Document:

Exhibit 10.13
         -------------

THE SECURITIES  REFERRED TO HEREIN HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933,  AS AMENDED (THE "ACT"),  AND MAY NOT BE OFFERED OR SOLD UNLESS THE
SECURITIES ARE REGISTERED  UNDER THE ACT, OR AN EXEMPTION FROM THE  REGISTRATION
REQUIREMENTS OF THE ACT IS AVAILABLE.

                                 COPYTELE, INC.
                                 --------------
                          STOCK SUBSCRIPTION AGREEMENT
                          ----------------------------

This Stock  Subscription  Agreement (this  "Agreement"),  dated as of August 30,
1999, is entered into by and between CopyTele, Inc., a Delaware corporation (the
"Company"), and Lewis H. Titterton (the "Subscriber").

The Company has offered for sale,  and the  Subscriber  has agreed to  purchase,
200,000  shares (the  "Shares") of common  stock,  par value $.01 per share (the
"Common  Stock"),  of the  Company  and a Warrant  (the  "Warrant")  to purchase
200,000 shares of Common Stock (the "Warrant Shares").  In connection therewith,
the Company and the Subscriber hereby agree as follows:

 1. Purchase and Sale of Shares.
    ----------------------------

Upon the basis of the representations  and warranties,  and subject to the terms
and  conditions,  set forth  herein,  the  Company  agrees to issue and sell the
Shares and the Warrant to the  Subscriber  on the Closing  Date (as  hereinafter
defined) at a purchase price of $1.00 per share of Common Stock, or an aggregate
purchase price of $200,000 (the "Subscription Price"), and the Subscriber agrees
to purchase  the Shares and the Warrant  from the Company on the Closing Date at
the Subscription Price.

2.  Closing.
    --------

The  closing of the  purchase  and sale of the Shares  shall take place at 10:00
a.m., New York City time, on September 8, 1999, at the offices of the Company at
900 Walt Whitman Road,  Huntington,  New York 11746, or on such other date or at
such other time or place as the  Company  and the  Subscriber  may agree upon in
writing  (such  time and date of the  closing  being  referred  to herein as the
"Closing Date").  Upon payment of the Subscription  Price in full in the form of
cash or certified or bank check payable to the order of the Company, the Company
will deliver to the Subscriber as promptly as practicable (but in no event later
than fifteen (15) days following the date of payment in full of the Subscription
Price) (i) a certificate or certificates  representing the Shares, registered in
the name of the Subscriber, and (ii) a Warrant granting the Subscriber the right
to  purchase  the  Warrant  Shares  at the  purchase  price  per share of $1.00,
expiring two (2) years  following the Closing Date, in the form attached  hereto
as Exhibit A, the terms and conditions of which are agreed to by the Subscriber.

                                       1
<PAGE>
3.       Representations  and  Warranties  of the Company.
         -------------------------------------------------

The Company  represents  and warrants
that:

(a) no  consent,  approval,  authorization  or order of any court,  governmental
agency or body or arbitrator having  jurisdiction over the Company or any of the
Company's  affiliates  is required for the  execution  of this  Agreement or the
performance  of  the  Company's  obligations   hereunder,   including,   without
limitation, the sale of the Shares to the Subscriber;

(b) neither the sale of the Shares and the  Warrant nor the  performance  of the
Company's other  obligations  pursuant to this Agreement will violate,  conflict
with, result in a breach of, or constitute a default (or an event that, with the
giving of notice or the lapse of time or both, would constitute a default) under
(i) the certificate of incorporation or bylaws of the Company,  (ii) any decree,
judgment,  order or determination of any court,  governmental agency or body, or
arbitrator  having  jurisdiction  over  the  Company  or any  of  the  Company's
properties or assets,  (iii) any law, treaty,  rule or regulation  applicable to
the  Company  (other  than the  federal  securities  laws,  representations  and
warranties  with respect to which are made by the Company  solely in  paragraphs
(f)  through  (j) of this  Section 3) or (iv) the terms of any bond,  debenture,
note or other evidence of indebtedness,  or any agreement, stock option or other
similar plan, indenture,  lease, mortgage,  deed or trust or other instrument to
which the Company is a party or otherwise  bound or to which any property of the
Company is subject;

(c) the  Company has or,  prior to the  Closing,  will have taken all  corporate
action  required to authorize the  execution and delivery of this  Agreement and
the performance of its obligations hereunder;

(d) the Company has duly  authorized the Shares and the Warrant Shares and, when
issued and delivered in accordance  with the terms of the Company's  certificate
of  incorporation  and delivered to and paid for by the Subscriber in accordance
with the terms hereof and the Warrant,  respectively, the Shares and the Warrant
Shares will be duly and validly issued,  fully paid and non-assessable,  and the
issuance  of the  Shares  and the  Warrant  Shares  will not be  subject  to any
preemptive or similar rights;

(e) the Shares and the  Warrant  Shares  will be free and clear of any  security
interest, lien, claim or other encumbrance;

(f) the sale of the Shares and the  Warrants  by the  Company  are not part of a
plan or scheme to evade the  registration  requirements of the Securities Act of
1933, as amended (the "Act");

                                       2
<PAGE>
(g)  neither  the  Company  nor any person  acting on behalf of the  Company has
offered  or sold  any of the  Shares  or the  Warrant  by any  form  of  general
solicitation or general advertising;

(h) the  Company  has  offered  the  Shares  and the  Warrant  for sale  only to
"accredited  investors,"  as such term is defined in Rule 501(a)  under the Act,
who by reason of their business and financial  experience  have such  knowledge,
sophistication and experience in business and financial matters as to be capable
of evaluating the merits and risks of the investment in the Shares,  the Warrant
and the Warrant Shares;

(i) the  Company's  Annual  Report on Form 10-K (the "Form 10-K") for the fiscal
year ended  October  31,  1998  fairly and  accurately  presents  the  Company's
business  as of the date  thereof  and its  financial  condition  and results of
operation  through  October  31,  1998,  and the Form 10-K does not  contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not misleading;

(j) the financial statements of the Company included in the Form 10-K, including
the  schedules  and notes  thereto,  comply in all  material  respects  with the
requirements of the Securities  Exchange Act of 1934, as amended,  and have been
prepared,  and fairly present the financial  condition and results of operations
and cash flows of the Company and its  subsidiaries at the respective  dates and
for the respective  periods  indicated,  in accordance  with generally  accepted
accounting principles consistently applied throughout such periods; and

(k) except as set forth in the Form 10-K, since October 31, 1998 (i) the Company
has not incurred any material liabilities,  direct or contingent, and (ii) there
has been no material  adverse  change in the  properties,  business,  results of
operations,  condition (financial or other), affairs or prospects of the Company
and its subsidiaries, taken as a whole.

The Company has not made any  representations  or warranties to the  Subscriber,
and the Subscriber has not relied upon any  representations or warranties of the
Company, except as expressly set forth in this Section 3.

                                       3
<PAGE>
4. Representations  and  Warranties  of  the  Subscriber.
   ------------------------------------------------------

The  Subscriber  represents  and
warrants that:

(a) the purchase of the Shares and the Warrant by the  Subscriber is not part of
a plan or scheme to evade the registration requirements of the Act;

(b) the Subscriber is an "accredited  investor," as such term is defined in Rule
501(a) under the Act, who by reason of its business and financial experience has
such knowledge,  sophistication and experience in business and financial matters
as to be capable of  evaluating  the merits and risks of the  investment  in the
Shares,  the Warrant and the Warrant Shares and,  having had access to or having
been  furnished  with  all  such  information  as it  has  considered  necessary
(including, without limitation, the Form 10-K), has concluded that it is able to
bear those risks;

(c) the Subscriber  understands that (i) the Shares, the Warrant and the Warrant
Shares  have not been  registered  under the Act and may not be  offered or sold
unless   registered  under  the  Act  or  an  exemption  from  the  registration
requirements  of the Act is available,  (ii) if any transfer of the Shares,  the
Warrant or the Warrant  Shares is to be made in reliance on an  exemption  under
the Act, the Company may require an opinion of counsel  satisfactory  to it that
such transfer may be made pursuant to such exemption and (iii) so long as deemed
appropriate by the Company,  the Shares,  the Warrant and the Warrant Shares may
bear a legend to the effect of clauses (i) and (ii) of this paragraph;

(d) in making any subsequent offering or sale of the Shares, the Subscriber will
be acting only for itself and not as part of a sale or planned  distribution  in
violation of the Act;

(e) the Shares and  Warrant  were not offered to the  Subscriber  by any form of
general solicitation or general advertising;

(f) the Subscriber  understands  that no federal or state or other  governmental
agency has passed upon or made any recommendation or endorsement with respect to
the Shares, the Warrant or the Warrant Shares;

(g) the  Subscriber is purchasing  the Shares and the Warrant,  and will acquire
the Warrant  Shares,  for its own account and not with a view to, or for sale in
connection with, any distribution;

(h)  during  the  period  of five (5)  business  days  immediately  prior to the
execution of this Agreement by the Subscriber, Subscriber did not, and from such
date and through the  expiration  of the 90th day following the date hereof will
not,  directly  or  indirectly,  execute  or effect or cause to be  executed  or
effected any short sale,  option,  or equity swap transaction in or with respect
to the Common Stock or any other derivative security  transaction the purpose or
effect of which is to hedge or  transfer to a third party all or any part of the
risk of loss  associated  with the  ownership of the Shares,  the Warrant or the
Warrant Shares by the Subscriber; and

                                       4
<PAGE>
(i) no  consent,  approval,  authorization  or order of any court,  governmental
agency or body or arbitrator  having  jurisdiction over the Subscriber or any of
the  Subscriber's  affiliates is required for the execution of this Agreement or
the performance of the Subscriber's  obligations hereunder,  including,  without
limitation, the purchase of the Shares and the Warrant by the Subscriber.

5. Conditions to Closing.
   ----------------------

The  obligations of each party hereunder shall be subject to (a) the accuracy of
the  representations  and  warranties  of the other party  hereto as of the date
hereof and as of the Closing Date, as if such representations and warranties had
been made on and as of such date, (b) the  performance by the other party of its
obligations  hereunder  and (c) the  condition  that Les  Appel,  counsel to the
Subscriber,  shall have  delivered on or prior to the Closing Date an opinion to
the effect that the sale of the Shares and the Warrant  pursuant  to, and in the
manner  contemplated by, this Agreement does not require  registration under the
Act,  which opinion shall be acceptable to the Company's  transfer agent for the
Shares.  The  Company  and the  Subscriber  hereby  acknowledge  that Les Appel,
counsel  to  the  Subscriber,  will  rely  on  the  accuracy  and  truth  of the
representations  and  warranties of the Company and the  Subscriber in Section 3
and  Section 4,  respectively,  and  hereby,  consent to such  reliance  by such
counsel.

6. Indemnification.
  ----------------

(a) The Company  agrees to  indemnify  and hold  harmless the  Subscriber,  each
person,  if any, who controls the Subscriber within the meaning of Section 15 of
the Act and each officer, director,  employee and agent of the Subscriber and of
any such  controlling  person against any and all losses,  liabilities,  claims,
damages or expenses  whatsoever,  as incurred,  arising out of or resulting from
any breach or alleged  breach or other  violation  or alleged  violation  of any
representation,  warranty,  covenant or undertaking by the Company  contained in
this Agreement, and the Company will reimburse the Subscriber for its reasonable
legal  and  other  expenses   (including  the  cost  of  any  investigation  and
preparation, and including the reasonable fees and expenses of counsel) incurred
in connection therewith.

(b) The  Subscriber  agrees to indemnify  and hold  harmless  the Company,  each
person, if any, who controls the Company within the meaning of Section 15 of the
Act and each  officer,  director,  employee  and agent of the Company and of any
such controlling person against any and all losses, liabilities, claims, damages
or expenses whatsoever, as incurred, arising out of or resulting from any breach
or alleged breach or other violation or alleged violation of any representation,
warranty, covenant or undertaking by the Subscriber contained in this Agreement,
and the Subscriber will reimburse the Company for its reasonable legal and other
expenses (including the cost of any investigation and preparation, and including
the reasonable fees and expenses of counsel) incurred in connection therewith.

                                       5
<PAGE>
7.  Survival of Representations and Warranties.
   --------------------------------------------

The respective agreements,  representations,  warranties,  indemnities and other
statements  made by or on behalf of each party hereto pursuant to this Agreement
shall remain in full force and effect,  regardless of any investigation  made by
or on behalf of any party,  and shall  survive  delivery  of any payment for the
Shares and the Warrant.

