of the Program Agreement to use the trademarks and tradenames set forth in Exhibit A (the "Licensed Marks") in the United States solely in connection with GE's activities pursuant to Section 9 of the Program Agreement. GE shall not use the Licensed Marks for any other purpose, or in any other jurisdiction without prior written approval of OMNICELL.

1.2 Form of Use. GE shall use the Licensed Marks only in the form(s) set forth on Exhibit A hereto or otherwise approved in writing by OMNICELL and shall include where appropriate the designation (R) and (TM) and a statement that the Licensed Marks are the trademarks of OmniCell Technologies, Inc. and other proprietary notices as reasonably required by OMNICELL from time-to-time.

2. QUALITY CONTROL.

2.1 The nature and quality of all services rendered by GE in connection with the Licensed Marks shall conform to standards set by and under the control of OMNICELL. OMNICELL shall have the right to monitor the quality of GE's use of the Licensed Marks, and in connection therewith, GE agrees to undertake such steps as OMNICELL may reasonably request to assist OMNICELL in monitoring and preserving the quality of GE's use of the Licensed Marks, including, without limitation, providing OMNICELL with samples of GE's use of the Licensed Marks, and, at OMNICELL's request, modifying or ceasing any use of the Licensed Marks to which OMNICELL may object.

2.2 GE shall comply with all applicable laws and regulations and obtain all appropriate government approvals pertaining to its activities under the Program Agreement. GE shall not do or suffer to be done any act or thing that would impair OMNICELL's ownership or rights in the Licensed Marks, or damage the reputation for quality inherent in the Licensed Marks. OMNICELL has the right to take all action which it deems necessary to ensure that GE's uses of the Licensed Marks are consistent with the reputation for quality and prestige of the Licensed Marks. GE agrees not to adopt or use any other trademark, word, symbol, letter, design or mark (i) in combination with a Licensed Mark in a manner that would create a combination Mark or (ii) that is confusingly similar to a Licensed Mark; provided, however, that GE may use a Licensed Mark with other marks or names if such other marks or names are sufficiently separated from the Licensed Mark and sufficiently distinctive to avoid the impression by a reasonable consumer that such other marks or their owners are associated with OMNICELL.

3. OWNERSHIP. GE acknowledges that it has no interest in the Licensed Marks other than the license granted under the Program Agreement and that OMNICELL is the sole and exclusive owner of all right, title and interest in the Licensed Marks. GE agrees that any and all of GE's uses of the licensed Marks will inure solely to the benefit of OMNICELL and will not create any right, title or interest for GE in the Licensed Marks other than the license granted under the Program Agreement. GE agrees that it will not contest, oppose or challenge OMNICELL's ownership or registration of, or register or attempt to register, the Licensed Marks in any jurisdiction. GE shall promptly notify OMNICELL of any adverse use by a third party of the Licensed Marks or of a mark or name confusingly similar to the Licensed Marks and agrees to take no action with respect thereto except with the prior written authorization of OMNICELL. GE further agrees to provide full cooperation with any legal or equitable action by OMNICELL to protect OMNICELL's rights, title and interest in the Licensed Marks.

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4. LICENSE TERMINATION.

4.1 Termination of the Program Agreement. The license granted hereunder shall terminate upon termination of the Program Agreement.

OMNICELL TECHNOLOGIES, INC.        GENERAL ELECTRIC COMPANY

By: /s/ Earl E. Fry                By: /s/ R.B. Berger
   -----------------------------      -----------------------------
Name: Earl E. Fry                  Name: R.B. Berger
     ---------------------------        ---------------------------
Title: CFO                         Title:
      --------------------------         --------------------------
Date: June 4, 1999                 Date: June 7, 1999
     ---------------------------        ---------------------------

11.


EXHIBIT "A"

OMNICELL Technologies, Inc.
1101 East Meadow Drive
Palo Alto, CA 94303

Dear Sirs:

In consideration of the agreements contained in this letter and subject to the provisions hereof, General Electric Company ("GE") has agreed to provide financing capabilities to_______________________________________________________ _______________________ ("Customer") to rent a System from OMNICELL Technologies, Inc. ("OMNICELL") (the "Transaction") pursuant to the Program Agreement dated ________________ between OMNICELL and GE (the "Agreement").

GE and OMNICELL agree that if Customer fails to make payment in full of any amount owed to GE under the Transaction within 45 days of the original due date thereof, OMNICELL will, upon 10 days notice, pay GE _________ percent (x%) of the Net Book Value of the Transaction (the "Recourse Amount").

OMNICELL agrees that OMNICELL's obligations to pay GE the Recourse Amount shall not be conditioned upon, or in any way affected by: notice of debt or obligation of the Customer to GE or of default or breach of such debt or obligation; any requirement that GE exhaust its remedies against the Customer; presentment, protest and demand and notice of protest and demand (or any of them) with respect to the Transaction; any extension of time or performance to, or any settlement or granting of any indulgence to, or any modification of any obligation of the Customer; GE's failure to enforce any provision of the Transaction; the acceptance, alteration, or release of any security provided by the Customer; or the Customer's voluntary or involuntary bankruptcy, assignment for the benefit of creditors, reorganization or similar proceedings affecting the Customer or any of its assets, or the release of the Customer from any of its agreements pursuant to the Transaction, by operation of law or otherwise.

Upon receipt by GE of the Recourse Amount, GE will assign the Transaction to OMNICELL, including all rights to the Equipment and any related financing statements.

The terms of this letter may not be amended or modified except by writing signed by OMNICELL and GE. Defined terms shall have the meaning set forth in the Agreement, except as expressly provided herein. This letter shall be subject to the terms and conditions of the Agreement.

AGREED TO:

OMNICELL TECHNOLOGIES, INC.        GENERAL ELECTRIC COMPANY

By:___________________________     By:___________________________

Title:________________________     Title:________________________

12.


EXHIBIT "B"

STANDARD RATE MATRIX

                                    CUSTOMER CREDIT
                                    RATING CATEGORY
          ----------------------------------------------------------
T
R                         A           B           C           D
A
N         ----------------------------------------------------------
S     S
A     I      under       3.80        4.00        4.50        4.95
C     Z    $1 million
T     E
I         ----------------------------------------------------------
O
N             over       3.50        3.70        4.20        4.65
           $1 million
          ----------------------------------------------------------

13.


EXHIBIT "C"

OMNICELL


OMNICELL MASTER RENTAL AGREEMENT

Dated_____________, 1999 Master Rental Agreement #________________

Dear Customer: We use the words "you" and "your" to mean the Customer indicated below. The words "we", "us", and "our" refer to OmniCell Technologies, Inc.

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OmniCell Technologies                            Customer                                Customer
Mainz Address                                    Billing Address                         Delivery Address
--------------------------------------------------------------------------------------------------------------------
                                      Customer Legal Name:
OmniCell Technologies, Inc.           ________________________________             ________________________________
1101 East Meadow Drive                ________________________________             ________________________________
Palo Alto, CA 94303                   ________________________________             ________________________________
Attn:  Accounts Payable               ________________________________             ________________________________
Tel:  1:800-850-664
--------------------------------------------------------------------------------------------------------------------

1. Rental Terms. We agree to rent to you and you agree to rent from us certain OmniCell System or Sure-Med System equipment (hereinafter "Equipment') and we agree to license to you and you agree to license from us the software (as hereinafter defined) that accompanies such Equipment, all more fully described on the attached Supplement, and any subsequent Supplement(s) to this Agreement entered into by you and us (hereinafter the "Supplements"), all on the terms and conditions set forth herein. Each Supplement shall constitute a separate and independent lease; the original for such lease shall consist of the signed Supplement and a copy of the Master Rental Agreement. You agree to pay to us the monthly rent shown for each unit of Equipment for the number of consecutive months shown under "Term" on each Supplement. For purposes of this Agreement, Equipment will also include all replacement parts for the Equipment which you may receive under the separate Master Service Agreement you have entered into with us in connection with this Agreement. All Equipment we provide to you will be new unless otherwise noted as "used" or "reconditioned" on the relevant Supplement.

2. Additional Equipment. If you would like to add Equipment to your system, we shall send you a Supplement listing such additional Equipment ("Additional Equipment') and the monthly rental payment per unit. Upon execution of the Supplement we will deliver the Additional Equipment listed thereon in accordance with the terms of this Master Rental Agreement. All terms of this Master Rental Agreement shall apply to Additional Equipment listed on any mutually executed Supplement.

3. Term and Rental Payments. The initial term of this Agreement for the unit or units of Equipment described in each Supplement shall be as set forth therein. You understand that time is of the essence as to your performance; You agree to pay all Rental payments in advance and no later than the date designated by us. Rental payments due do not include any applicable taxes. If any Taxes (as hereinafter defined) are due, we shall invoice you for them and you agree to pay the Tax billings along with your Rental payments. Rental payments shall begin upon the date of delivery of the Equipment listed in each Supplement. Rental Payments will be made at such place as we may designate in writing. You authorize us to insert for the purposes of the Rental, the serial numbers of the Equipment, and other information into each Supplement.