8. Miscellaneous.
   --------------

(a)  This  Agreement  may be  executed  in one or more  counterparts,  and  such
counterparts shall constitute but one and the same agreement.

(b) This Agreement shall inure to the benefit of and be binding upon the parties
hereto,  their  respective  successors and, with respect to the  indemnification
provisions  hereof,  each person entitled to indemnification  hereunder,  and no
other person shall have any right or obligation hereunder.  This Agreement shall
not be assignable by any party hereto  without the prior written  consent of the
other party hereto.  Any  assignment  contrary to the terms hereof shall be null
and void and of no force or effect.

(c) This Agreement represents the entire understanding and agreement between the
parties  hereto with  respect to the subject  matter  hereof and can be amended,
supplemented or changed, and any provision hereof can be waived, only by written
instrument  making  specific  reference  to this  Agreement  signed by the party
against whom  enforcement of any such  amendment,  supplement,  modification  or
waiver is sought.

9. Time of the Essence.
   --------------------

Time shall be of the essence in this Agreement.

10. Governing Law.
   ---------------

This Agreement shall be governed by the internal laws of the State of New York.

                                       6
<PAGE>
IN WITNESS  WHEREOF,  the parties  hereto  have  caused this Stock  Subscription
Agreement to be executed and delivered as of the date first written above.

                                 COPYTELE, INC.

                                  By:    Denis A. Krusos
                                         ---------------------
                                  Name:  Denis A. Krusos
                                  Title: Chairman of the Board and
                                         Chief Executive Officer

                                         SUBSCRIBER:

                                         Lewis H. Titterton
                                         -------------------------
                                         Name: Lewis H. Titterton

                                       7
<PAGE>
THIS WARRANT AND ANY SECURITIES  ACQUIRED UPON THE EXERCISE OF THIS WARRANT HAVE
NOT  BEEN  REGISTERED  UNDER  THE  SECURITIES  ACT  OF  1933,  AS  AMENDED  (THE
"SECURITIES  ACT"), OR ANY STATE  SECURITIES LAWS AND NEITHER THE SECURITIES NOR
ANY INTEREST  THEREIN MAY BE OFFERED,  SOLD,  TRANSFERRED,  PLEDGED OR OTHERWISE
DISPOSED OF EXCEPT  PURSUANT TO AN EFFECTIVE  REGISTRATION  STATEMENT UNDER SUCH
ACT OR SUCH LAWS OR AN EXEMPTION FROM REGISTRATION  UNDER SUCH ACT AND SUCH LAWS
THAT,  IN THE OPINION OF COUNSEL FOR THE HOLDER,  WHICH  COUNSEL AND OPINION ARE
REASONABLY SATISFACTORY TO COUNSEL FOR THIS CORPORATION, IS AVAILABLE.

Warrant to Purchase                               Expiration:  September 8, 2001
                                                              ------------------
   200,000 Shares
  ---------------

                          -----------------------------
                                 COPYTELE, INC.
                          COMMON STOCK PURCHASE WARRANT
                          -----------------------------

This certifies  that,  for good and valuable  consideration,  CopyTele,  Inc., a
Delaware  corporation  (including  any  successor  thereto  with  respect to the
obligations hereunder,  by merger,  consolidation or otherwise,  the "Company"),
grants to Lewis Titterton or permitted assigns (the "Warrantholder"),  the right
to subscribe for and purchase,  in whole or in part,  from time to time from the
Company 200,000 duly authorized,  validly issued,  fully paid and  nonassessable
shares (the "Warrant  Shares") of the Company's Common Stock, par value $.01 per
share  (the  "Common  Stock"),  at the  purchase  price per share of $ 1.00 (the
"Exercise  Price")  at any  time  prior  to  5:00  p.m.,  New  York  time on the
Expiration Date, all subject to the terms, conditions and adjustments herein set
forth. The terms that are capitalized  herein shall have the meanings  specified
in Section 10 hereof, unless the context shall otherwise require.

1.   Duration and Exercise of Warrant; Limitation on Exercise; Payment of Taxes.
     --------------------------------------------------------------------------

1.1. Duration  and  Exercise  of  Warrant.
     ------------------------------------
Subject to the terms and  conditions  set forth  herein,  this  Warrant may be

exercised, in whole or in part, by the Warrantholder by:

(a) the surrender of this Warrant to the Company,  with a duly executed Exercise
Form  specifying  the number of Warrant  Shares to be  purchased,  during normal
business hours on any Business Day prior to the Expiration Date; and

(b) the delivery of payment to the Company of the Exercise  Price for the number
of  Warrant  Shares  specified  in the  Exercise  Form  in the  form  of cash or
certified or bank check payable to the order of the Company.

The Company  agrees that such Warrant Shares shall be deemed to be issued to the
Warrantholder  as the record  holder of such  Warrant  Shares as of the close of
business  on the date on which  this  Warrant  shall have been  surrendered  and
payment made for the Warrant Shares as aforesaid. Notwithstanding the foregoing,
no such  surrender  shall be  effective  to  constitute  the person  entitled to
receive such shares as the record holder thereof while the transfer books of the
Company for the Common  Stock are closed for any purpose (but not for any period
in excess of five days);  but any such  surrender  of this  Warrant for exercise
during any period  while such books are so closed  shall  become  effective  for
exercise  immediately  upon the reopening of such books,  as if the exercise had
been made on the date this Warrant was  surrendered and for the number of shares
of  Common  Stock  and at the  Exercise  Price  in  effect  at the  date of such
surrender. This Warrant and all rights and options hereunder shall expire on the
Expiration Date, and shall be wholly null and void to the extent this Warrant is
not exercised before it expires.

                                       8
<PAGE>
1.2. Warrant Shares  Certificate.
     ---------------------------

A stock  certificate or  certificates  for the Warrant  Shares  specified in the
Exercise  Form shall be delivered to the  Warrantholder  within 10 Business Days
after  receipt of the  Exercise  Form by the Company and payment of the purchase
price.  If this  Warrant  shall have been  exercised  only in part,  the Company
shall, at the time of delivery of the stock certificate or certificates, deliver
to the  Warrantholder  a new  Warrant  evidencing  the  rights to  purchase  the
remaining  Warrant  Shares,  which new  Warrant  shall in all other  respects be
identical with this Warrant.

1.3.  Payment of Taxes.
      ----------------

The issuance of certificates  for Warrant Shares shall be made without charge to
the  Warrantholder  for any stock  transfer  or other  issuance  tax in  respect
thereto; provided,  however, that the Warrantholder shall be required to pay any
and all taxes that may be payable in  respect of any  transfer  involved  in the
issuance and delivery of any  certificate  in a name other than that of the then
Warrantholder as reflected upon the books of the Company.

2. Restrictions on Transfer; Restrictive Legends.
   ---------------------------------------------

2.1.  Limitation  on  Transfer.
      -------------------------

No Warrantholder shall, directly or indirectly, sell, give, assign, hypothecate,
pledge,  encumber, grant a security interest in or otherwise dispose of (whether
by operation of law or otherwise) (each a "transfer") this Warrant or any right,
title or interest herein or hereto,  except in accordance with the provisions of
this Warrant.  Any attempt to transfer  this Warrant or any rights  hereunder in
violation  of the  preceding  sentence  shall be null and void ab initio and the
Company shall not register any such transfer.

2.2. Transfer Procedures.
     -------------------

If any  Warrantholder  wishes  to  transfer  this  Warrant  to a  transferee  (a
"Transferee")  under this Section 2, such Warrantholder shall give notice to the
Company of its intention to make any transfer permitted under this Section 2 not
less than five (5) days prior to  effecting  such  transfer,  which notice shall
state the name and address of each Transferee to whom such transfer is proposed.
This Warrant may, in accordance  with the terms hereof,  be transferred in whole
or in part. If this Warrant is assigned in whole,  the assignee  shall receive a
new Warrant  (registered  in the name of such assignee or its nominee) which new
Warrant shall cover the number of shares  assigned.  If this Warrant is assigned
in part, the assignor and assignee shall each receive a new Warrant  (which,  in
the case of the assignee, shall be registered in the name of the assignee or its
nominee),  each of which new  Warrant  shall  cover the  number of shares not so
assigned  and in respect of which no such  exercise has been made in the case of
the assignor and the number of shares so assigned, in the case of the assignee.

                                       9
<PAGE>
2.3.  Transfers in Compliance  with Law;  Substitution  of  Transferee.
      -----------------------------------------------------------------

Notwithstanding  any other  provision of this  Warrant,  no transfer may be made
pursuant to this Section 2 unless (a) the Transferee has agreed in writing to be
bound by the terms and  conditions  hereto,  (b) the  transfer  complies  in all
respects with the  applicable  provisions of this Warrant,  and (c) the transfer
complies in all respects  with  applicable  federal and state  securities  laws,
including,  without  limitation,  the  Securities  Act of 1933,  as amended.  If
requested by the Company in its  reasonable  judgment,  an opinion of counsel to
such  transferring  Warrantholder  shall  be  supplied  to the  Company  at such
transferring  Warrantholder's expense, to the effect that such transfer complies
with the applicable federal and state securities laws; provided,  however,  that
no such opinion shall be required if the Transferee is a successor  trust to the
Warrantholder  which has the same  beneficiaries.  Any attempt to transfer  this
Warrant or rights  hereunder in violation of this Warrant shall be null and void
ab initio and the Company shall not register such transfer.

3. Legends.
   -------

Each Warrant (and each Warrant issued in substitution  for any Warrant  pursuant
hereto) shall be stamped or otherwise  imprinted with a legend in  substantially
the following form:

THIS WARRANT AND ANY SECURITIES  ACQUIRED UPON THE EXERCISE OF THIS WARRANT HAVE
NOT  BEEN  REGISTERED  UNDER  THE  SECURITIES  ACT  OF  1933,  AS  AMENDED  (THE
"SECURITIES  ACT"), OR ANY STATE  SECURITIES LAWS AND NEITHER THE SECURITIES NOR
ANY INTEREST  THEREIN MAY BE OFFERED,  SOLD,  TRANSFERRED,  PLEDGED OR OTHERWISE
DISPOSED OF EXCEPT  PURSUANT TO AN EFFECTIVE  REGISTRATION  STATEMENT UNDER SUCH
ACT OR SUCH LAWS OR AN EXEMPTION FROM REGISTRATION  UNDER SUCH ACT AND SUCH LAWS
THAT,  IN THE OPINION OF COUNSEL FOR THE HOLDER,  WHICH  COUNSEL AND OPINION ARE
REASONABLY SATISFACTORY TO COUNSEL FOR THIS CORPORATION, IS AVAILABLE.

Each stock  certificate  for  Warrant  Shares  issued  upon the  exercise of any
Warrant and each stock  certificate  issued upon the direct or indirect transfer
of any such Warrant Shares shall be stamped or otherwise imprinted with a legend
in substantially the following form:

THE SECURITIES  REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS AND NEITHER THE SECURITIES
NOR ANY INTEREST THEREIN MAY BE OFFERED, SOLD, TRANSFERRED, PLEDGED OR OTHERWISE
DISPOSED OF EXCEPT  PURSUANT TO AN EFFECTIVE  REGISTRATION  STATEMENT UNDER SUCH
ACT OR SUCH LAWS OR AN EXEMPTION FROM REGISTRATION  UNDER SUCH ACT AND SUCH LAWS
THAT,  IN THE OPINION OF COUNSEL FOR THE HOLDER,  WHICH  COUNSEL AND OPINION ARE
REASONABLY SATISFACTORY TO COUNSEL FOR THIS CORPORATION, IS AVAILABLE.

                                       10
<PAGE>
Notwithstanding  the  foregoing,  the  Warrantholder  may require the Company to
issue a Warrant or a stock  certificate for Warrant Shares, in each case without
a legend, if either (i) such Warrant or such Warrant Shares, as the case may be,
have  been   registered  for  resale  under  the  Securities  Act  or  (ii)  the
Warrantholder  has  delivered  to the Company an opinion of counsel  (reasonably
satisfactory to the Company) which opinion shall be addressed to the Company and
be reasonably  satisfactory in form and substance to the Company's  counsel,  to
the affect that such  registration  is not required with respect to such Warrant
or such Warrant Shares, as the case may be.

4. Reservation of Shares, Etc.
   --------------------------

    The Company covenants and agrees as follows:

(a) All Warrant  Shares that are issued upon the exercise of this Warrant  will,
upon issuance,  be duly and validly issued,  fully paid and  nonassessable,  not
subject  to any  preemptive  rights,  and free from all taxes,  liens,  security
interests, charges, and other encumbrances with respect to the issuance thereof,
other than taxes in respect of any  transfer  occurring  contemporaneously  with
such issue.

(b) During the period  within which this Warrant may be  exercised,  the Company
will at all times have  authorized  and reserved,  and keep  available free from
preemptive  rights, a sufficient number of shares of Common Stock to provide for
the exercise of the rights represented by this Warrant.

5. Loss or Destruction of Warrant.
   ------------------------------

Subject to the terms and  conditions  hereof,  upon  receipt  by the  Company of
evidence  reasonably  satisfactory  to it of the  loss,  theft,  destruction  or
mutilation of this Warrant and, in the case of loss,  theft or  destruction,  of
such bond or  indemnification  as the Company may reasonably require and, in the
case of such mutilation,  upon surrender and  cancellation of this Warrant,  the
Company  will  execute and deliver a new Warrant of like tenor.  If the original
holder of this Warrant or any subsequent Institutional Holder with a minimum net
worth of at least  $25,000,000 is the owner of this Warrant at the time it shall
be lost,  stolen or destroyed,  then the  affidavit of an authorized  officer of
such owner, setting forth the fact of such loss, theft or destruction and of its
ownership of this Warrant at the time of such loss,  theft or destruction  shall
be  accepted  as  satisfactory  evidence  thereof  and no further  bond shall be
required as a condition to the  execution  and  delivery of a new Warrant  other
than the written agreement of such owner to indemnify the Company.

                                       11
<PAGE>
6.  Ownership of Warrant.
    --------------------

The  Company  may deem and  treat  the  person in whose  name  this  warrant  is
registered  as the holder and owner  hereof  (notwithstanding  any  notations of
ownership  or writing  hereon  made by anyone  other than the  Company)  for all
purposes  and  shall  not be  affected  by any  notice  to the  contrary,  until
presentation of this Warrant for registration of transfer.  Notwithstanding  the
foregoing,  the Warrants  represented hereby, if properly assigned in compliance
with this Agreement, may be exercised by an assignee for the purchase of Warrant
Shares without having a new Warrant issued.

7.  Certain Adjustment.
    ------------------

7.1. The number of Warrant Shares  purchasable  upon the exercise of this
     Warrant and the Exercise Price shall be subject to adjustment as follows:

(a) Stock Dividends; Stock Splits. If at any time after the date of the issuance
of this  Warrant  (i) the Company  shall pay a stock  dividend or make any other
distribution  payable in shares of Common  Stock or (ii) the number of shares of
Common Stock shall have been increased by a subdivision or split-up of shares of
Common Stock,  then, on the date of the payment of such dividend or  immediately
after the  effective  date of  subdivision  or split up, as the case may be, the
number of shares to be delivered upon exercise of this Warrant will be increased
so that the  Warrantholder  will be  entitled to receive the number of shares of
Common Stock that such Warrantholder would have owned immediately following such
action had this  Warrant  been  exercised  immediately  prior  thereto,  and the
Exercise Price will be adjusted as provided below in paragraph (f).

(b) Combination of Stock. If the number of shares of Common stock outstanding at
any  time  after  the date of the  issuance  of this  Warrant  shall  have  been
decreased by a combination  of the  outstanding  shares of Common  Stock,  then,
immediately after the effective date of such  combination,  the number of shares
of Common Stock to be delivered  upon exercise of this Warrant will be decreased
so that the  Warrantholder  thereafter will be entitled to receive the number of
shares of Common  Stock that such  Warrantholder  would  have owned  immediately
following such action had this Warrant been exercised immediately prior thereto,
and the Exercise Price will be adjusted as provided below in paragraph (f).

                                       12
<PAGE>
(c)  Reorganization,  etc. If any capital  reorganization of the Company, or any
reclassification  of the Common Stock, or any consolidation or share exchange of
the Company  with or merger of the Company  with or into any other person or any
sale, lease or other transfer of all or  substantially  all of the assets of the
Company to any other person, shall be effected in such a way that the holders of
Common  Stock shall be entitled to receive  stock,  other  securities  or assets
(whether such stock, other securities or assets are issued or distributed by the
Company or another  person)  with  respect to or in exchange  for Common  Stock,
then,  upon exercise of this Warrant the  Warrantholder  shall have the right to
receive the kind and amount of stock other securities or assets  receivable upon
such reorganization,  reclassification,  consolidation, merger or sale, lease or
other  transfer  by a holder of the  number of shares of Common  Stock that such
Warrantholder  would have been entitled to receive upon exercise of this Warrant
had  this  Warrant  been  exercised   immediately  before  such  reorganization,
reclassification,  consolidation,  merger  or sale,  lease  or  other  transfer,
subject to adjustments that shall be as nearly  equivalent as may be practicable
to the adjustments provided for in this Section 7.1.

(d) Fractional  Shares.  No fractional  shares of Common Stock or scrip shall be
issued to any  Warrantholder  in  connection  with the exercise of this Warrant.
Instead  of any  fractional  shares of Common  Stock  that  would  otherwise  be
issuable to such  Warrantholder,  the Company will pay to such  Warrantholder  a
cash  adjustment  in respect of such  fractional  interest in an amount equal to
that  fractional  interest of the then  current  Fair Market  Value per share of
Common Stock.

(e)  Carryover  Notwithstanding  any other  provision  of this  Section  7.1, no
adjustment shall be made to the number of shares of Common Stock to be delivered
to the  Warrantholder  (or to the Exercise Price) if such adjustment  represents
less  than 1% of the  number  of  shares  to be so  delivered,  but  any  lesser
adjustment  shall be carried  forward and shall he made at the time and together
with the next  subsequent  adjustment  that  together  with any  adjustments  so
carried  forward  shall  amount  to 1% or more of the  number of shares to be so
delivered.  However,  upon the exercise of this Warrant,  the Company shall make
all necessary adjustments not theretofore made to the number of shares of Common
Stock to be delivered to the  Warrantholder (or to the Exercise Price) up to and
including the date upon which this Warrant is exercised.

(f) Exercise Price Adjustment. Whenever the number of Warrant Shares purchasable
upon the  exercise  of the  Warrant is  adjusted  as  provided  pursuant to this
Section 7.1, the Exercise  Price payable upon the exercise of this Warrant shall
be  adjusted  by  multiplying  such  Exercise  Price  immediately  prior to such
adjustment by a fraction,  of which the numerator shall be the number of Warrant
Shares  purchasable upon the exercise of the Warrant  immediately  prior to such
adjustment,  and of which the denominator  shall be the number of Warrant Shares
purchasable immediately thereafter;  provided,  however, that the Exercise Price
for each  Warrant  Share  shall in no event be less  than the par  value of such
Warrant Share.

                                       13
<PAGE>
7.2. No Adjustment for Dividends.
    -----------------------------

Except as provided in Section  7.1, no  adjustment  in respect of any  dividends
shall be made  during  the term of this  Warrant  or upon the  exercise  of this
Warrant.  Notwithstanding  any other provision  hereof,  no adjustments shall be
made on Warrant  Shares  issuable on the  exercise of this  Warrant for any cash
dividends paid or payable to holders of record of Common Stock prior to the date
as of which the  Warrantholder  shall be deemed to be the record  holder of such
Warrant Shares.

7.3. Notice of Adjustment.
     ---------------------

Whenever  the number of Warrant  Shares or the  Exercise  Price of such  Warrant
Shares is adjusted, as herein provided, or the rights of the Warrantholder shall
change by reason of other events  specified  herein,  the Company shall promptly
mail by first  class,  postage  prepaid,  to the  Warrantholder,  notice of such
adjustment or adjustments  and a certificate of the Chief  Financial  Officer of
the Company setting forth the number of Warrant Shares and the Exercise Price of
such Warrant Shares after such  adjustment,  setting forth a brief  statement of
the facts  requiring such  adjustment and setting forth the computation by which
such adjustment was made.

8. Amendments.
   ----------

Any provision of this Warrant may be amended and the  observance  thereof waived
only with the written consent of the Company and the Warrantholder.

9. Notices of Corporate Action.
   ---------------------------
So long as this Warrant has not been exercised in full, in the event of:

(a) any  taking  by the  Company  of a record  of the  holders  of any  class of
securities for the purpose of determining  the holders  thereof who are entitled
to receive any dividend or other  distribution,  or any right to subscribe  for,
purchase  or  otherwise  acquire  any  shares of stock of any class or any other
securities or property, or to receive any other right,

(b)  any  capital   reorganization  of  the  Company,  any  reclassification  or
recapitalization  of the capital  stock of the Company or any  consolidation  or
merger  involving  the  Company  and any other  party or any  transfer of all or
substantially all the assets of the Company to any other party, or

                                       14
<PAGE>
(c) any voluntary or involuntary  dissolution,  liquidation or winding-up of the
Company,  the Company will mail to the Warrantholder a notice specifying (i) the
date or expected date on which any such record is to be taken for the purpose of
such  dividend,  distribution  or right and the amount and character of any such
dividend,  distribution or right and (ii) the date or expected date on which any
such reorganization, reclassification,  recapitalization, consolidation, merger,
transfer, dissolution,  liquidation or winding-up is to take place and the time,
if any such time is to be fixed,  as of which  the  holders  of record of Common
Stock (or other securities) shall be entitled to exchange their shares of Common
Stock (or other  securities)  for the securities or other  property  deliverable
upon such  reorganization,  reclassification,  recapitalization,  consolidation,
merger, transfer,  dissolution,  liquidation or winding-up. Such notice shall be
delivered at least 10 days prior to the date therein  specified,  in the case of
any date referred to in the foregoing subdivisions (i) and (ii).

10. Definitions.
    -----------

As used herein, unless the context otherwise requires,  the following terms have
the following respective meanings:

"Business  Day"  means any day other than a  Saturday,  Sunday or a day on which
national banks are authorized by law to close in the State of New York.

"Common Stock" has the meaning specified on the cover of this Warrant.

"Company" has the meaning specified on the cover of this Warrant

"Exercise Form" means an Exercise Form in the form annexed hereto as Exhibit A.

"Exercise Price" has the meaning specified on the cover of this Warrant.

"Expiration Date" means September 8, 2001 ; provided, however, that if such date
shall not be a Business Day,  then on the next  following day that is a Business
Day.

"Institutional  Holder"  means  any  bank,  trust  company,   savings  and  loan
association or other financial institution, any pension plan, any pension trust,
any investment  company,  any insurance  company,  any broker or dealer,  or any
similar financial institution or entity, regardless of legal form.

"Person"  means any natural  person,  corporation,  limited  liability  company,
trust, joint venture, association, company, partnership,  governmental authority
or other entity.

                                       15
<PAGE>
"Securities Act" has the meaning specified on the cover of this Warrant,  or any
similar  Federal  statute,  and the rules and  regulations of the Securities and
Exchange Commission thereunder,  all as the same shall be in effect at the time.
Reference  to a  particular  section  of the  Securities  Act,  shall  include a
reference  to the  comparable  section,  if any,  of any  such  similar  Federal
statute.

"Transfer" has the meaning specified in Section 2.1

"Transferee" has the meaning specified in Section 2.2.

"Warrantholder" has the meaning specified on the cover of this Warrant.

"Warrant Shares" has the meaning specified on the cover of this Warrant.

11. Miscellaneous.
    -------------

11.1. Entire  Agreement.
      -----------------

This  Warrant  constitutes  the entire  agreement  between  the  Company and the
Warrantholder with respect to the Warrants.

11.2. Binding Effect; Benefits.
      -------------------------

This Warrant shall inure to the benefit of and shall be binding upon the Company
and the  Warrantholder and their respective  successors and assigns.  Nothing in
this Warrant, expressed or implied, is intended to or shall confer on any person
other than the Company and the Warrantholder,  or their respective successors or
assigns, any rights, remedies,  obligations or liabilities under or by reason of
this Warrant.

11.3. Section and Other  Headings.
      ---------------------------

The section  and other  headings  contained  in this  Warrant are for  reference
purposes  only and shall not be deemed to be a part of this Warrant or to affect
the meaning or interpretation of this Warrant.