You agree to all the terms and conditions of this Master Rental Agreement. These terms and conditions are a complete and exclusive statement of our agreement with respect to the subject matter hereof and may be modified only by a written agreement signed by both of us and not by course of performance. Any terms and conditions on any purchase order you submit in conjunction with this Master Rental Agreement shall be invalid and of no force or effect to the extent such terms and conditions contradict or are in addition to the terms of this Master Rental Agreement. Your purchase orders shall be for reference purposes only and shall not become a part of this Master Rental Agreement. This Master Rental Agreement may not be terminated early. By signing this Master Rental Agreement, each of us represents that he/she has the authority to bind our respective parties to this Master Rental Agreement.

Accepted:
------------------------------------------------------------------------------
OMNICELL TECHNOLOGIES, INC.                   CUSTOMER
----------------------------------            --------------------------------
Signature                                     Signature
----------------------------------            --------------------------------
Print Name:                                   Print Name:
---------------------------------             --------------------------------
Title:                                        Title:
------------------------------------------------------------------------------

(See Pages 2 & 3 for Additional Terms)

Omnicell OmniSupplier, OmniCT, OmniCenter, the OmniCell logo, and Sure-Med System are registered trademarks or trademarks of OmniCell Technologies, Inc.

14.


Master Rental Agreement Terms and Conditions

4. Default. You shall be in default of this Agreement upon any of the following events: (A) You fail to pay any monthly payment, or any other sum hereunder when due and such failure continues for fifteen (15) days, (B) You materially breach any of the terms, conditions, warranties or representations of this Agreement, or any other agreement between you and us; (C) Any execution or writ of process is issued in any action or proceeding to seize or detain any item of Equipment; (D) A proceeding in bankruptcy, receivership or insolvency shall be instituted by or against you (E) You shall enter into any agreement or composition with your creditors, breach or default under any term of any loan or credit agreement; (F) You become insolvent or unable to pay your debts when due; (G) You merge, consolidate, or transfer all or substantially all of your assets.

5. Remedies. Upon a default by you, we shall have the right to: (1) retake immediate possession of the Equipment and the Software without any process of law and may enter upon any premises where the Equipment may be and remove it without notice of our intention to do so, without being liable in any action or other proceeding by you. We may, at our option, sell or re- rent the Equipment including the Software at any public or private sales for cash or on credit and you shall be liable for the expense incurred in the repossession, recovery, storage, repair, sale, re-rent, re-licensing any court costs, in addition to any arrears in payment and the balance of the payments provided for herein, together with reasonable attorneys fees, less the net proceeds of disposition, if any, of the Equipment; and/or (2) accelerate all sums payable under this Agreement and any other agreements with us and require you to immediately pay us all sums that are already due and the discounted value, at the discount rate of six percent (6%) as of the date of default, of all payments that will be due under this Agreement, plus our estimate at the time this Agreement was entered into of our residual interest in the Equipment and Software reduced to present value at a discount rate of six percent (6%) as of the date of default, less the net proceed of disposition, if any, of the Equipment and Software. Such sums shall be due and payable upon notice of acceleration and demand for payment and if not so paid, we may institute legal proceedings against you with your being responsible for said sums, court costs, and reasonable attorneys fee incurred, and/or (3) exercise any other remedy available to us at law or equity, notice thereof being expressly waived by you. Our rights hereunder shall be cumulative. You agree that all sums due under the calculations above shall become immediately due and payable and are to be construed a liquidated damages rather than a penalty provision.

6. No Warranties. THE EQUIPMENT AND THE SOFTWARE IS PROVIDED TO YOU "AS IS".
WE MAKE NO WARRANTIES, EXPRESSED OR IMPLIED, INCLUDING WARRANTIES OF MERCHANTABILITY, NONINFRINGEMENT, OR FITNESS FOR A PARTICULAR PURPOSE IN CONNECTION WITH THIS MASTER RENTAL AGREEMENT OR THE EQUIPMENT OR THE SOFTWARE. YOU HAVE BEEN OFFERED THE OPPORTUNITY TO ENTER INTO A SEPARATE MASTER SERVICE AGREEMENT (THE "MASTER SERVICES AGREEMENT") WITH US CONTAINING CERTAIN LIMITED WARRANTIES WITH RESPECT TO THE EQUIPMENT YOU AGREE THAT YOUR OBLIGATIONS UNDER THIS MASTER RENTAL AGREEMENT ARE NOT SUBJECT TO ANY CLAIMS OR DEFENSES WHICH YOU MAY HAVE DUE TO PERFORMANCE UNDER THE MASTER SERVICE AGREEMENT OR THE WARRANTIES CONTAINED THEREIN.

7. Liability and Limitation of Liability. WE ARE NOT RESPONSIBLE FOR ANY LOSSES OR INJURIES ARISING FROM THE INSTALLATION, OPERATION, CONDITION, POSSESSION OR USE OF THE EQUIPMENT OR SOFTWARE. OUR TOTAL LIABILITY UNDER THIS MASTER RENTAL AGREEMENT SHALL NOT EXCEED THE AMOUNT PAID BY YOU HEREUNDER. IN NO EVEN SHALL WE BE LIABLE FOR ANY LOST PROFITS, COST OF COVER, OR OTHER SPECIAL, CONSEQUENTIAL, OR INCIDENTAL DAMAGES ARISING OUT OF THIS MASTER RENTAL AGREEMENT, HOWEVER CAUSED AND WHETHER ARISING UNDER CONTRACT, TORT, STRICT LIABILITY OR OTHERWISE, EVEN IF WE HAVE BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES AND NOTWITHSTANDING THE FAILURE OF ESSENTIAL PURPOSE OF ANY LIMITED REMEDY. TO THE EXTENT PERMITTED BY LAW, YOU HEREBY WAIVE ANY RIGHTS NOW OR HEREAFTER CONFERRED BY STATUTE OR OTHERWISE WHICH MAY REQUIRE US TO SELL, LEASE, LICENSE OR OTHERWISE USE ANY EQUIPMENT OR SOFTWARE IN MITIGATION OF OUR DAMAGES.

8. Copyright Indemnity. WITH RESPECT TO THE SOFTWARE, WE AGREE TO INDEMNIFY AND DEFEND YOU AGAINST ANY CLAIMS FOR INFRINGEMENT OF ANY U.S. COPYRIGHT (WITH RESPECT TO THE SOFTWARE AS DEFINED IN SECTION 13), PROVIDED THAT WE SHALL CONTROL THE DEFENSE AND SETMEMENT OF ALL SUCH CLAIMS. YOU AGREE THAT SUCH INDEMNITY AND DEFENSE SHALL BE OUR SOLE LIABILITY TO YOU AND YOUR SOLE RECOURSE IN THE EVENT A CLAIM OF U.S. COPYRIGHT INFRINGEMENT BASED ON THE SOFTWARE IS BROUGHT AGAINST YOU.

9. Indemnification. You hereby assume all liability for, and agree to indemnify and defend us and our successors, assigns, agents and employee against any and all liabilities, losses, damages, claims and expenses (including reasonable attorney fees) in any way relating to or arising out of this Agreement, the Equipment, the Software or the installation, use, possession, control, return, condition or operation of the Equipment or the Software including without limitation, claims arising in contract or tort, including negligence, strict liability, products liability or otherwise, except for claim resulting from OmniCell's gross negligence or intentional misconduct, or claims of U.S. copyright infringement as set forth in
Section 9. Your obligation to indemnify us shall survive the expiration or termination of this Master Rental Agreement.

Omnicell OmniSupplier, OmniCT, OmniCenter, the OmniCell logo, and Sure-Med System are registered trademarks or trademarks of OmniCell Technologies, Inc.

15.


10. Insurance. You agree to assume and bear the entire risk of casualty or damage to the Equipment from any cause whatsoever from the date of delivery of the Equipment to your premises. No casualty or damage shall relieve you from the obligation to make payments or to comply with another obligation under this Agreement. You agree, at your own cost and expense, to keep the Equipment fully insured against loss until this Master Rental Agreement is paid in full and to have us named as sole loss payee on all such policies. You also agree to obtain a general public liability insurance policy from an insurance company acceptable to us and to include us as an additional insured on the policy. You agree to provide us certificates or other evidence of such insurance acceptable to us. You agree to have your insurance company notify us of any significant changes in coverage during the term of this Master Rental Agreement. If you do not provide us with acceptable evidence of insurance, we may, but will not be required to, buy such insurance for you and add a charge to your monthly payments which will include the premium cost, costs associated with effecting the insurance and a carrying charge of 1.5% per month on the unpaid premium cost, or the highest rate allowed by applicable law whichever is lower. We are under no obligation to obtain such insurance, and any loss resulting during a period in which the Equipment is uninsured shall be borne by you.