                                       16
<PAGE>
11.4.  Notices.
       --------

All notices and other communications required or permitted hereunder shall be in
writing and shall be  delivered  personally,  telecopied  or sent by  certified,
registered or express  mail,  postage  prepaid.  Any such notice shall be deemed
given when so delivered personally,  telecopied or sent by certified, registered
or express mail, as follows:

                  (a)      if to the Company, addressed to:

                           CopyTele, Inc.
                           900 Walt Whitman Road
                           Huntington, New York 11746
                           Attn:Chief Financial Officer

                  (b)      if to Warrantholder, addressed to:

                           Lewis H. Titterton
                           6 Autumn Lane
                           Saratoga Springs, NY  12866

Any party may by notice given in  accordance  with this  Section 11.4  designate
another address or person for receipt of notices hereunder.

11.5.  Severability.
       -------------

Any term or provision of this Warrant which is invalid or  unenforceable  in any
jurisdiction  shall,  as to such  jurisdiction,  be ineffective to the extent of
such invalidity or  unenforceability  without rendering invalid or unenforceable
the  terms  and  provisions  of  this  Warrant  or  affecting  the  validity  or
enforceability  of any of the terms or  provisions  of this Warrant in any other
jurisdiction.

                                       17
<PAGE>
11.6. Governing Law.
      --------------

This Warrant  shall be deemed to be a contract  made under the laws of the State
of New  York  and for  all  purposes  shall  be  governed  by and  construed  in
accordance with the laws of such State applicable to such agreements made and to
be performed entirely within such State.

11.7. No Rights or Liabilities  as  Stockholder.
      ------------------------------------------

Nothing  contained in this Warrant shall be  determined  as conferring  upon the
Warrantholder  any rights as a  stockholder  of the Company or as  imposing  any
liabilities  on the  Warrantholder  to  purchase  any  securities  whether  such
liabilities  are asserted by the Company or by creditors or  stockholders of the
Company or otherwise.

11.8. Copy of Warrant.
      ---------------

A copy of this Warrant shall be filed among the records of the Company.

11.9. Exercise of Remedies.
      ---------------------

In the event that the Company shall fail to observe any  provision  contained in
this  Warrant,  the holder  hereof  and/or any holder of the Common Stock issued
hereunder,  as the case may be,  may  enforce  its rights  hereunder  by suit in
equity, by action at law, or by any other appropriate  proceedings in aid of the
exercise  of any  power  granted  in this  Warrant  and,  without  limiting  the
foregoing,  said holder  shall be entitled to the entry of a decree for specific
performance and to such other and further relief as such court may decree.

                                    18
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by its duly
authorized officer.

                    COPYTELE, INC.

                    By:    Denis A. Krusos
                    Name:  Denis A. Krusos
                    Title: Chairman of the Board &
                           Chief Executive Officer

                    Dated: September 8, 1999

                                       19

                                                                     Exhibit A

                                  EXERCISE FORM

(To be executed upon exercise of this Warrant)

The undersigned hereby irrevocably elects to exercise the right,  represented by
this Warrant,  to purchase  _________ of the Warrant Shares and herewith tenders
payment for such Warrant Shares to the order of CopyTele,  Inc. in the amount of
$________ in accordance with the terms of this Warrant. The undersigned requests
(a) that a certificate  for such Warrant Shares be registered in the name of the
undersigned  (b), if such shares shall not include all of the shares issuable as
provided  in such  Warrant,  that a new  Warrant  of like tenor and date for the
balance of the shares  issuable  thereunder be issued to the undersigned and (c)
that such  certificates and Warrant,  if any, be delivered to the  undersigned's
address below.

The undersigned  represents that it is acquiring such Warrant Shares for its own
account for investment and not with a view to or for sale in connection with any
distribution thereof.

Dated:

                             Signature

                             (Print Name)

                             (Street Address)

                             (City) (State) (Zip Code)

Signed in the presence of:
                                       20<PAGE>

                                  Exhibit 10.1

                CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR THE
                            INFORMATION MARKED HEREIN

                                    AGREEMENT

      This Agreement, made as of this 7th day of June, 1999, between Chromatics
Color Sciences International, Inc. ("CCSI"), a New York corporation, and
Datex-Ohmeda, Inc. ("DO"), a Delaware corporation.

                               W I T N E S S E T H

      WHEREAS, CCSI is in the business of color science and has developed the
Colormate(R) TLc-BiliTest(trademark) System having medical applications
involving the monitoring of newborn bilirubinemia (infant jaundice);

      WHEREAS, Ohmeda Medical ("OM") is a division of DO;

      WHEREAS, DO is in the business of marketing and distributing medical
equipment; and

      WHEREAS, DO, through its OM division, desires to purchase, market and
distribute, and CCSI desires to supply to DO products for the monitoring of
newborn bilirubinemia (infant jaundice) as described in Attachment A hereto.

      NOW THEREFORE, in consideration of the premises and the mutual covenants
contained herein, the parties agree as follows:

            I ATTACHMENTS AND DEFINITIONS

            1. Attachments. The following Attachments are attached to this
            Agreement and are incorporated herein by this reference:

                           Attachment A:  Product Description
                           Attachment B:  Product Information
                           Attachment C:  Market Factors
                           Attachment D:  Customer Support

            2. Definitions.

                  2.1 "Affiliates" means, as to any party hereunder, any person
      or legal entity which directly or indirectly has control, is under control
      by, or is under common control with, such party hereunder. The term
      "control" as used in this paragraph means the possession, directly or
      indirectly, of the power to direct or cause the direction of the
      management and policies of a person or legal entity, whether through the
      ownership of voting securities, by contract, or otherwise. Any person or
      legal entity that is not an

                                       5
<PAGE>

      "affiliate" of a party hereunder, shall be considered "unaffiliated" with
      such party hereunder.

                  2.2 "Calibration Standard" means, CCSI's disposable
      calibration standard (TLc Lensette(trademark)) that is used (single use)
      to calibrate each measurement taken by the Device as described in
      Attachment A hereto.

                  2.3 "Charges per Use" means, the charges per use component
      described in Attachment A hereto.

                  2.4 "Device" means, the noninvasive bilirubin measurement
      system known as the "Colormate(R) TLc-BiliTestTM.", as described in
      Attachment A hereto. "Device" also includes the LED Device and any
      Modified Device following such time when such Modified Device or LED
      Device is legally marketable and commercially available for distribution
      under this Agreement, all as set forth in Attachment A.

                  2.5 "DMR" means, the Device Master Record required by FDA
      regulations.

                  2.6 "DO Purchase Price" means, the total price that DO pays
      CCSI for the Products as further described in paragraph 5 of Section III
      and Attachment A of this Agreement.

                  2.7 Evaluation Unit" means, a Device delivered by CCSI prior
      to the date hereof or during the Initial Transition under a program where
      an evaluator pays [*] for the use over a limited time period (normally
      30-60 days) of such Device and [*][*] Calibration Standards, but only if
      such Device is not ultimately sold to or placed with the evaluator.

                  2.8 "Exit Transition" means, those transition considerations
      and related transition activities of the parties following termination of
      this Agreement, as more fully described in Attachment D hereto (Customer
      Support).

                  2.9 "Experimental Unit" means, Products placed by CCSI at its
      expense, on a not-for-profit basis, solely for clinical studies,
      experimental or educational purposes or for obtaining or compiling data
      for obtaining any regulatory clearances and/or approvals with respect to
      the Products, and only in cases where Devices are placed and used for
      non-commercial use and for a limited period of time as reasonably required
      by the investigator.

                  2.10 "Extended Term" means, the potential additional term of
      the Agreement as defined in paragraph 1(a) of Section VI.

                  2.11 "FDA" means, the United States Food and Drug
      Administration.

                  2.12 "Firm Purchase Order" means, a purchase order for
      Products that is firm, binding, unchangeable, and non-cancelable even if
      delivery under said purchase order is scheduled to occur after termination
      of this Agreement; provided, however, that any such purchase order may be
      canceled by DO under any of the following

                                       6
<PAGE>

      circumstances: if the Products covered by the purchase order are not
      legally marketable or commercially available; in the event of a Default by
      CCSI relating to the delivery (or failure or delay in delivery) of the
      Products as defined in paragraph 9(a) of Section III; when there has been
      any other Default by CCSI under the Agreement that would give rise to a
      right of termination by DO; or in the event of a Force Majeure Event that
      prevents timely delivery of the Products covered by the Purchase Order and
      such delivery does not occur within six (6) months after the occurrence of
      the Force Majeure Event .

                  2.13 "Force Majeure Event" means, an event caused by the
      elements, acts of God, acts of government, civil or military authority,
      fires, floods, epidemics, quarantine restrictions, war, riots, accidents
      to machinery, or any other like or different events beyond the control of
      the party claiming such Force Majeure Event.

                  2.14 "Initial Term" means, the initial term of the Agreement
      as defined in paragraph 1(a) of Section VI.

                  2.15 "Initial Transfer Price" means, the initial price paid by
      DO to CCSI for the Calibration Standard and the Charges per Use solely
      during the first two (2) Performance Years of this Agreement, as set forth
      in paragraph 5(e)(vii) of Section III and Attachment A.

                  2.16 "Initial Transition" means, the Initial Sales Start-Up
      Transition Items and related transition activities of the parties at the
      onset of this Agreement, as more fully described in Attachment D hereto
      (Customer Support).

                  2.17 "Invoice Price" means, DO's selling price to a customer
      for a sale of Product as stated on the invoice to such customer, less any
      national account or bona fide group purchasing organization rebate or
      administrative fees in total not to exceed four percent (4%) of the
      selling price without CCSI's prior written consent.

                  2.18 "ISO" means, the International Standards Organization.

                  2.19 "LED Device" means, a noninvasive bilirubin measurement
      system that uses a light emitting diode, as described in Attachment A,
      which is currently under development. Following such time when the LED
      Device is legally marketable and commercially available for distribution
      under this Agreement, it will be considered a Device for purposes of this
      Agreement.

                  2.20 "Managed Use" means, the selling structure described in
      Attachment A hereto.

                  2.21 "Marketing and Distribution Plan" means, DO's written
      sales, marketing, training, in-servicing and distribution plan relating to
      the Products, as shall be agreed to in writing between the parties.

                  2.22 "Medical International Agreement" means, the agreement
      between CCSI and Medical International, Inc. relating to the distribution
      of Products.

                                       7
<PAGE>

                  2.23 "Minimum Transfer Price" means, with respect to any
      Product, the minimum price payable by DO to CCSI for such Product, as set
      forth in paragraph 7 of Section III and Attachment A hereto.

                  2.24 "Modified Device" means, the Device which is modified
      with a laptop computer, modem, printer, briefcase system and/or other
      modification, as described in Attachment A. Following such time when a
      Modified Device is legally marketable and commercially available for
      distribution under this Agreement, it will be considered a Device for
      purposes of this Agreement.

                  2.25 "Performance Year" means, each 12-month period in which
      Annual Minimum Performances and Cumulative Annual Minimum Targeted Market
      Performances by DO are required as defined in paragraph 6 of Section III
      of this Agreement.

                  2.26 "Product Components" means, add-on components for
      Products as described in Attachment A hereto.

                  2.27 "Product Information" means, the labeling (as defined by
      the FDA) relating to the Products, including the information set forth on
      Attachment B hereto.

                  2.28 "Products" means, the products as described in Attachment
      A hereto, including the Device, LED Device and any Modified Device, the
      Calibration Standard, the Charges per Use component, and any and all
      further upgrades, adaptations, modifications and improvements of and to
      the Products adopted or made from time to time; provided, however, that
      the LED Device, the Charges per Use component or any Modified Device
      currently in development shall not be considered a "Product" until it is
      legally marketable and commercially available for distribution under this
      Agreement as specified in Attachment A hereto.

                  2.29 "Product Inspection and Acceptance Location" means, the
      place where CCSI provides for manufacturing of the Products.

                  2.30 "Specifications" means, the written specifications for
      and description of the Products as stated in the relevant DMR, and as may
      be amended from time to time in accordance with paragraph 3 of Section III
      of this Agreement.

                  2.31 "Subsidiary" means, as to any party hereunder, any
      subsidiary that is majority owned or wholly owned by such party hereunder,
      or any legal entity over which such party hereunder has control.

                  2.32 "Targeted Markets" means, the hospital market, the home
      healthcare market (wherein the test is administered solely by a healthcare
      professional and the pediatrician market, and clinics within all such
      markets and which markets exclude the consumer market and the
      over-the-counter market as defined by the FDA.

                  2.33 "Term" means, the Initial Term plus the Extended Term, if
      any.