11. Taxes, Assessments, And Fees. You agree to pay all licensing and registration fees for the Equipment and the Software, all personal property taxes assessed against the Equipment and the Software and all other taxes, assessments, fees and penalties (local, state, and federal) which may be levied or assessed on the ownership, leasing, rental, sale, purchase, possession, use, installation or servicing of the Equipment (collectively, "Taxes") excluding any Taxes on or measured solely by our net income. If any Taxes are due, we shall invoice you and you agree to pay the Tax in a timely manner along with your monthly rent. We may, but are not obligated to, pay such Taxes and other amounts and may file such returns on behalf of you if you fail to do so, and you agree to reimburse us upon demand for any amount expended for such Taxes, including fees or penalties paid by us hereunder. Your obligations to pay such Taxes which are due or assessed during the term of the rental shall survive the expiration or termination o this Master Rental Agreement.

12. Assignment. You have no right to sell, transfer, assign, sublease, or sublicense (a) the Equipment, (b) the Software, or (c) this Master Rental Agreement. We may sell, assign, encumber, or transfer this Master Rental Agreement and any or all or our rights created by it subject to your right hereunder. Any such assignment shall not relieve us of our obligations to you and you agree not to hold any assignee liable for any of these obligations. You agree that the rights of the new owner or assignee shall not be subject to any claims, counter-claims, defenses, or set offs that you may have against us including those in any Master Service Agreement.

13. Software. Subject to the terms of this Agreement, we grant to you the right to use one copy only of any software provided to you by us relating to the operation, information storage and retrieval, record keeping, and communication of the Equipment (the "Software") only in the manner described in the written materials accompanying the Software and solely as installed on the Equipment in object code form. You agree not to use it in any other way. You agree that the structure and organization of the Software are valuable trade secrets of ours and agree to protect the Software as you would other confidential, copyrighted material. You understand and agree that we own the Software and any copies of it and that the Software is licensed to you only for your use in connection with the Equipment. You agree that you will neither modify, nor alter the Software, nor decompile, reverse engineer, disassemble or otherwise attempt to obtain the source code of the Software, or to encourage any third party to do so.

14. Further Assurances. You agree to provide such additional documents, instruments, and Uniform Commercial Code financing statements to assist us in completing the transactions contemplated by this Master Rental Agreement to protect our rights or our assignee's rights to the Equipment. You hereby agree to authorize us to file UCC financing statements, amendments, and assignments relating to the Equipment in any location and execute the same as your attorney-in-fact. If we assign this Master Rental Agreement, you agree to execute such documents as we may reasonably request confirming your obligations under this Master Rental Agreement and you agree to make all payments of rent and other amounts due under this Master Rental Agreement directly to the assignee. If it is determined that the rental payment includes interest, no such interest shall exceed the amount legally allowed.

15. Use of Information. You agree hereby to grant to us the royalty-free right and license to utilize the Equipment to collect information (the "Information") with regard to the use of the Equipment by you, including supply utilization, inventory management, and billing information provided that we shall have no right to use any personal patient identifying information (such as name, address, telephone number, or social security number). You hereby agree to grant to us an irrevocable, perpetual, royalty-free right and license to use the Information for any purpose. We agree to keep confidential the name of your hospital in connection with the Information unless otherwise agreed by us and you.

16. Late Charges. If any part of a payment due is more than fifteen (15) days late, you agree to pay a late charge at the rate of 5%, or the highest rate allowed by law, of the payment for each month or part of a month the payment is not made.

17. Automatic Renewal. At the end of the term for each unit of equipment listed on each Rental Supplement made part of this Master Rental Agreement, you may choose to: (A) return the unit of Equipment and any accompanying Software to us, or (B) enter into a new Master Rental. Agreement for the applicable Equipment. If you do not notify us of your selection of one of the previous two options prior to the end of any term, the Equipment will automatically convert to a month-to-month rental agreement at the then current month-to-month rental rate. In case of such conversion to a month- to-month rental, all provisions of this Master Rental Agreement will remain in full force and effect.

Omnicell OmniSupplier, OmniCT, OmniCenter, the OmniCell logo, and Sure-Med System are registered trademarks or trademarks of OmniCell Technologies, Inc.

16.


18. Ownership of Equipment. We are the owner of the Equipment and Software and shall retain at all times title to the Equipment and the Software delivered to you hereunder.

19. Location of Equipment. You agree to keep and use the Equipment only at your address shown above. You agree that the Equipment shall not be removed from that address unless you get our written permission in advance to move it.

20. Return of Equipment. If you choose to return the Equipment at the end of this Master Rental Agreement, you agree to immediately return the Equipment to us in a condition as good as received, allowing for normal wear and tear, to any place in the United States we designate. You agree to prepay all expenses of crating and shipping by means we designate and you agree to properly insure the shipment. At our option, we will supply you with crating and packing materials. You agree to pay monthly rental payments for any month or part thereof until the Equipment is returned.

21. Other Rights. You agree that any delay or failure to enforce our rights under this Master Rental Agreement does not prevent us from enforcing any rights at a later time.

22. Freight. All shipments are FOB OmniCell Technologies, Inc.

23. California Law, Jurisdiction and Venue. This Agreement shall be construed, governed, interpreted, and enforced in accordance with the laws of the State of California and shall be deemed to be fully and solely executed, performed, and/or observed in the State of California. All actions of proceedings arising under this Agreement shall be brought in the Federal Courts of the Northern District of California or the State Courts located in Santa Clara County, State of California, and the parties hereby consent to and waive any objection to the jurisdiction of such court.

24. Notices. Any notices given under this Agreement shall be deemed received five (5) days after the date of mailing, one (1) day after dispatch by overnight courier service, or upon receipt if by hand delivery.

OMNICELL,                          MASTER RENTAL #__________________________
                                   RENTAL SUPPLEMENT #______________________
                                   MASTER RENTAL DATED______________________

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                                                 OMNICELL SUPPLEMENT TO RENTAL AGREEMENT
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CUSTOMER
----------------------------------------------------------------------------------------------------------------------------------
ADDRESS
----------------------------------------------------------------------------------------------------------------------------------
CITY                                   COUNTY                             STATE                              ZIP
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CONTACT                                                                                   PHONE NO.
----------------------------------------------------------------------------------------------------------------------------------
ADDRESS OF INSTALLATION:          STREET                 CITY                    COUNTY                    STATE           ZIP
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1. The Rental Supplement is subject to and incorporates by reference all the terms, conditions, and agreements set forth in the Master Rental Agreement identified above as is fully set forth at length herein. Serial numbers for each unit of Equipment will be shown on attached Exhibit A made Part of this Supplement.

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                                                                              Monthly                       Term
Catalog                     Product                  Number of                Rental Payment                (Number of
Number                      Description              Units                    for each unit                 Rental Payments)
___________________         ___________________      ___________________      ___________________           ___________________
___________________         ___________________      ___________________      ___________________           ___________________
___________________         ___________________      ___________________      ___________________           ___________________
___________________         ___________________      ___________________      ___________________           ___________________

Total Monthly Payment $  ____________________________________
----------------------------------------------------------------------------------------------------------------------------------

2. Monthly Rental payments shall be billed to Customer Purchase Order # The terms and conditions on any such purchase order issued in conjunction with this Supplement shall be for reference purposes only and shall not become a part of the terms of this Supplement.

3. Customer promises to pay the monthly rent shown for each unit of Equipment described above for the consecutive months shown under Term.

4. Customer acknowledges that they have the authority to sign this Rental Supplement.

Omnicell OmniSupplier, OmniCT, OmniCenter, the OmniCell logo, and Sure-Med System are registered trademarks or trademarks of OmniCell Technologies, Inc.

17.


----------------------------------------------------------------------------------------------------------------------------------
ACCEPTED:                                                        CUSTOMER:
This ____ day of _________________, 19 ______                    SIGNATURE:_______________________________________________________
                                                                 PRINT NAME:______________________________________________________
OMNICELL TECHNOLOGIES, INC.                                      TITLE:___________________________________________________________

                                                                 -----------------------------------------------------------------
                                                                 CERTIFICATE OF ACCEPTANCE OF RENETED EQUIPMENT
SIGNATURE:________________________________________________
PRINT NAME:_______________________________________________       We hereby certify that all of the Equipment referred to in the
TITLE:____________________________________________________       Supplement has been delivered to and has been received by the
                                                                 Customer, that the Equipment is in good working condition and
                                                                 repair and is in all respects satisfactory to the Customer, and
                                                                 that the Equipment is accepted by Customer for all purposes
                                                                 under the Supplement.

                                                                 Signature:_______________________________________________________
                                                                 Title:___________________________________________________________
                                                                 Date:____________________________________________________________
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ASSIGNMENT ACKNOWLEDGMENT

We acknowledge that as of ______ there are ______ payments remaining under this Rental Supplement and that all future Rental Payments shall be paid directly to General Electric Company, pursuant to Master Assignment Letter made part of the Master Rental Agreement.

Signature:_________________________________

OMNICELL


OMNICELL MASTER SERVICE AGREEMENT

Dated ___________, 1999 Master Service Agreement # ___________ Master Rental Agreement Dated __________ Master Rental Agreement # ____________

Dear Customer: We use the words "you" and "your" to mean the Customer indicated below. The words "we", "us", and "our" refer to OmniCell Technologies, Inc.