                  2.34 "Territory" means, the United States.

                                       8
<PAGE>

            II. PRODUCT DEVELOPMENT

                  1. Manufacturing. CCSI shall cause the Products to be
            manufactured to conform to the Specifications as set forth in the
            warranty in paragraph 1 of Section IV. CCSI shall provide or cause
            to be provided all technology, labor, material, tooling and
            facilities required for the manufacture of the Products in
            accordance with the provisions of this Agreement.

                  2. Labels. CCSI shall be responsible, at its expense, for
            preparing and affixing (or caused to be affixed) all labels to be
            affixed to the Products. DO shall have the right to approve, in
            writing, and shall reimburse CCSI for all costs of art work relating
            to any and all labels referring to OM, as the distributor of the
            Products, to be affixed to the Products such as, but not limited to,
            art work layout, silk screens, camera-ready art work, first article
            printed labels for all Products, art work for labels, and silk
            screens for labels, if such labeling (which is to be affixed to the
            Products) refers to OM as the distributor of the Products.
            Production of such labels to be affixed to the Products shall not
            begin until DO provides approval, in writing, of the first
            production samples of such labels. During the Initial Transition,
            the parties will cooperate to expeditiously obtain such conforming
            labels (with regulatory approval) to be affixed to the Products.
            After the end of the Initial Transition, CCSI shall not, without
            DO's written consent, place (or permit to be placed) any Products in
            the Targeted Markets within the Territory without labels affixed to
            the Products referring to OM as the distributor of the Products and
            conforming to label samples approved by DO. As to any Products for
            the monitoring of newborn bilirubinemia (infant jaundice) already
            placed in the Targeted Markets within the Territory as of the end of
            the Initial Transition, the parties agree to cooperate fully with
            each other to affix or cause to be affixed such conforming labels to
            such Products by relabeling in the field by DO or CCSI sales or
            in-service personnel as soon as reasonably possible, and to the
            extent that DO has its representatives do any such relabeling in the
            field, DO shall not charge CCSI for such service. During the Initial
            Transition, CCSI shall have its representatives perform such
            relabeling in connection with site visits in the ordinary course of
            business.

                  3. Patent, Trademark and Copyright Notices. All Products shall
            bear and/or be packaged with CCSI's existing and/or future
            trademarks and trade dress, labels, copyright and patent notices,
            licenses and restrictions and any other notices required by law, and
            notices that the Products were manufactured for CCSI. At DO's
            direction, CCSI will have labels affixed to the Products referring
            to OM as the distributor of the Products subject to CCSI's written
            approval of design, which approval will not be unreasonably withheld
            or delayed. An example of approved labeling is included as part of
            Attachment B hereto. Neither party shall use any trademark or
            service mark not owned by CCSI to identify or name any Product.

                  4. Regulatory Compliance. CCSI shall be solely responsible for
            and will use commercially reasonable efforts to identify, obtain and
            maintain in good standing, at its sole cost, any and all necessary
            U.S. governmental and regulatory approvals, certifications and
            clearances required for the Products by U.S. governmental or
            regulatory entities including, but not limited to, the FDA and any
            applicable state and local law and regulation for the monitoring of
            newborn bilirubinemia (infant jaundice) applicable to CCSI. CCSI
            shall be responsible for ensuring that all Products for the
            monitoring of

                                       9
<PAGE>

            newborn bilirubinemia (infant jaundice) are manufactured in
            compliance with the provisions and standards of all applicable U.S.,
            state and local statutes, regulations and other legal requirements
            including, but not limited to, the medical device provisions of the
            Federal Food, Drug and Cosmetic Act and regulations promulgated by
            the FDA relating to clearance for commercial distribution, labeling
            and good manufacturing practices.

                  DO agrees (1) not to change any Product or Product
            labeling/promotional advertising material (or to create and
            disseminate the same) without prior CCSI approval relating solely to
            regulatory matters (including clinical accuracy) and/or CCSI's
            intellectual property; (2) to maintain compliant files in accordance
            with all FDA regulations and requirements and to document and
            forward all complaints to CCSI; and (3) to use, promote, distribute
            and sell the Products only for the monitoring of newborn
            bilirubinemia (infant jaundice) pursuant to paragraph 2 of Section
            III hereof.

                  5. Product Recalls or Corrective Actions.

                        (a)   In the event of a voluntary or mandatory recall of
                              the Products or if CCSI takes any "Corrective
                              Action" (as defined below) with respect to any of
                              the Products including, without limitation,
                              because the Products are believed to violate any
                              provision of applicable law, CCSI shall bear all
                              costs and expenses related to such recall or
                              Corrective Action including, without limitation,
                              expenses or obligations to third parties, the cost
                              of notifying customers, costs associated with the
                              shipment of such recalled or corrected Products
                              from customers to CCSI or its designee and direct
                              costs related to handling or correcting the
                              Products (the "Recall/Corrective Action Costs").
                              However, if such recall or Corrective Action is
                              caused by any act or omission by DO or its
                              subdistributors that is inconsistent with, or a
                              breach by DO, of its obligations under this
                              Agreement, including without limitation any
                              unauthorized changes to the Products or the
                              Product Information, DO shall bear all such
                              Recall/Corrective Action Costs relating thereto or
                              arising therefrom.

                        (b)   Both parties shall maintain complete and accurate
                              records, for such periods as may be required of
                              CCSI or DO by applicable law, of all the Products
                              for the monitoring of newborn bilirubinemia
                              (infant jaundice) placed into distribution by them
                              within the Territory. The parties shall cooperate
                              fully with each other in carrying out any Product
                              recall, in fulfilling all recall obligations under
                              applicable regulations, and in effecting any
                              Corrective Action with respect to the Products
                              including, without limitation, communications with
                              any purchasers or end users. Where feasible, but
                              subject to applicable legal requirements, prior to
                              either party incurring any Recall/Corrective
                              Action Costs, the parties will discuss the scope
                              and extent of such costs.

                        (c)   For purposes of this section, "Corrective Action"
                              means a field or other action relative to any of
                              the Products (voluntarily undertaken

                                       10
<PAGE>

                              or as required by the FDA or other governmental
                              authority) or any field or other action including
                              mandatory notification, repair, replacement and
                              refund, safety alert, "cease distribution and
                              notification" and mandatory recall action,
                              voluntary recall, market withdrawal, stock
                              recovery, "device removal or correction," as
                              defined or understood under FDA law or policy (or
                              those of other governmental authority) and any
                              other action necessary to address a product safety
                              or effectiveness problem and any "enforcement
                              action" (defined for this purpose as any seizure,
                              injunction, criminal prosecution, civil penalties
                              and any other legal or administrative action that
                              the FDA or other governmental authority can bring
                              against CCSI, DO and their officers/employees,
                              and/or the Products).

            6. Quality Assurance Audits.

                  (a)   DO, at its own expense and at its sole discretion, shall
                        have reasonable access during regular business hours,
                        upon prior written notice of not less than ten (10)
                        business days, to the Product Inspection and Acceptance
                        Location(s) where the Products are being manufactured in
                        order to monitor and audit the manufacturing practices
                        for the Products as necessary to ensure satisfaction of
                        the regulatory compliance provisions of this Agreement
                        including FDA QSR and GMP requirements, and, in
                        accordance with paragraph 10 of Section III, to inspect
                        and accept the Products prior to shipping. During such
                        audit or inspection for acceptance, CCSI agrees that
                        either CCSI or its third-party manufacturer of the
                        Products shall, upon written request from DO, promptly
                        make available to DO, for its review but not for
                        copying, the entire DMR documents, including the master
                        document (as amended from time to time) redacted to
                        exclude proprietary information of CCSI and of its
                        third-party manufacturer not needed for such audit or
                        inspection, as follows: the exclusion of the detailed
                        description of parts specifications for Light Emitting
                        Diodes, [*] for Light Emitting Diodes, optical filters,
                        light sources, calibration color standards, verification
                        color standards and integrated circuit boards, and the
                        specific description in all software documentation
                        (including the Technical File and Design Control
                        documentation) of the algorithms, mathematical formulas
                        or equations, or any other computations or specific
                        descriptions of software code where the specific
                        descriptions are related to the color measurement, the
                        skin color categories, the adjustments for skin
                        coloration (including under phototherapy) baseline skin
                        coloration, measurement of proprietary standards,
                        computation of spectral data, computation of [*] data,
                        conversion formulas for spectral and [*] data, equations
                        for power source, [*] equations, site computations, [*]
                        signals and [*] parameters. CCSI agrees to provide DO
                        with prior written notice of any change in CCSI's third-
                        party manufacturer of the

                                       11
<PAGE>

                        Products, which notice shall identify the name and
                        location of any such manufacturer.

                  (b)   CCSI, at its own expense and at its sole discretion,
                        shall have reasonable access during regular business
                        hours, upon prior written notice of not less than ten
                        (10) business days, to audit DO's distribution practices
                        for the Products as necessary to ensure satisfaction of
                        the regulatory compliance provisions of this Agreement.

            7. Product Information. The parties will prepare, revise from time
      to time, and distribute Product Information in accordance with the
      provisions of Attachment B hereto. DO shall not make any unauthorized
      representation or warranty regarding the Products without CCSI's prior
      written consent. DO shall only distribute the materials covered by this
      paragraph in connection with the marketing, distribution, training,
      service and/or maintenance of the Products. All Product Information and
      other written materials relating to the Products sent to dealers,
      distributors and end users distributed in the Targeted Markets within the
      Territory shall bear CCSI's copyright, trademark and patent notices,
      licenses and restrictions as may reasonably be required by CCSI.

            III. PURCHASE AND SALE

            1. CCSI's Supply of Products. CCSI agrees to manufacture and ship or
      cause its manufacturing subcontractor to manufacture and ship the Products
      ordered by DO under a Firm Purchase Order during the Term of this
      Agreement in accordance with the provisions of this Agreement. CCSI will
      not ship or cause to be shipped to DO any products that are not legally
      marketable or not commercially available.

            2. DO's Right and License to Market the Products.

                  (a)   During the Term of this Agreement, and subject to the
                        terms and conditions hereof, including without
                        limitation subparagraphs (b) and (c) of this paragraph 2
                        of Section III, CCSI hereby grants to DO the exclusive
                        right and license without the right to sublicense to
                        use, market, sell and distribute the Products to
                        dealers, distributors and users in the Targeted Markets
                        (and, notwithstanding the absence of the right to
                        sublicense, to and through all sales and/or distribution
                        channels for or to any and all such markets) within the
                        Territory solely for use within the Territory in
                        monitoring newborn bilirubinemia (infant jaundice);
                        provided, however, that CCSI may place Experimental
                        Units in the Targeted Markets within the Territory for
                        use in monitoring newborn bilirubinemia (infant
                        jaundice) for clinical studies, for research, for
                        experimental and educational purposes and to obtain and
                        compile data for obtaining any regulatory clearances
                        and/or approvals; and provided, further, however, that
                        CCSI's activities in support of DO's marketing and sales
                        of the Products in the Targeted Markets within the
                        Territory as provided in Attachment D hereto shall not
                        be deemed a breach of this Agreement. CCSI shall retain
                        all rights to use, market, sell and

                                       12
<PAGE>

                        distribute the Products throughout the world for all
                        uses other than for use in monitoring newborn
                        bilirubinemia (infant jaundice) and, subject to
                        paragraph 2(d) of this Section III, CCSI shall retain
                        all rights to use, market, sell and distribute the
                        Products for use in monitoring newborn bilirubinemia
                        (infant jaundice) in any market outside the Territory
                        and in any market within the Territory other than the
                        Targeted Markets.

                  (b)   The limited, exclusive right and license granted to DO
                        in paragraph 2(a) of this Section III includes a
                        correspondingly limited, exclusive license (without the
                        right to sublicense) to use, offer to sell and sell
                        during the Term of this Agreement under U.S. patents
                        5,313,267 and 5,671,735 and under any other U.S. patent
                        of CCSI that may issue on any Device. No other right or
                        license, express or implied, is granted to DO under any
                        other patent or patent application including, without
                        limitation, any U.S. patent of CCSI that may issue on
                        the Calibration Standards, provided, however, that
                        during the Term of this Agreement, CCSI shall not grant
                        any license under any U.S. patent of CCSI that may issue
                        on the Calibration Standards for monitoring newborn
                        bilirubinemia (infant jaundice) (or any other
                        calibration standards for monitoring newborn
                        bilirubinemia (infant jaundice) for use with the
                        Devices) to any other person to use, offer to sell or
                        sell Products in the Targeted Markets within the
                        Territory.

                  (c)   The limited, exclusive right and license granted to DO
                        in paragraph 2(a) of this Section III includes a
                        correspondingly limited, exclusive right and license to
                        use, market, and distribute (but not sell) the software
                        of the Device ("Software") to end-users of the Device in
                        the Targeted Markets within the Territory during the
                        Term of this Agreement. DO may not and DO may not
                        authorize others to (1) copy the Software, (2)
                        dissemble, decompile or otherwise attempt to discern the
                        source code of the Software, (3) reverse engineer the
                        Software, or (4) modify or prepare derivative works of
                        the Software. Title to the Software is not transferable
                        to DO but remains vested in CCSI. It is understood that
                        a correspondingly limited lease and license of the
                        Software will be conveyed by CCSI directly to end-users
                        of the Software packaged with the Devices that are
                        marketed and distributed by DO.

                  (d)   CCSI agrees that during the Initial Term of this
                        Agreement, prior to marketing and/or distributing any
                        Products for profit, either by itself or through a
                        distributor or any other third-party representative, for
                        use in monitoring newborn bilirubinemia (infant
                        jaundice) in any market outside the Targeted Markets
                        within the Territory or in any market outside the
                        Territory, CCSI shall give written notice thereof to DO
                        and DO shall have the right within thirty (30) days
                        after receipt of that notice to present to CCSI its
                        marketing and distribution plan for such market, it
                        being understood and agreed

                                       13
<PAGE>

                        that nothing in this Agreement shall obligate CCSI to
                        grant any marketing and/or distribution right or license
                        to DO in any markets outside the Territory or in any
                        market within the Territory other than the Targeted
                        Markets.

                  (e)   DO shall not sell the Products outside of the Targeted
                        Markets within the Territory or anywhere outside of the
                        Territory and shall not sell the Products to any third
                        party that DO knows intends to divert the Products for
                        use or sale outside of the Targeted Markets within the
                        Territory or anywhere outside of the Territory. CCSI
                        agrees that it shall not be considered a Default by DO
                        under this Agreement if a Product is used within the
                        Territory in a market other than the Targeted Markets,
                        provided that DO itself does not market, distribute or
                        sell (or knowingly permit any third party to market,
                        distribute or sell) such Product for use in such market.
                        Accordingly, in the event that DO or CCSI identifies
                        unauthorized marketing or distribution of Products
                        outside the Targeted Markets within the Territory
                        (either as a result of information received from DO or
                        otherwise), DO will cooperate with CCSI should CCSI deem
                        it necessary to take all reasonably necessary steps to
                        stop such unauthorized activity, including where
                        appropriate termination by DO of its supply of Products
                        to such third party. Likewise, in the event that DO or
                        CCSI identifies unauthorized marketing or distribution
                        of Products inside the Targeted Markets within the
                        Territory by a third party other than DO or its
                        authorized agents or subdistributors, CCSI will take all
                        reasonably necessary steps to stop such unauthorized
                        activity, including where appropriate termination by
                        CCSI of its supply of Products to such third party.

            3. Product Changes. From time to time CCSI may propose to make, and
      DO may request (although CCSI is not obligated to make), changes to the
      Products constituting an adaptation, improvement, redesign or modification
      of the Products. If CCSI decides to implement a change to the Products
      that would require a change to the Product Information it shall notify DO
      in writing of the changes proposed (and the proposed date of
      implementation) at least sixty (60) days prior to the time CCSI proposes
      to implement such changes to the Products and during such sixty (60) day
      period CCSI will seek input from DO regarding the proposed changes for
      purposes of effecting a smooth transition. Notwithstanding the foregoing,
      the parties agree that CCSI is working at this time on modifications to
      the Products relating to the LED Device, the Modified Devices, "Charges
      per Use" components, and software upgrades relating to same, and may also
      from time to time make changes to the Products for further regulatory
      compliance that do not require a change to the Product Information. In all
      such cases, CCSI will give DO sixty (60) days notice, but will not be
      required to seek input from DO. Both parties understand that CCSI may make
      product changes, some of which may require additional FDA regulatory
      clearance. Such modified Device or Product shall not be included under
      this Agreement as a Modified Device or Product until it is legally
      marketable, has all required FDA regulatory clearance, and is commercially
      available.

            4. Rolling Forecasts and Delivery of the Products.

                                       14
<PAGE>

                  (a)   DO shall submit Firm Purchase Orders with CCSI for
                        specific quantities of Devices (other than LED Devices)
                        at the Minimum Transfer Price as set forth on Attachment
                        A due within 30 days of delivery of Product(s) subject
                        to the DO Purchase Price at a quarterly reconcilliation
                        if the Products are sold not less than seven (7) months
                        prior to DO's requested delivery date. In the event DO
                        submits to CCSI an additional Firm Purchase Order for
                        such Devices within seven (7) months after any prior
                        Firm Purchase Order, CCSI shall not be obligated to
                        deliver such Devices to DO until seven (7) months from
                        the scheduled delivery date relating to the prior Firm
                        Purchase Order. However, under no circumstances will
                        CCSI be obligated to accept any Firm Purchase Order for
                        such Devices if such Firm Purchase Order is for more
                        than [*] such Devices to be delivered following the
                        seven months lead time of DO's Firm Purchase Order. The
                        foregoing provisions shall not prevent DO from placing
                        additional orders for additional quantities of such
                        Devices or emergency orders for such Devices for
                        delivery in less than seven (7) months. Subject to
                        paragraph 9 of Section III, CCSI agrees to use
                        commercially reasonable efforts to cause its third-party
                        manufacturer to deliver such Devices on the requested
                        schedule; provided, however, that the failure to deliver
                        such Devices on or before the date requested relating to
                        such Devices ordered under any short term or emergency
                        purchase order within less than seven (7) months lead
                        time, shall not be deemed a breach of this Agreement so
                        long as CCSI exercises such commercially reasonable
                        efforts.

                  (b)   Within two (2) business days following the date hereof,
                        DO shall place a Firm Purchase Order with CCSI for not
                        less than [*] Devices at the Minimum Transfer Price as
                        set forth on Attachment A due within 30 days of delivery
                        of Product(s) subject to the DO Purchase Price at a
                        quarterly reconcilliation if the Products are sold.
                        Under no circumstances shall DO be obligated to accept
                        for delivery more than: (i) a total of [*](in the
                        aggregate) of such [*] Devices prior to the end of the
                        fourth calendar month following the date that DO places
                        its Firm Purchase Order for such initial [*] Devices
                        (the "Initial Order Date"), (ii) a total of [*] (in the
                        aggregate) of such [*] Devices prior to the end of the
                        fifth calendar month following the Initial Order Date,
                        and (iii) the total [*] of such Devices (in the
                        aggregate) prior to the end of the sixth calendar month
                        following the Initial Order Date. Within two (2)
                        business days following the date hereof, CCSI shall
                        order all parts for an additional [*] Devices (over and
                        above the [*] unit order placed by DO to CCSI above), so
                        that a total of [*]units will have been ordered with the
                        third-party manufacturer by such date and all parts for
                        an additional [*] units will be available at CCSI's
                        third-party manufacturer within seven (7) months from
                        the date of such order so as to improve availability of
                        Products to DO. As soon as such parts for an additional
                        [*] Devices are at CCSI's third-party

                                       15
<PAGE>

                        manufacturer, CCSI shall notify DO in writing of such
                        availability and if DO elects to purchase some or all of
                        such Devices, CCSI shall arrange for delivery of such
                        Devices to DO within sixty (60) days following CCSI's
                        receipt of a Firm Purchase Order for any such Devices
                        from DO.

                  (c)   CCSI and DO will cooperate with each other to facilitate
                        any transition to the LED Device, and CCSI will keep DO
                        informed as to the anticipated date when the LED Device
                        may be legally marketable and commercially available.
                        Following such time when the LED Device becomes legally
                        marketable and commercially available to DO for
                        distribution, DO shall submit to CCSI a non- binding
                        rolling forecast (updated by DO every two (2) months
                        during the First Performance Year and every three (3)
                        months thereafter) setting forth the anticipated
                        quantity of LED Devices required by DO for the then
                        upcoming twelve (12) month period. Such forecasts shall
                        reflect, as a minimum, the Annual Minimum Performances
                        for Devices for the applicable Performance Year listed
                        in paragraph 6 of this Section III, unless DO determines
                        in good faith that a smaller forecast is appropriate due
                        to existing inventory or other market conditions. The
                        lead time for delivery of the LED Device, prices and lot
                        size shall be as stated in Attachment A hereto. DO shall
                        submit Firm Purchase Orders for LED Devices in
                        accordance with such prices, lead time and lot size at
                        the Minimum Transfer Price as set forth on Attachment A
                        due within 30 days of delivery of Products subject to
                        the DO Purchase Price at a quarterly reconcilliation if
                        the Products are sold. In the event DO submits to CCSI
                        an additional Firm Purchase Order for LED Devices prior
                        to the expiration of the lead time applicable to any
                        prior Firm Purchase Order, CCSI shall not be obligated
                        to deliver such additional LED Devices to DO except in
                        accordance with the lead time applicable to such order.
                        For orders exceeding the forecasted quantity, CCSI shall
                        advise DO in writing within ten (10) days of receipt by
                        CCSI of such orders whether CCSI has accepted such
                        orders. CCSI will use commercially reasonable efforts to
                        satisfy Firm Purchase Orders for the LED Device
                        exceeding the forecasted quantities, but shall not be in
                        breach hereof for its failure to provide such excess
                        quantities so long as CCSI exercises such commercially
                        reasonable efforts. Unless it violates CCSI's existing
                        agreement with its third party manufacturer, CCSI agrees
                        to use commercially reasonable efforts to explore
                        alternative arrangements with other third-party
                        manufacturers that may be able to offer comparable
                        pricing together with more favorable delivery,
                        acceptance and other standard terms and conditions that
                        are more consistent with typical commercial practice
                        without causing any delay in Product delivery or lesser
                        quality of Products or regulatory standards. At DO's
                        request, CCSI will permit DO to play an active role to
                        assist CCSI in identifying and assist CCSI in
                        negotiating with such other third-party manufacturers.

                                       16
<PAGE>

                  (d)   DO shall submit to CCSI a non-binding rolling forecast
                        (updated by DO every month) setting forth the
                        anticipated quantity of Calibration Standards (or, when
                        legally marketable, Charges per Use) required by DO for
                        the upcoming twelve (12) month period. Such forecasts
                        shall reflect, as a minimum, the Annual Minimum
                        Performances for Calibration Standards (or, when legally
                        marketable, Charges per Use) for the applicable
                        Performance Year listed in paragraph 6 of this Section
                        III, unless DO determines in good faith that a smaller
                        forecast is appropriate due to existing inventory or
                        other market conditions. DO shall submit Firm Purchase
                        Orders not less than two (2) months prior to DO's
                        requested delivery date for quantities of Calibration
                        Standards (or, when legally marketable, the quantities
                        of Charges per Use) at the Minimum Transfer Price set
                        forth in Attachment A with the Initial Transfer Price
                        set forth in Attachment A payable in thirty (30) days
                        after delivery of Products and the DO Purchase Price due
                        at quarterly reconcilliations if the Products are sold.
                        If the Products are not sold, the balance due for the
                        Minimum Transfer Price is due in 365 days after delivery
                        of the Products to DO. The lead times for delivery,
                        prices and lot sizes for Calibration Standards (and,
                        when legally marketable, Charges per Use) shall be as
                        stated in Attachment A hereof. For orders exceeding the
                        forecasted quantity, CCSI shall advise DO in writing
                        within ten (10) days of receipt by CCSI of such orders
                        whether CCSI has accepted such orders. CCSI agrees to
                        maintain a two (2) month inventory of Calibration
                        Standards and DO agrees to maintain a two (2) week
                        inventory of Calibration Standards, in each case based
                        on a moving three (3) month average of purchases by DO.

                  (e)   CCSI will use commercially reasonable efforts to satisfy
                        Firm Purchase Orders for the Calibration Standards or
                        Charges per Use exceeding the forecasted quantities, but
                        shall not be in breach hereof for its failure to provide
                        such excess quantities so long as CCSI exercises such
                        commercially reasonable efforts.