---------------------------------------------------------------------------------
OmniCell Technologies                      Customer              Customer
Mailing Address                            Billing Address       Delivery Address
---------------------------------------------------------------------------------
                                           Customer Legal Name:
OmniCell Technologies, Inc.                ____________________  ________________
1101 East Meadow Drive                     ____________________  ________________
Palo Alto, CA 94303                        ____________________  ________________
Attn.: Accounts Payable                    ____________________  ________________
Tel: 1-800-850-6664
---------------------------------------------------------------------------------

1. Definitions. All capitalized terms used but not defined herein shall have the same definitions as in the Master Rental Agreement designated above. An "OmniCell System" means an integrated combination of OmniCell System and/or Sure-Med System Equipment and Software as delivered to you under the Master Rental Agreement.

2. Master Service Agreement. Provided you timely pay the Monthly Service Payments designated on each Supplement you execute in connection with the Master Rental Agreement referenced above, we agree to provide service as described in this Agreement. Service shall cover the Equipment listed on each Supplement, the Software provided by us in connection with the Equipment, and our side of any Hardware or Software interfaces as may be provided by us. You agree to pay the service payment ("Monthly Service Payment') for each item of Equipment as set forth on the executed Supplements for the number of consecutive months shown under Term on each Supplement.

3. Additional Equipment. Each time you add Additional Equipment to your system, you agree to execute a Supplement prepared by us listing the Additional Equipment and the Monthly Service Payment, if any, per unit. All other terms of this Master Service Agreement shall apply to Additional Equipment listed on any additional Supplements. The Monthly Service Payment for each unit of Additional Equipment shall begin on the date of installation of each unit of Additional Equipment, if any.

4. Terms and Payments. The term of the Master Service Agreement shall be from the date first set forth above through the last day of the month in which the final Monthly Service Payment is made in accordance with the Supplements you have executed. Your Monthly Service Payments shown on each Supplement do not include any applicable Tax. If any Taxes are due, we shall invoice you and you agree to pay the Tax in a timely manner in addition to your Monthly Service Payments. We may, but are not obligated to, pay such Taxes and other amounts and may file such returns on

Omnicell OmniSupplier, OmniCT, OmniCenter, the OmniCell logo, and Sure-Med System are registered trademarks of OmniCell Technologies, Inc.

18.


behalf of you if you fail to do so, and you agree to reimburse us upon demand for any amount expended for such Taxes, including fees or penalties paid by us hereunder.


You agree to all the terms and conditions shown above and on Pages 2, 3 & 4 of this Master Service Agreement. These terms and conditions are a complete and exclusive statement of our agreement with respect to the subject matter hereof and may be modified only by a written agreement signed by both parties and not by course of performance. The terms and conditions on any purchase order you submit in conjunction with this Master Service Agreement shall be invalid and of no force and effect to the extent such terms and conditions contradict or are in addition to the terms of Us Master Service Agreement. Your purchase orders are for reference purposes only and shall not become a part of this Master Service Agreement.

You agree that this Master Service Agreement cannot be terminated except as provided for in this Master Service Agreement. This Master Service Agreement may not be terminated early. By signing this Master Service Agreement each of us represents that he/she has the authority to bind our respective parties to this Master Service Agreement.

Accepted:
--------------------------------------------------------------------------------
OMNICELL TECHNOLOGIES, INC.                  CUSTOMER

_________________________________________    ___________________________________
Signature                                    Signature
_________________________________________    ___________________________________
Print Name:                                  Print Name:
_________________________________________    ___________________________________
Tide:                                        Title:
--------------------------------------------------------------------------------

Omnicell OmniSupplier, OmniCT, OmniCenter, the OmniCell logo, and Sure-Med System are registered trademarks of OmniCell Technologies, Inc.

19.


Master Service Agreement Terms and Conditions

5. Installation. Under this Agreement you are entitled to installation by us of any Equipment for which you pay a Monthly Service Payment. You agree to execute an OmniCell Installation Worksheet prior to any Equipment installation. We shall make reasonable commercial efforts to complete the installation of such Equipment in a timely manner upon receipt of confirmation that the Equipment has arrived at your location. Prior to arrival of the Equipment at your location, you agree to provide adequate space for the Equipment under conditions suitable to the proper functioning of the Equipment. In addition, you agree to provide clear commercial power including our specified Uninterrupted Power Supply ("UPS") and the necessary communication cable (telephone extension cable and jack or Local Area Network ("LAN") connection and jack) to each location where the Equipment will be placed. You agree to provide a dedicated direct inward dial (DID) communication line for remote access for service ("RAS") at the location of the server(s). If this dedicated RAS line is not provided, service will be charged at twice the quoted monthly fee amount. We shall provide all installation personnel, tools, equipment, and material necessary to install the Equipment and will install it in a workmanlike manner.

6. Master Service. During the term of this Master Service Agreement, we shall perform service to keep the Equipment, the Software and our portion of any Software or Hardware interfaces in good working order based on the specific needs of the item of Equipment or Software as determined by us. Master Service will include adjustments and replacements of parts as we deem necessary. If we are unable to repair an item of Equipment, we will replace it. Replacement parts will be furnished on an exchange basis. In the event any Equipment shall, for any reason, become disabled, you agree to immediately advise us of the disability, specifying where the Equipment is located, the nature of the disability and any known cause. Any repairs or adjustments to the Equipment must be performed by an individual specifically trained in the application and use of the OmniCell System. During normal business hours we will use our good faith efforts to respond to emergency service requests. THIS MASTER SERVICE AGREEMENT DOES NOT ASSURE UNINTERRUPTED OR ERROR FREE SERVICE.

We shall provide service whether or not the Equipment has been used properly in applications for which it was intended, provided that in the event that the Equipment requires service due to misapplication, abuse, misuse, alteration, or unauthorized repair or installation, Customer agrees to be charged for the service at our minimum charge, plus our hourly rate after the first four (4) hours of service and the list price for any replacement parts required. We will charge at our rates and charges in effect at the time such service is performed. Additionally, in the event you require any Additional Fee- Based Services as described in the Master Services Agreement Plans, you agree to be charged according to the corresponding schedule of charges. For any Software service performed without a functional RAS line in place, Customer agrees to be charged twice the quoted monthly fee amount, plus twice our hourly charge after the first four (4) hours of service. We will charge at our rates and charges in effect at the time such service is performed. You agree to provide us with entry and access during normal business hours to the location of the Equipment for purposes of providing service and repair.

7. Interfaces. You agree to provide service for your side of any Software or Hardware interfaces.

A. Software and Service at No Charge. OmniCell agrees to provide the following initial interface Software and services at no charge to you within the first twelve (12) months from the date of this Master Service Agreement.

I. ADT Interface: We will provide at no charge, Software which will run on the OmniCell System and will receive Admitting Discharge Transfer ("ADT") messages from your ADT/Patient Management system. These ADT messages will be processed by the OmniCell System to update patient information in the OmniCell database. The format of the ADT interface messages and the communications mechanism will be mutually agreed upon by us, the ADT/Patient Management system vendor, and you. Software installation, software set-up, and up to 20 hours of testing are included as part of our side of the ADT interface We are not responsible for producing and transmitting ADT interface records from the ADT system. We are only responsible for receiving ADT interface records and processing the records on the OmniCell System. We are not

Omnicell OmniSupplier, OmniCT, OmniCenter, the OmniCell logo, and Sure-Med System are registered trademarks of OmniCell Technologies, Inc.

20.


responsible for development, installation, set-up, or testing of the ADT system side of the ADT interface.

II. Patient Charge Interface: OmniCell will provide at no charge, Software which will run on the OmniCell System and will produce interface records for each chargeable transaction that occurs on the OmniCell System. These patient charge interface records will be transmitted to the Customer's Patient Accounting system in real-time, or as a daily batch. The format of the Patient Charge interface messages, and the communications mechanism will be mutually agreed upon by us, the Patient Accounting system vendor, and you. Software installation, software set-up, and up to 20 hours of testing are included as part of our side of the Patient Charge interface. We are not responsible for the processing of the Patient Charge interface record which occurs on the Patient Accounting system. We are not responsible for development, installation, set-up, or testing of the Patient Accounting system side of the Patient Charge interface.

III. Supply Inventory Replenishment Interface: We will provide at no charge, Software which will run on the OmniCell System and will produce interface records indicating the quantities of items that are required to replenish each Omni Supplier. Supply Inventory Replenishment Interface for Sure-Med System will be provided at an additional charge. These Supply Inventor. Replenishment interface records will be transmitted to your Materials Management system in real-time, or in batches. The format of the Supply Inventory Replenishment interface messages, and the communications mechanism will be mutually agreed upon by us, the Materials Management system vendor, and you. Software installation, software set-up, and up to 30 hours of testing are included as part of our side of the Supply Inventory Replenishment interface. We are not responsible for the processing of the Supply Inventory Replenishment interface records which occurs on the Materials Management system. We are not responsible for development, installation, set-up, or testing of the Materials Management system side of the Supply Inventory Replenishment interface.