            5. Purchase Price.

                  (a)   Subject to the remaining provisions of this Section III,
                        paragraph 5, the DO Purchase Price for each of the first
                        two Performance Years shall be equal to the higher of
                        (i) sixty percent (60%) of the Invoice Price for the
                        Products or (ii) the Minimum Transfer Price for each
                        Product set forth on Attachment A hereto.

                  (b)   The DO Purchase Price after the first two Performance
                        Years shall be equal to the higher of (i) fifty percent
                        (50%) of the Invoice Price for the Products, or (ii) the
                        Minimum Transfer Price for each Product set forth on
                        Attachment A hereto.

                  (c)   In addition, anytime after the first Performance Year
                        and prior to the end of the second Performance Year,
                        upon DO achieving

                                       17
<PAGE>

                        cumulative purchases of [*] Calibration Standards and/or
                        Charges per Use and [*] Devices, the DO Purchase Price
                        shall be equal to the higher of (i) fifty percent (50%)
                        of the Invoice Price for the Products, or (ii) the
                        Minimum Transfer Price for each such Product set forth
                        on Attachment A hereto.

                  (d)   The parties agree that DO's initial suggested list price
                        for the Calibration Standard or Charges per Use shall
                        not be less than [*] per Calibration Standard or Charges
                        per Use, and not less than [*] per Device, but DO is
                        free to determine, and from time to time change, the
                        price it charges for Products.

                  (e)   The Initial Transfer Price, the Minimum Transfer Price,
                        and/or the DO Purchase Price may not be changed from
                        that set forth in Attachment A; provided, however,
                        notwithstanding the foregoing provisions of paragraph 5
                        of this Section III and the purchase price requirements
                        thereunder and under Attachment A, such purchase prices
                        may change solely as follows:

                        (i)   The DO Purchase Price for Demo Calibration
                              Standards/Charges per Use (as defined herein) and
                              the Purchase Price for Evaluation Calibration
                              Standards or Charges per Use (also as defined
                              herein) shall be as described in Attachment A
                              hereto. Demo Calibration Standards/Charges per Use
                              are used solely by DO's sales personnel,
                              sub-distributors or in-servicers to demonstrate
                              the Products or train others to operate the
                              Products. DO will not [*] Demo Calibration
                              Standards/Charges per Use. Evaluation Calibration
                              Standards/Charges per Use are non- Demo
                              Calibration Standards/Charges per Use that are
                              provided to DO's potential customers for
                              evaluating Devices. Evaluation Calibration
                              Standards/Charges per Use may be used by customers
                              for evaluation purposes only. DO will not [*]
                              Evaluation Calibration Standards/Charges per Use
                              and will provide Evaluation Calibration
                              Standards/Charges per Use [*]. DO will not bundle
                              Evaluation Calibration Standards/Charges per Use
                              for sale with any other product.

                              (ii) As and when requested by DO from time to
                              time, CCSI shall have an obligation to negotiate
                              in good faith with DO to reduce the Minimum
                              Transfer Price component of the DO Purchase Price
                              in specific instances for higher volume type sales
                              to one or more accounts and for sales to large
                              accounts where the price of the Calibration
                              Standards or Charges per Use is needed to be less
                              than [*] per Calibration Standard or Charge per
                              Use to close such sale. In such event, the parties
                              agree to cooperate together to determine the
                              appropriate reduction in the Minimum

                                       18
<PAGE>

                              Transfer Price component of the DO Purchase Price
                              and sales structure for such sales as they may
                              happen from time to time. Such negotiations shall
                              be conducted, and such determination shall be made
                              within thirty (30) days, by and between OM's
                              senior sales and marketing executive and CCSI's
                              senior sales and marketing executive.

                              (iii) As and when requested by either of the
                              parties from time to time, CCSI and DO shall
                              cooperate together to determine the appropriate
                              marketing and DO Purchase Price for placement of
                              the Products under a managed use program as the
                              same may exist in the future or change from time
                              to time.

                              (iv) As and when requested by DO from time to
                              time, in the event at any time during the Term of
                              this Agreement that DO believes in good faith that
                              the selling price to be charged by DO to its
                              customers for the Calibration Standard or Charges
                              per Use should be less than [*] per unit (or once
                              below [*] as DO believes that such selling price
                              should be further reduced from time to time below
                              the previous selling price), as verified by a
                              large number (at least 10) of substantial
                              customers in specific Targeted Markets, then DO
                              can require CCSI to negotiate in good faith to
                              determine any appropriate reduction in the Minimum
                              Transfer Price component of the DO Purchase Price
                              for Calibration Standards and Charges per Use (but
                              in no event is CCSI obligated to reduce the
                              Initial Transfer Price or the Minimum Transfer
                              Price component of the DO Purchase Price for
                              Calibration Standards or Charges per Use to below
                              [*] per unit as set forth in Attachment A). Such
                              negotiations shall be conducted, and such
                              determination shall be made within sixty (60)
                              days, by and between OM's senior sales and
                              marketing executive and CCSI's senior sales and
                              marketing executive.

                              (v) As and when requested by CCSI from time to
                              time, CCSI and DO shall cooperate together to
                              determine any appropriate change to the Minimum
                              Transfer Price for Calibration Standards based
                              upon the past six month average selling price
                              being over [*] per unit of Calibration Standards
                              sold by DO.

                              (vi) It is the intent of the parties that any
                              pricing adjustment for Products occurring under
                              any of the foregoing provisions under clauses (ii)
                              (iii), (iv) and/or (v) of this paragraph 5(e) of
                              Section III shall preserve a [*] margin of the
                              Invoice Price to DO and [*] of Invoice Price as
                              the DO Purchase Price to CCSI in the

                                       19
<PAGE>

                              first two Performance Years and [*] margin of the
                              Invoice Price to DO and [*] of Invoice Price as
                              the DO Purchase Price to CCSI thereafter,
                              including any Extended Term.

                              (vii) The Initial Transfer Price for Calibration
                              Standards/Charges per Use shall be set initially
                              at [*] per Calibration Standard/Charges per Use,
                              as set forth in Attachment A. However, if the
                              Minimum Transfer Price should ever be reduced to
                              [*] or less, then the Initial Transfer Price shall
                              thereafter be equal to the Minimum Transfer Price.

                              (viii) Notwithstanding any provision in this
                              Agreement, CCSI has no obligation, at any time or
                              under any circumstances, without penalty, to
                              reduce the Initial Transfer Price or the Minimum
                              Transfer Price component of the DO Purchase Price
                              for Calibration Standards or Charges per Use to
                              below [*] per unit or to have a pricing structure
                              for Devices that would differ from the pricing
                              structure in provisions set forth in Attachment A.

                  (f)   If at any time DO believes that market conditions are
                        such that the market price for Products is less than the
                        Minimum Transfer Price for such Products or the Initial
                        Transfer Price for Calibration Standards/Charges per
                        Use, it will so notify CCSI, and CCSI shall have the
                        right but not the obligation, within fifteen (15) days
                        after receipt of such notice, to elect to repurchase all
                        of DO's inventory of Products at the price paid by DO
                        for such inventory. DO will not sell such Products at a
                        price below the Minimum Transfer Price or the Initial
                        Transfer Price, as the case may be, unless CCSI elects
                        not to repurchase the inventory. If CCSI elects to
                        repurchase the inventory, it will make payment to DO
                        within sixty (60) days after CCSI's receipt of the
                        inventory.

                  (g)   It is the parties' intention that OM will receive the
                        economic credit (and credit towards its minimums) for
                        any and all sales or placements of Products (other than
                        an Experimental Unit and the [*] for an Evaluation Unit)
                        by CCSI to customers within the Targeted Market within
                        the Territory during the Initial Transition. CCSI will
                        not make any such sales or placements of Products (other
                        than an Experimental Unit and the [*] for an Evaluation
                        Unit) without DO's consent. As to any and all such sales
                        or placements of Products (other than an Experimental
                        Unit and the [*] for an Evaluation Unit) by CCSI, CCSI
                        shall retain an amount equal to the DO Purchase Price
                        and shall remit the balance to DO, such payment to be
                        made within thirty (30) days following receipt by CCSI
                        of payment of the invoice in question. DO shall have the
                        right to audit the books and records of CCSI for the
                        limited

                                       20
<PAGE>

                        purpose, and only to the extent necessary and
                        appropriate for DO to verify the accuracy of such sales
                        and other placements and invoicing and collections
                        relating thereto, which audit shall take place during
                        reasonable business hours following reasonable advance
                        notice to CCSI. DO shall bear the risk of non-collection
                        from such customers, provided CCSI uses good faith
                        efforts to collect such amounts, and provided further,
                        that as to any invoices which remain unpaid more than
                        180 days, DO shall only be obligated to reimburse CCSI
                        the Minimum Transfer Price for the sales of Products and
                        the prices for Product Components, Software, Demo
                        Calibration Standards/Charges per Use, Evaluation
                        Calibration Standards/Charges per Use, and Accessories
                        as set forth on Attachment A reflected on such invoices.

                  (h)   The prices paid by DO to CCSI for Product Components and
                        Accessories identified in Attachment A hereto shall be
                        as set forth in Attachment A hereto.

                        (i) In all instances where a price for a Product other
                        than Calibration Standards/Charges per Use is subject to
                        change based on cost to CCSI or is to be determined by
                        reference to a cost incurred by CCSI (the "Cost
                        Amount"), the reference shall mean CCSI's direct
                        out-of-pocket payments to third-party vendors for parts,
                        materials, direct labor, related incoming inspections,
                        manufacturing and assembly charges, regulatory charges,
                        and shipping, but not any research and development
                        expenditures for the Products or overhead expenses of
                        CCSI, and in all cases as shown on invoices received
                        from third-party vendors and paid (or to be paid in the
                        ordinary course) by CCSI. DO shall have the right to
                        audit the books and records of CCSI at DO's expense for
                        the limited purpose, and only to the extent necessary
                        and appropriate for DO to verify the computation of such
                        Cost Amounts, which audit shall take place during
                        reasonable business hours following reasonable advance
                        notice to CCSI, but in no event more than once for each
                        increase in Cost Amount. DO shall also have the right to
                        suggest ways to reduce such Cost Amounts, either through
                        alternative sources for parts and materials, alternative
                        third-party manufacturers, or direct manufacture by CCSI
                        or DO. Unless it violates CCSI's existing agreement with
                        its third-party manufacturer, at DO's request, CCSI will
                        permit DO to play an active role assisting CCSI in
                        identifying and assisting CCSI in negotiating with such
                        other third-party manufacturers. CCSI agrees to consider
                        such suggestions in good faith but shall have no
                        obligation to implement any such suggestion, provided,
                        however, CCSI shall have a continuing good faith
                        obligation to minimize Cost Amounts, considering all
                        business factors involved.

            6. Annual Minimum Performances.

                                       21
<PAGE>

                  (a)   The amounts listed on the table below as "Annual Minimum
                        Performances" are DO's Annual Minimum Performances for
                        the Initial Term of this Agreement, provided, however,
                        that DO's failure to reach such Annual Minimum
                        Performances shall not constitute a Default by DO under
                        this Agreement. Subject to the footnotes to the table
                        below, in the event that the quantity of units of either
                        of the Calibration Standards/Charges per Use or Devices
                        purchased by DO as of the expiration of any Performance
                        Year is less than the Annual Minimum Performances for
                        such Performance Year in the following table, CCSI shall
                        have the right, but not the obligation, to terminate
                        this Agreement in accordance with the following
                        procedures:

                        (i)   at least sixty (60) days before the end of any
                              Performance Year in which it appears that DO is in
                              jeopardy of failing to meet the Annual Minimum
                              Performances for such Performance Year, CCSI may
                              give written notice to DO of CCSI's intent to
                              terminate this Agreement, which notice shall
                              contain CCSI's requirements for DO to avoid
                              termination. Such notice is referred to herein as
                              the "Advance Notice of Termination." Within thirty
                              (30) days after receipt of the Advance Notice of
                              Termination, DO will inform CCSI whether DO
                              believes it can meet the requirements to avoid
                              termination.

                        (ii)  if by the end of such Performance Year in which
                              CCSI has issued an Advance Notice of Termination
                              DO still has not met the Annual Minimum
                              Performances for such Performance Year, then,
                              unless the parties agree otherwise, the Agreement
                              will terminate sixty (60) days after the end of
                              such Performance Year, and the Exit Transition
                              will begin.

                        (iii) if CCSI does not issue a timely Advance Notice of
                              Termination, i.e., at least sixty (60) days before
                              the end of the applicable Performance Year, then
                              DO's failure to meet the Annual Minimum
                              Performances for such Performance Year will not be
                              grounds for termination of the Agreement by CCSI.