B. Chargeable Software and Service. We will charge you for the following Software and services:

I. Interface Modifications: If you request changes to an interface after initial installation, testing, and your acceptance of that interface, a fee will be charged to you for those modifications. "Modifications" includes, but is not limited to: a) change in record format; b) change in communications mechanism; c) addition of new record types; and, d) addition of new processing functionality.

II. Additional Interfaces: Any interfaces in addition to the ADT Interface, Patient Charge Interface, and Supply Inventory Replenishment Interface, and including initial interfaces not written within the first twelve (12) months described in Section A above will be charged to you at a rate of $5,000 per interface. The specifications for each interface will be mutually agreed upon by us, the vendor responsible for the other side of the interface, and you.

III. Replacement of an Existing Interface: If an existing interface between the OmniCell System and one of your Hospital Information System ("HIS") systems must be replaced by a new interface, the implementation of the replacement interface will be charged to you at a rate of $5,000. The specifications for the replacement interface must be collectively agreed upon by us, the vendor responsible for the other side of the interface, and you.

8. Training. You agree to select, and we shall provide training in the management, maintenance and use of the Equipment to, one of your employees who is qualified to act as "System Administrator." The System Administrator is responsible for administering and managing the performance of the Equipment, including maintaining the files and monitoring the performance of the Equipment. The System Administrator shall be responsible for reviewing and evaluating all end-user requests for service and informing us of any problems which the System Administrator cannot resolve. We shall provide training at our Headquarters location for one System Administrator in the system management and use of the Equipment. System

Omnicell OmniSupplier, OmniCT, OmniCenter, the OmniCell logo, and Sure-Med System are registered trademarks of OmniCell Technologies, Inc.

21.


Administrator Training shall be concluded within ninety (90) days from the initial installation date of the Equipment at your location. We shall also provide reasonable enduser training for each location of Equipment.

9. Subcontracting. We may subcontract any part of our obligations under this Master Service Agreement, provided that any such subcontracting shall not relieve us of our obligations or duties under this Agreement.

10. Limited Warranties. We hereby warrant that, if the Equipment is defective in workmanship or materials, or if the Software we provide is defective during the term of this Agreement, we shall repair or replace, at our option, the defective part, parts, Software or Equipment, and you agree that such repair or replacement shall be your sole remedy and recourse in the event of such defect. THE WARRANTY GRANTED HEREIN DOES NOT COVER ANY PRODUCTS THAT YOU MAY USE, CREATE, OR INSTALL THAT IS NOT PROVIDED BY US. THIS WARRANTY IS IN LIEU OF ALL OTHER WARRANTIES, EXPRESSED OR IMPLIED, INCLUDING WARRANTIES OF MERCHANTABILITY, NONINFRINGEMENT, USE AND FITNESS FOR A PARTICULAR PURPOSE. THIS WARRANTY SHALL BE VOID AND OF NO FORCE OR EFFECT IF WE DETERMINE THAT ANY EQUIPMENT OR SOFTWARE DEFECT IS DUE TO YOUR MISUSE OR NEGLECT OR ANY UNAUTHORIZED REPAIRS OR TAMPERING WITH THE EQUIPMENT OR SOFTWARE.

11. Limitation of Liability. OUR TOTAL LIABILITY UNDER THIS AGREEMENT SHALL NOT EXCEED THE AMOUNT PAID BY YOU HEREUNDER. IN NO EVENT SHALL WE BE LIABLE FOR ANY LOST PROFITS, COST OF COVER, OR OTHER SPECIAL, CONSEQUENTIAL, OR INCIDENTAL DAMAGES ARISING OUT OF THIS AGREEMENT, OR YOUR USE OF OR ANY MALFUNCTION OF THE EQUIPMENT OR SOFTWARE, HOWEVER CAUSED AND WHETHER ARISING UNDER CONTRACT, TORT, STRICT LIABILITY OR OTHERWISE, EVEN IF WE HAVE BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES AND NOTWITHSTANDING THE FAILURE OF ESSENTIAL PURPOSE OF ANY LIMITED REMEDY.

12. Default You shall be in material default of this Agreement if: (a) you are in default under the Master Rental Agreement referenced above; (b) you fail to pay any Monthly Service Payment when due and fail to cure such failure to pay within fifteen (15) days after receipt of notice from us; (c) you breach any material provision of this Agreement and such default is not cured within fifteen (15) days after receipt of notice from us. In the event you fail to cure any default within the prescribed period, if any, we shall have the right, in addition to any other rights and remedies which may be available to us at law or in equity, to accelerate all sums due us under this Agreement and/or terminate this Agreement and cease providing Master Service to you. For purposes of this Section, notice shall be deemed given five (5) days after the date of mailing, one day after dispatch by overnight courier service or upon receipt if by hand delivery.

13. California Law, Jurisdiction and Venue. This Agreement shall be construed, governed, interpreted, and enforced in accordance with the laws of the State of California and shall be deemed to be fully and solely executed, performed, and/or observed in the State of California. All actions or proceedings arising under this Agreement shall be brought in the Federal Courts of the Northern District of California or the State Courts located in Santa Clara County, State of California, and the parties hereby consent to and waive any objection to the jurisdiction of such court.

Omnicell OmniSupplier, OmniCT, OmniCenter, the OmniCell logo, and Sure-Med System are registered trademarks of OmniCell Technologies, Inc.

22.


Master Service Agreement Plans

                                                        Basic Service Plan
----------------------------------------------------------------------------------------------------------------------------------
Basic Service Plan                                 Disabled System                             Hardware or Software Malfunction
----------------------------------------------------------------------------------------------------------------------------------
Phone Support                                      24 Hours/Day                                24 Hours/Day
                                                   7 Days/Week                                 7 Days/Week
----------------------------------------------------------------------------------------------------------------------------------
Response Time                                      30 Minutes                                  30 Minutes
     Phone:                                        (Monday-Friday 5 AM - 6 PM PST)             (Monday-Friday 5 AM - 6 PM PST)
                                                   2 Hours                                     2 Hours
                                                   (Monday-Friday 6 PM - 5 AM PST &            (Monday-Friday 6 PM -5AM PST &
                                                   Saturday- Sunday)                           Saturday-Sunday)
----------------------------------------------------------------------------------------------------------------------------------
On-Site:                                           24 Hours                                    48 Hours
----------------------------------------------------------------------------------------------------------------------------------
On-Site Availability (if necessary)                24 Hours/Day                                9 AM - 5 PM
                                                   7 Days/Week                                 Monday-Friday
----------------------------------------------------------------------------------------------------------------------------------
Repair/Replacement Parts                           Included                                    Included
----------------------------------------------------------------------------------------------------------------------------------
Remote Software & Interface Diagnostics            Included                                    Included
----------------------------------------------------------------------------------------------------------------------------------
System Administrator Training                      $1,000/Attendee (Travel and e~= not
                                                   included)
----------------------------------------------------------------------------------------------------------------------------------

                                                       Extended Service Plan
----------------------------------------------------------------------------------------------------------------------------------
Extended Service Plan                              Disabled System / Hardware or Software Malfunction
----------------------------------------------------------------------------------------------------------------------------------
Phone Support                                      24 Hours/Day
                                                   7 Days/Week
----------------------------------------------------------------------------------------------------------------------------------
Response Time                                      30 Minutes
     Phone:                                        (Monday-Friday 5 AM - 6 PM PSI)
                                                   2 Hours
                                                   (Monday-Friday 6 PM - 5 AM PST & Saturday-Sunday)
----------------------------------------------------------------------------------------------------------------------------------
On-Site:                                           24 Hours
----------------------------------------------------------------------------------------------------------------------------------
On-Site Availability (if necessary)                24 Hours/Day
                                                   7 Days/Week
----------------------------------------------------------------------------------------------------------------------------------
Repair/Replacement Parts                           Included
----------------------------------------------------------------------------------------------------------------------------------
Remote Software & Interface Diagnostics            Included
----------------------------------------------------------------------------------------------------------------------------------
Interface Support (ADT, Billing & Inventory)       Included
----------------------------------------------------------------------------------------------------------------------------------
Back-up Server                                     Included
----------------------------------------------------------------------------------------------------------------------------------
Annual System Checkup                              Included
----------------------------------------------------------------------------------------------------------------------------------
3 Days System Optimization Consulting              Included
----------------------------------------------------------------------------------------------------------------------------------
System Administrator Training *                    2 attendees at no charge per every 20 frames purchased (Travel and expenses
                                                   not include)
----------------------------------------------------------------------------------------------------------------------------------

                                                   Additional Fee-Based Services
----------------------------------------------------------------------------------------------------------------------------------
Additional Fee-Based Services                               Minimum Charge 1st four (4) hours  Additional Charge
----------------------------------------------------------------------------------------------------------------------------------
Relocation & All Services associated with Relocation        $  675                             $150/Hour
----------------------------------------------------------------------------------------------------------------------------------
Reconfiguration & Rearrangement of OmniSuppliers            $  675                             $150/Hour
----------------------------------------------------------------------------------------------------------------------------------
Field Installation of Product Modules & Module Conversions  $  675                             $150/Hour
----------------------------------------------------------------------------------------------------------------------------------
Data Management & Data Manipulation of OmniCenter           $  675                             $150/Hour
----------------------------------------------------------------------------------------------------------------------------------
Re-Training                                                 $  675                             $150/Hour
----------------------------------------------------------------------------------------------------------------------------------
System Administrator Functions                              $  675                             $150/Hour
----------------------------------------------------------------------------------------------------------------------------------
Inventory Management Consulting                             $1,250                             $250/Hour
----------------------------------------------------------------------------------------------------------------------------------
Backup Server                                                                                  S 15,000 with  $120/month service
                                                                                               fee
----------------------------------------------------------------------------------------------------------------------------------
Annual System Checkup                                                                          $1,200/OmniSupplier Unit
----------------------------------------------------------------------------------------------------------------------------------
3 Days System Optimization Consulting                                                          $ 6,000
----------------------------------------------------------------------------------------------------------------------------------
OmniCell Full-time System Administrator                     Requires extended service plan     As quoted
----------------------------------------------------------------------------------------------------------------------------------
Interfaces: Modification of existing Interfaces                                                $1,000- - $3,000
New Interface                                                                                  $5,000
New Interface Maintenance                                                                      $50/Month
----------------------------------------------------------------------------------------------------------------------------------

* All customers must identify at least one individual. the System Administrator, who will assume ongoing responsibility for OmniCell equipment Training is completed in a two to three day session at an OmniCell facility

Omnicell OmniSupplier, OmniCT, OmniCenter, the OmniCell logo, and Sure-Med System are registered trademarks or trademarks of OmniCell Technologies, Inc.

23.


OMNICELL


OMNICELL SUPPLEMENT TO SERVICE AGREEMENT

MASTER SERVICE AGREEMENT # __________
SERVICE SUPPLEMENT # ________________
DATED ___________________

Dear Customer: In this Supplement to Master Service Agreement (this "Supplement"), we use the words "you" and "Your" to mean the Customer indicated below. The words "we", "us", and "our" refer to OmniCell Technologies, Inc.

----------------------------------------------------------------------------------------------------------
OmniCell Technologies                 Customer                                Customer
Mailing Address                       Billing Address                         Delivery Address
----------------------------------------------------------------------------------------------------------
                                      Customer Legal Name:
OmniCell Technologies, Inc.
1101 East Meadow Drive
Palo Alto, CA 94303
Attn: Accounts Payable
Tel.: 800-850-6664
----------------------------------------------------------------------------------------------------------

1. Service Agreement. We agree to provide service to you on the Equipment listed below. You promise to pay to us the monthly service fee shown for each unit of Equipment for the number of consecutive months shown under the Term below.
2. Terms and conditions. You agree that all of the terms and conditions contained in the Master Service Agreement identified above between you and us will apply to this Supplement, except as stated in Section 3 below.
3. Term and Service Fee. The term and monthly service payment for each unit of Equipment on this Supplement shall be as shown above. You agree to pay the service fee payments on their due dates.

----------------------------------------------------------------------------------------------------------
Equipment
----------------------------------------------------------------------------------------------------------
                                                                  Monthly Service
Catalog               Product               Number of             Payment               Term (Number of
Number                Description           units                 for each unit         Service Payments)
________________      ________________      ________________      ________________      ________________
________________      ________________      ________________      ________________      ________________
________________      ________________      ________________      ________________      ________________
________________      ________________      ________________      ________________      ________________
________________      ________________      ________________      ________________      ________________
Total Payment $___________________
----------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------
OmniCell Service Plan:                 Basic Service Plan                    Extended Service Plan
----------------------------------------------------------------------------------------------------------

By signing this Service agreement, each of us represents that he/she has the authority to bind our respective parties to this Service agreement Accepted:

Accepted:
OMNICELL TECHNOLOGIES, INC.                  CUSTOMER
-----------------------------------          -----------------------------------
Signature                                    Signature
-----------------------------------          -----------------------------------
Print Name:                                  Print Name:
-----------------------------------          -----------------------------------
Title:                                       Title:
--------------------------------------------------------------------------------

Omnicell OmniSupplier, OmniCT, OmniCenter, the OmniCell logo, and Sure-Med System are registered trademarks or trademarks of OmniCell Technologies, Inc.

24.


EXHIBIT "D"

OMNICELL

1101 E. Meadow Drive
Palo Alto, CA 94303
Tel. 800-850-6664

MASTER ASSIGNMENT LETTER

Re: Master Rental No.__________

Dear Customer,

We are assigning the right to payments under your Master Rental Agreement with us to General Electric Company. This assignment includes all present Rental Supplements between us and any future Rentals Supplements you may enter into (collectively "Rentals"). All payments made on and after this date under the Rentals should be paid to General Electric Company at the address as indicated. Please be advised that General Electric Company is only being assigned the rights to payments under your Rentals and is not undertaking any of our obligations thereunder. We remain solely liable for all obligations as the renter under the Rentals, all warranties as manufacturer and/or supplier, all claims under any service contract or any other matters concerning the Rentals or the equipment. You acknowledge that any claims against us under the Rentals or as vendor or supplier of the equipment or under any service contract shall be made solely against us and not General Electric Company and that General Electric Company shall not be subject to any claims, damages, liabilities, or offsets against any payments due under any Rentals for any reason whatsoever. Payments under all Rentals should be remitted to General Electric Company to the address referenced on the invoices.

Thank you for your attention in this regard. Please acknowledge this assignment by signing and returning a signed copy of this letter to us.

Very truly yours,

OmniCell Technologies, Inc.
1101 E. Meadow Drive
Palo Alto, CA 94303

ACKNOWLEDGED:

By:_____________________________

Title:__________________________

25.


EXHIBIT "E"

CUSTOMER CREDIT RATING CATEGORY

Rating              Requirements:
------              ------------
"A"                 Fund balance greater than $30 million
                    Net income greater than $4 million
                    Cash on hand greater than $5 million
                    (An "A" can be moved down to a "B" if the current
                    ratio is less than 1:1 and the debt ratio is
                    greater than 5:1)

"B"                 Fund balance greater than $20 million
                    Net income greater than $2 million
                    Cash on hand greater than $3 million
                    (A "B" can be moved up to an "A" if the current
                    ratio is greater than 3:1 and the debt ratio is
                    less than 1:1 or a "B" can be moved down to a "C"if
                    the current ratio is less than 1:1 and the debt
                    ratio is greater than 5:1)

"C"                 Fund balance greater than $15 million
                    Net income greater than $1 million
                    Cash on hand greater than $2 million
                    (A "C" can be moved up to a "B" if the current
                    ratio is greater than 2:1 and the debt ratio is
                    less than 2:1 or a "C" can be moved down to a "D"
                    if the current ratio is less than 1:1 and the debt
                    ratio is greater than 5:1)

"D"                 Fund balance less than $15 million
                    Net income less than $1 million
                    Cash on hand less than $2 million
                    (A "D" can be moved up to a "C" if the current
                    ratio is greater than 2:1 and the debt ratio is
                    less than 2:1)

26.


EXHIBIT "F"
BILL OF SALE

OmniCell Technologies, Inc. ("Seller") in consideration of:


paid by General Electric Company ("Buyer"), receipt of which is acknowledged, hereby grants, sells, transfers and delivers to the Buyer the Master Rental Agreement and Supplement No. To Rental Agreement, along with the OmniCell System or Sure-Med System equipment ("Equipment"), as described below:

Master Rental Agreement Number:_________________________________________________

Master Rental Agreement Date:___________________________________________________

Supplement to Rental Agreement:_________________________________________________

Customer Name:__________________________________________________________________

Buyer shall have all rights and title to the Equipment, but shall have no rights in any related software.

Seller warrants and represents to Buyer that the title to be conveyed is good, its transfer is rightful and the Equipment is, has been, or shall be delivered free from any interest or other lien or encumbrance.

IN WITNESS WHEREOF, Buyer and Seller have executed this Bill Of Sale this day of ___________________.

Seller:                                 Buyer:

OMNICELL TECHNOLOGIES, INC.             GENERAL ELECTRIC COMPANY

By:_____________________________        By:_____________________________

Title:__________________________        Title:__________________________

                                      27.


EXHIBIT 10.18

EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT (this "Agreement") is made as of December 13, 1993 by and between OmniCell Technologies, Inc., a California corporation (hereinafter referred to as the "Company"), and Sheldon D. Asher (hereinafter referred to as the "Executive").

WITNESSETH:

The company desires to enter into this Agreement and to employ the Executive and the Executive desires to enter into this Agreement and be employed by the Company, upon the terms and subject to the conditions hereinafter set forth;

NOW, THEREFORE, the Executive and the Company, in consideration of the agreements, covenants and conditions contained herein, hereby agree as follows:

1. AGREEMENT TO EMPLOY

The Company hereby employs the Executive, and the Executive hereby agrees to work in the employ of the Company, according to terms and conditions provided herein.

2. TERM OF EMPLOYMENT

The employment term shall commence on December 13, 1993 (the "Commencement Date") and shall be on an at-will basis with either party having a right to terminate such employment, subject to the terms and provisions of this Agreement, including but not limited to those contained in Section 9 hereof (such period of employment being herein called the "Employment Period"), provided that for the period from December 13, 1993 through December 31, 1993, the Executive's base salary shall be 33% of the Base Rate as set forth in
Section 4.01 hereof.

3. DUTIES; SERVICE AS DIRECTOR

(a) The Executive shall be employed (i) in the capacity of President and Chief Executive Officer of the Company to perform, subject to the direction and control of the Board of Directors of the Company, such duties as are customarily attendant to such office and such other duties as are reasonably assigned from time to time by such Board of Directors, and (ii) in such executive capacities as may be mutually agreed upon by the Board of Directors of the Company and the Executive in subsidiaries or affiliates of the Company.

(b) Upon the Commencement Date, the Company's management shall take such action as may be necessary to cause the

1.


Executive to be named as a director of the Company. So long as the Executive is employed hereunder, the company will use its best efforts to cause the Executive to continue to serve as a director of the Company without any additional compensation to the Executive, and the company will nominate the Executive and recommend to its shareholders that they vote for the Executive as a director of the Company.

(c) The Company agrees that, from and after an initial public offering of the Company's Common Stock and for so long thereafter as the Executive serves as a director of the Company, the Company will use its best efforts to maintain in effect policies of directors' and officers' liability insurance in an amount of coverage of at least $1,000,000 subject to a deductible of not more than $100,000.

4. COMPENSATION OF THE EXECUTIVE

For the performance of his duties hereunder in all capacities, the Executive shall be compensated by and entitled to compensation by the Company as follows:

4.1 Regular Salary. Subject to Section 2 hereof, Employee shall be entitled to receive a regular salary during the Employment Period at a rate equal to the Base Rate (as hereinafter defined), payable in accordance with the normal custom of the Company for its other executive employees. As used herein, "Base Rate" shall mean an amount of compensation as determined by the Board of Directors from time to time, which shall be reviewed at least annually, but shall be at least $200,000 per year.

4.2 Performance Bonus. (a) In addition to such salary, commencing January 1, 1994 and thereafter during the Employment Period the Executive shall be entitled to receive additional compensation for his services ("Bonus Compensation") in respect of each calendar year of the Company ("Calendar Year") beginning or ending during the term of this Agreement, subject to subsection (b) below, in an amount based on the performance of the Executive during such Calendar Year as determined by the Board of Directors of the Company, provided that such amount shall be at least $50,000 in each Calendar Year or, if greater, for Calendar Year 1994, 1% of the gross revenues of the Company determined in accordance with generally accepted accounting principles and as set forth in the Company's financial statements, and for Calendar Years 1995 and thereafter, an amount determined pursuant to a formula to be established by the Company's Board of Directors based on relevant operating and other criteria. Bonus Compensation of $12,500 shall be paid in respect of each of the first three calendar quarters of the Company (each a "Calendar Quarter") (or, if greater, for each Calendar Quarter in Calendar Year 1994, 1% of the Company's gross revenues for such Calendar Quarter) within 10 days after the end

2.


of the corresponding Calendar Quarter and the remaining Bonus Compensation shall be paid within ninety (90) days after the end of the corresponding Calendar Year. All Bonus Compensation will be payable in cash or, for Calendar Year 1994, at the election of Executive, which election shall be made by written notice given by the Executive to the Company no later than the last day of the corresponding Calendar Quarter or Calendar Year, in any combination of cash or the Company's stock as is mutually agreed upon.

(a) To the extent that any Bonus Compensation is being paid in respect of a Calendar Quarter or Calendar Year during which the termination of this Agreement occurs, the amount of such Bonus Compensation to be paid shall be subject to proration based on the number of days in such Calendar Quarter or Calendar Year occurring during the term of this Agreement.

4.3 Stock Options. Executive will receive as of the Commencement Date the grant to Executive of (i) an incentive stock option qualified as such pursuant to the Internal Revenue Code to purchase from the Company 330,000 shares of the company's common stock at a price equal to fair market value per share at the date of grant, which shall be $0.21 per share. Such options shall be granted pursuant to the Company's existing stock option plan (the "Plan") and shall be evidenced by an appropriate option agreement. This option will become exercisable with respect to one-sixtieth (1/60) of the total number of shares an each successive monthly anniversary of the Commencement Date until all shares covered thereby have become exercisable, provided that in the event that the Executive's employment by the Company is terminated without cause pursuant to
Section 9(d) hereof or is terminated as a result of the Executive's death or disability (i) within the first twelve months after the Commencement Date, this option will accelerate and become immediately exercisable with respect to an additional one-fifth (1/5) of the total number of shares subject to this option and (ii) at or subsequent to twelve months after the Commencement Date, this option will accelerate and become immediately exercisable with respect to the greater of (A) an additional one-fifth (1/5) of the total number of shares subject to this option and (B) 40% of the then-unvested shares subject to this option, and provided further, that in the event that, as the result of any sale of the Company's equity securities, merger, consolidation, sale of assets, or proxy contest, the persons who were directors of the Company immediately prior to such transaction shall not constitute a majority of the Board of Directors of the Company (or of the board of directors of any successor to or assign of the Company) immediately after the next election of directors of the Company (or such successor or assign) following such transaction, this option will accelerate and become immediately exercisable with respect to the total number of shares subject to this option. Once the option becomes exercisable with respect to a number of shares, the option will remain so

3.


exercisable for the remainder of its term. The option will have a term of ten years from the date of grant but would terminate in accordance with the Plan after the Executive's employment by the Company or any of its affiliates terminates.

5. VON-DISCLOSURE AND NON-COMPETITION

The Company and the Executive agree that they will enter into a mutually acceptable agreement containing provisions with respect to non-disclosure by the Executive of confidential information relating to the Company and restricting the right of the Executive to compete with the Company during the period the Company shall continue to pay Executive's compensation as set forth in Section 9(g) hereof.

6. EMPLOYEE BENEFITS

(a) During the Employment Period, the Executive and his dependents shall be entitled to participate in such employee benefits, including, but not limited to, sick days, holidays, group pension, life and health insurance and other medical and dental benefits, as the %Company may from time to time generally make available to its executive employees, provided that the Executive may in addition elect to continue coverage for him and his dependents pursuant to COBRA under his former employer's benefit plans for a period not to exceed 90 days and the Company will reimburse Executive for the cost thereof so long as such election is in effect. The Executive shall be entitled, during the term of his employment hereunder, to a paid vacation aggregating four (4) weeks per year, at a time or times mutually convenient to the Company and the Executive.

(b) The Company shall pay or reimburse the Executive for (i) the cost of a $1,000,000 term life insurance policy on the life of the Executive, the owner and the beneficiaries of which may be designated by the Executive, subject to the Executive satisfactorily completing any required physical examination and (ii) a housing allowance which, for the period commencing on the earlier of July 1, 1994 or the date on which the Executive closes on the purchase of a home in the San Francisco Bay area, shall equal $50,000 per year, payable monthly, through the earlier of (A) the first anniversary of the closing of an initial public offering of the Company's common stock or of the acquisition of the Company in which its shareholders receive cash or publicly traded securities, (B) the closing of an acquisition of the Company in which its shareholders receive all cash, and (C) the month in which the aggregate of the Executive's Base Rate compensation plus his Bonus Compensation for the preceding 12 months equals or exceeds $350,000, provided that in any event, the $50,000 per year housing allowance will be paid for a minimum of 36 months after the commencement of such period.

4.


7. RELOCATION EXPENSES

(a) Expenses incurred on or prior to July 1, 1995 relating to Executive's relocation from the Chicago metropolitan area to the San Francisco Bay area will be borne as follows:

(i) customary closing costs (including real estate commissions) payable by the seller relating to the sale of Executive's home in Lake Bluff, Illinois will be borne by the Company;

(ii) costs associated with the relocation of Executive's household (including 3 automobiles and packing and unpacking) from Lake Bluff, Illinois to either rental or purchased housing in the San Francisco Bay area, and, if to rental housing, from such rental -housing to purchased housing, will be borne by the Company;

(iii) living expenses in transit and temporary housing in the San Francisco Bay area (including apartment rental in lieu of hotel estimated at $1,500 per month) will be borne by the Company:

(iv) customary closing costs (including up to a maximum of three points) associated with obtaining a mortgage on and closing on Executive's new residence in the San Francisco Bay area will be borne by the Company;

(v) costs associated with air fare between Chicago and the San Francisco Bay area for the Executive and his family for the purpose of seeking housing or schooling in the San Francisco Bay area will be borne by the Company; and

(vi) 75% of the difference, if any, between the purchase price of Executive's Lake Bluff, Illinois home and capital improvements thereon and the selling price of such home (which difference, for purposes of determining the amount to be borne by the Company, will not exceed $50,000 without the approval of the Board of Directors of the Company), will be borne by the Company.

(b) With respect to any payment by the Company for relocation expenses for the benefit of the Executive or his family pursuant to Section 7(a) (a "Payment") which is subject to any state, federal, Medicare, FICA or other income tax or would increase any such tax because of the deduction phase-out penalty provisions, the Executive shall be entitled to receive an additional payment (the "Gross-Up Payment") in an amount such that after payment by the Executive of all income taxes on such Payment, including, without limitation, any taxes imposed upon the Gross-Up Payment, or due as a

5.


result of such deduction phaseout penalty provisions, the Executive retains an amount of the Gross-Up Payment equal to the income taxes imposed upon and/or deductions lost as a result of such Payment. The Executive's accountant will submit documentation to the Company evidencing the calculation of the amount of any such Gross-Up Payment.

8. PURCHASE OF COMPANY STOCK

(a) The Company hereby agrees to sell to the Executive-, or if designated by the Executive, to the Asher Family Trust and/or trusts for the benefit of the Executive's children (the "Purchaser(s)"), 100,000 shares of Series D preferred stock of the Company on the Commencement Date at a price equal to $2.17 per share, payable in cash, and simultaneously therewith the Company agrees to make five loans to the Purchaser(s) of $40,000 each (for an aggregate of $200,000) in principal amount, each such loan to relate to 20,000 shares of such stock, such loans bearing interest at 4% per year, and the principal of and accrued interest on such loans shall be repayable serially, the first on January 1, 1995 and the second through the fifth on each successive January 1 thereafter, Provided that so long as the Executive's employment by the Company has not been terminated prior to the date of maturity of any such loan the repayment of the principal of and all accrued interest on such 'loan shall be forgiven by the Company on such date of maturity.

(b) Upon payment of the purchase price for the preferred stock referred to above, the Purchaser(s) shall have all of the rights of a stockholder with respect to the shares of preferred stock purchased by the Purchaser(s) pursuant to this Section 8, including the right to receive dividends and to vote such shares, except as provided in Subsection (c) hereof.

(c) All certificates representing the shares of preferred stock of the Company purchased by the Purchaser(s) pursuant to this Section 8, shall be kept in the stock records of the Company and shall be delivered to the Purchaser(s) in installments of 20,000 shares each on January 1 in each year in which a loan matures as such loan is repaid or forgiven. Upon such repayment or forgiveness with respect to shares so held in the stock records of the Company, the Company shall deliver to the Purchaser(s) the certificates representing such shares and the Company shall pay any fees and expenses incident to such delivery.

(d) The purchase of such shares by the Purchaser(s) shall be subject to the condition subsequent that the Company shall raise at least $5,000,000 in equity capital through the issuance and sale of Series E preferred stock by no later than December 24, 1993.

6.


9. TERMINATION

(a) The employment of the Executive hereunder shall terminate automatically upon his death.

(b) In the event of the disability or incapacity of the Executive, the Company may at any time thereafter elect to terminate the employment of the Executive hereunder by giving written notice of such termination to the Executive. For purposes hereof, "disability or incapacity" shall be deemed to exist-at such time as either of the following conditions has been met:

(i) The Executive - is unable to perform his basic duties hereunder after reasonable accommodation by reason of physical or mental illness or other incapacity and such disability shall exist for a continuous period in excess of 90 days, or

(ii) The Executive shall refuse to submit to a medical examination by a medical doctor reasonably acceptable to the Board of Directors of the Company and to the Executive to determine whether the Executive is unable to perform his basic duties hereunder by reason of physical or mental illness or other incapacity.

(c) In the event of the engagement by the Executive in serious misconduct, the Company may at any time thereafter elect to terminate the employment of the Executive hereunder by giving written notice of such termination to the Executive. For purposes hereof, "serious misconduct" shall mean (i) fraud, misappropriation, embezzlement or other similar act of dishonesty or material misconduct against the Company or any subsidiaries or affiliates thereof or act materially contrary to their best interests, or (ii) alcohol or drug abuse, or (iii) conviction of a felony.

(d) The Company, in its discretion, may elect to terminate the employment of the Executive hereunder, whether or not there is an event of disability or incapacity or serious misconduct (i.e., without cause), by giving at least 20 days, prior written notice of such termination to the Executive.

(e) The Executive may elect to terminate his employment hereunder for good reason. For purposes hereof, "good reason" shall mean the occurrence of any of the following without the consent of the Executive:

(i) a change in the Executive's title or position which represents a demotion from his title or position as in effect at the Commencement Date;

7.


(ii) the assignment to the Executive of material duties or responsibilities which are not commensurate with such title or position or of any duties, responsibilities or directions which violate law; or

(iii) a failure by the Company to pay the compensation specified in section 4.01 or 4.02 or Sections 6, 7 or 8 hereof.

(f) In the event of the termination of the employment of the Executive hereunder by reason of any of the events or circumstances described in subsection (a) or (c) above, the Company shall pay to the Executive, as of the effective date of such termination, any accrued and unpaid portion of his salary hereunder through the date of such termination, and, except as may be provided in the stock option agreement, Employer shall have no obligation to pay any other or additional compensation to the Executive hereunder.

(g) In the event of the termination of the employment of the Executive hereunder by the Company under subsection (b) or (d) above or by the Executive under subsection (e) above, but in each case not under circumstances permitting termination under subsection (a) or (c) above (it being agreed that circumstances permitting termination under subsection (c) above shall be deemed not to exist unless the Company has otherwise notified the Executive by the effective date of such termination, in which event whether such circumstances exist shall be determined as a matter of fact), the Executive shall be entitled to receive compensation at the Base Rate in effect at the effective date of such termination plus $50,000 for a period equal to one year following the effective date of such termination, provided that in the event of termination under subsection (b), such amounts may be paid by the Company's insurance carrier and shall be reduced by the amount of proceeds received by Executive from federal or state disability insurance. Any amount payable under the preceding sentence shall be payable in three lump sum payments, the first 40% within 30 days after the effective date of such termination, the next 40% within 180 days after the effective date of such termination, and the final 20% within 360 days after the effective date of such termination.

(h) In the event of the termination of the employment of the Executive hereunder for any reason, the maturity date of all loans referred to in Section 8 hereof shall be reset to the date which is 18 months after the effective date of such termination, provided that if the employment of the Executive is terminated without cause, the repayment of a pro rata portion of the principal of and accrued interest on any such loans which would otherwise have been due on the January 1 immediately after the effective date of such termination (such proration to be based on the number of days worked by the

8.


Executive in the year in which the effective date of such termination occurs) shall be forgiven by the Company.

10. NOTICES

Any notice to be given hereunder by either party to the other may be effected either by delivery of written notice in person or by mail, registered or certified, postage prepaid, with return receipt requested. Mailed notices shall be addressed to the party at the address as follows:

If to the Company, to:

OmniCell Technologies, Inc.
177 Jefferson Drive
Menlo Park, California 95025

If to the Executive, to:

Mr. Sheldon Asher
175 Norwich Court
Lake Bluff, IL 60044

Each party may change his or its address by written notice in accordance with this Section. Notices delivered personally shall be deemed communicated as of actual receipt. Mailed notices shall be deemed communicated as of three (3) days after mailing.

11. AMENDMENTS

Any modifications to this Agreement shall be effective only if they are in writing, signed by the Executive, and approved by the Board of Directors of the Company.

12. APPLICABLE LAW

The rights, duties, and obligations of the Executive and the Company hereunder shall be construed in accordance with the laws of the State of California.

9.


IN WITNESS WHEREOF, the Company and the Executive have executed this Employment Agreement as of the date first above written.

OmniCell Technologies, Inc.

  By: /s/ Randall Lipps

       Name: Randall Lipps

       Title: Chairman


  /s/ Sheldon D. Asher
  Sheldon D. Asher


10.


EXHIBIT 21.1

LIST OF SUBSIDIARIES

                        ORGANIZATION                           JURISDICTION NAME
                        ------------                           -----------------
Omnicell HealthCare Canada, Inc.                               Canada

Omnicell Europe SARL                                           France


EXHIBIT 23.1

CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS

We consent to the reference to our firm under the caption "Experts" and to the use of our report dated February 26, 2001 (except for Note 19, as to which the date is , 2001), in the Registration Statement (Form S-1) and related Prospectus of Omnicell, Inc. for the registration of shares of its common stock.

Our audits also included the financial statement schedule of Omnicell, Inc. listed in Item 16(b). This schedule is the responsibility of the Company's management. Our responsibility is to express an opinion based on our audits. In our opinion, the financial statement schedule referred to above, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein.

ERNST & YOUNG LLP

San Jose, California


The foregoing consent is in the form that will be signed upon completion of the name change and reverse stock split described in Notes 1 and 19 to the consolidated financial statements.

                                                           /s/ ERNST & YOUNG LLP

San Jose, California


March 14, 2001


EXHIBIT 23.2

CONSENT OF INDEPENDENT ACCOUNTANTS

We hereby consent to the use in this Registration Statement on Form S-1 of our report dated July 30, 1999, except for Notes 2 and 12, which are as of January 23, 2001, relating to the financial statements of the Sure-Med Division of Baxter Healthcare Corporation, an indirect division of Baxter International Inc., which appear in this Registration Statement. We also consent to the reference to us under the heading "Experts" in such Registration Statement.

/s/ PRICEWATERHOUSECOOPERS LLP

PricewaterhouseCoopers LLP


March 12, 2001