                  (b)   In the event that the quantity of Annual Minimum
                        Performances for units of either of the Calibration
                        Standards/Charges per Use or Devices purchased by DO as
                        of the expiration of any Performance Year is less than
                        the amount set forth as the Annual Minimum Performances
                        for such Performance Year in the following table, DO
                        shall have the right, but not the obligation, to
                        terminate this Agreement upon giving CCSI ninety (90)
                        days prior written notice, provided such notice is given
                        within thirty (30) days after the expiration of such
                        Performance Year and, provided, further, that DO's
                        failure to meet such Annual Minimum Performances for
                        such

                                       22
<PAGE>

                        Performance Year is not a Default under this Agreement
                        unless such failure resulted from DO having failed to
                        utilize commercially reasonable efforts to implement its
                        Marketing and Distribution Plan for distribution of the
                        Calibration Standards/Charges per Use and Devices within
                        the Targeted Markets within the Territory.

                  (c)   In the event either party elects to terminate this
                        Agreement pursuant to this paragraph 6 of Section III,
                        then both parties will cooperate with each other to use
                        commercially reasonable efforts in implementing the Exit
                        Transition.

                           ANNUAL MINIMUM PERFORMANCES

<TABLE>
<CAPTION>
Performance Year***       Minimum Performances for           Minimum Performances for Units of
                          Units of Devices*,**, ***          Calibration Standards or, when legally
                                                             marketable,  Charges per Use*,**,***
<S>                       <C>                                <C>
1                         [*]                                [*]
2                         [*]                                [*]
3                         [*]                                [*]
4                         [*]                                [*]
5                         [*]                                [*]
</TABLE>

      *In the event the number of Devices or Calibration Standards (or, when
legally marketable, Charges per Use) purchased*** by DO from CCSI in any
Performance Year exceeds the number of Devices or Calibration Standards (or,
when legally marketable, Charges per Use) set as the Annual Minimum Performances
for such Performance Year, such excess of units purchased*** by DO shall be
rolled over on a cumulative basis as follows. First, such excess shall be rolled
over and counted against the Annual Minimum Performance for the subsequent
Performance Year. Second, if DO's purchases*** in such subsequent Performance
Year (including and counting any excess rolled over from the prior Performance
Year) shall exceed the Annual Minimum Performance for such subsequent
Performance Year, the excess shall again be rolled over to the next succeeding
Performance Year and shall be included and counted against the Annual Minimum
Performance for such succeeding Performance Year. This process shall continue
from each Performance Year to the next.

      **No Calibration Standards/Charges per Use or Devices shall be counted or
included as a Calibration Standard/Charges per Use or Device purchased by DO for
purposes of determining whether DO has satisfied the Annual Minimum Performances
for Calibration Standards/Charges per Use or Devices except to the extent that
DO has paid CCSI, or is not past due on such amounts then owed,+ for the DO
Purchase Price (and not just the applicable demo price, if any) for such
Calibration Standards/Charges per Use or Devices. The amount of Calibration
Standards (and, when legally marketable, Charges per Use) purchased by DO at the
DO Purchase Price (and not just the applicable demo price, if any) in any
Performance Year*** shall be combined and counted together towards satisfying
DO's Annual Minimum Performances for Units of Calibration Standards/Charges per
Use in such Performance Year. Any Products for which DO has paid the DO Purchase
Price, or is not past due on such amounts then owed+ for the DO Purchase Price
(and not just the applicable demo price, if any) in any Performance Year (and DO
has the option (but not the obligation) of prepaying any or all such amounts)
shall count towards the Annual Minimum Performances for such Performance Year
even if such Products have not been shipped to or received by DO in such
Performance Year, provided, however, that as to any such prepayment, CCSI has
been paid at least the Minimum Transfer Price for Products, in such Performance
Year (subject to any subsequent reconciliation for the DO Purchase Price owed to
CCSI, if applicable+). Any prepayment by DO does not mitigate DO's obligation to
use commercially reasonable efforts to market and sell Products as per the terms
of this Agreement. It is understood and agreed that for Products purchased in a
Performance Year for which there has been no determination of the final DO
Purchase Price for such Products, because they have not yet been sold to
customers, DO shall not be deemed to be past due with respect to the portion of
the DO Purchase Price that may be in excess of the Minimum Transfer Price for
Products, and such purchases still count towards the Annual Minimum
Performances.+

      ***For purposes of calculating whether DO has satisfied its Annual Minimum
Performances, the initial Performance Year shall be considered to commence on
the date that is four (4) months after the date hereof (the "Four-Month Date")
and concluding sixteen (16) months after the date hereof. Thereafter, each
subsequent Performance Year shall be considered to commence on the anniversary
date of the Four-Month Date and concluding twelve (12) months after that
anniversary date (such that the end of the fifth Performance Year shall be
deemed to conclude at the end of the Initial

                                       23
<PAGE>

Term). However, any and all Calibration Standards/Charges per Use (excluding
Demo Calibration Standards/Charges per Use and Evaluation Calibration Standards
or Charges per Use) and Devices purchased by DO during the initial four (4)
months of this Agreement shall count towards DO's Annual Minimum Performance for
the initial Performance Year.

      +If such payments owed to CCSI by DO are not subsequently paid to CCSI
when due, then retrospectively, CCSI may terminate this Agreement if such
applicable Annual Minimum Performances are not satisfied.

                  (d)   (i)   the amounts listed in the table below captioned as
                              "Cumulative Annual Minimum Targeted Market
                              Performances" are DO's Cumulative Annual Minimum
                              Targeted Market Performances for the third, fourth
                              and fifth Performance Years, provided, however,
                              that DO's failure to reach such Cumulative Annual
                              Minimum Targeted Market Performances shall not
                              constitute a Default by DO under this Agreement.
                              Subject to the footnotes to the table below, in
                              the event that the cumulative quantity of
                              Cumulative Annual Minimum Targeted Market
                              Performances for Devices to be sold, leased, or
                              loaned-for-use placement within a Targeted Market
                              by DO as of the expiration of any of the
                              Performance Years 3, 4 or 5 is less than the
                              cumulative number of such applicable Devices set
                              forth as the Cumulative Annual Minimum Targeted
                              Market Performances applicable to such Targeted
                              Market for such Performance Year in the following
                              table, and provided DO has met its Annual Minimum
                              Performances for such Performance Year, CCSI shall
                              have the right, but not the obligation, to
                              implement the "Strategic Remediation" as described
                              in clause (ii) below, upon giving DO thirty (30)
                              days prior written notice, provided that such
                              notice is given within thirty (30) days after the
                              expiration of such Performance Year.

                        (ii)  Following DO's receipt of CCSI's thirty (30) day
                              written notice to implement the "Strategic
                              Remediation," the parties shall come together for
                              a strategic meeting for the purpose of devising a
                              six (6) month marketing plan designed to improve
                              sales in the subject Targeted Market. The parties
                              shall agree upon the six (6) month marketing plan
                              within thirty (30) days of the strategic meeting
                              and the six (6) month plan shall commence upon
                              agreement of such plan. The plan shall contain
                              targeted market performances (the "Remediation
                              Goals") to be achieved during the six (6) month
                              plan that shall not exceed what would be a pro
                              rata portion of the Cumulative Annual Minimum
                              Targeted Market Performances that would otherwise
                              be applicable during the period of such six (6)
                              month plan and the shortfall of the preceding
                              year's performance. If actual sales and placement
                              of Devices during the period of such six (6) month
                              plan do not achieve the Remediation Goals, DO will
                              still have until the end of the then-current
                              Performance Year

                                       24
<PAGE>

                              to meet the Cumulative Annual Minimum Targeted
                              Market Performances applicable to such
                              then-current Performance Year. If DO still has not
                              achieved the Cumulative Annual Minimum Targeted
                              Market Performances by the end of such Performance
                              Year, then CCSI shall have the right but not the
                              obligation to terminate DO's license in such
                              Targeted Market (and DO shall be relieved from any
                              obligation or responsibility to market or
                              distribute Devices in such Targeted Market through
                              its OM division and otherwise).

                    CUMULATIVE ANNUAL MINIMUM TARGETED MARKET
                                  PERFORMANCES*

<TABLE>
<CAPTION>
Performance Year**         Cumulative Annual           Cumulative Annual        Cumulative Annual
                           Minimum Performances        Minimum Performances     Performances for
                           for Hospital Devices        for Home Healthcare      Pediatrician Devices
<S>                                 <C>                       <C>                       <C>
         X                          [*]                       [*]                       [*]
         X                          [*]                       [*]                       [*]
         3                          [*]                       [*]                       [*]
         4                          [*]                       [*]                       [*]
         5                          [*]                       [*]                       [*]
</TABLE>

      *No Devices placed by DO with a customer shall be counted or included as a
Device placed by DO for purposes of determining whether DO has satisfied the
Cumulative Annual Minimum Targeted Market Performances for Devices except to the
extent that DO has both (1) paid CCSI, or is not past due on such amounts then
owed,+ for the DO Purchase Price for such Devices (and not just the applicable
demo price) in any Performance Year; and (2) sold, leased or placed in a
loan-for-use placement such Devices into the applicable Targeted Market.

      **For purposes of calculating whether DO has satisfied its Cumulative
Annual Minimum Targeted Market Performances, the initial Performance Year shall
be considered to commence on the date that is four (4) months after the date
hereof (the "Four-Month Date") and concluding sixteen (16) months after the date
hereof. Thereafter, each subsequent Performance Year shall be considered to
commence on the anniversary date of the Four-Month Date and concluding twelve
(12) months after that anniversary date (such that the end of the fifth
Performance Year shall be deemed to conclude at the end of the Initial Term).
However, any and all Devices sold, leased or placed in a loan-for-use placement
by DO (other than as a demo or replacement unit for which DO has not paid the DO
Purchase Price (and not just the demo price, if any) to CCSI) during the initial
four (4) months of this Agreement shall count towards DO's Cumulative Annual
Minimum Targeted Market Performances for the initial Performance Year.

      +If such payments owed to CCSI by DO are not subsequently paid to CCSI
when due, then retrospectively, CCSI may terminate DO's license for the
applicable Targeted Market if such applicable Cumulative Annual Targeted Market
Minimum Performances are not satisfied.

                  (e)   Notwithstanding the foregoing provisions of this
                        paragraph 6 of Section III and the Annual Minimum
                        Performances and/or the Cumulative Annual Minimum
                        Targeted Market Performances requirements thereunder:

                        (i)   The Annual Minimum Performances and/or the
                              Cumulative Annual Minimum Targeted Market
                              Performances requirements are subject to
                              reduction, as may be appropriate, if sales of the
                              Products within the Territory or any applicable
                              Targeted Market (as the case may be) are impaired
                              as a result of the existence of one or more of the

                                       25
<PAGE>

                              factors set forth in Attachment C hereto. The
                              parties agree to cooperate with each other in good
                              faith to determine the appropriate minimum
                              performance requirements for the current or future
                              Performance Year in which such cooperation is
                              undertaken for the Products in such case or cases,
                              including if necessary, a formal conference that
                              will take place among four individuals, two
                              representatives designated by the president or CEO
                              of each party, at least one of whom shall be a
                              senior sales or marketing executive;

                        (ii)  During the Initial Term of this Agreement, in the
                              event that DO satisfies its Annual Minimum
                              Performances for the first two (2) Performance
                              Years hereunder but then subsequently fails to
                              satisfy the Annual Minimum Performances for
                              Performance Years 3 or 4 (each a "Sub Performance
                              Year"), DO shall be entitled to the next
                              additional Performance Year (a "Grace Period
                              Year") to cure any such failure, meaning that CCSI
                              shall not have the right to terminate this
                              Agreement on the basis of DO having failed to
                              satisfy the Annual Minimum Performances for
                              Performance Year 3 or 4 unless and until by the
                              close of the next Performance Year immediately
                              following such Sub Performance Year DO shall have
                              failed to purchase (subject to all prior footnotes
                              hereunder) enough Product to satisfy both the
                              Annual Minimum Performances for the Grace Period
                              Year and the shortfall by which DO had failed to
                              satisfy the Annual Minimum Performances for the
                              immediately preceding Sub Performance Year. All
                              Annual Minimum Performances, as such may be
                              adjusted pursuant to this subparagraph (e), must
                              be satisfied by the end of the Initial Term, or
                              the Initial Term of this Agreement shall expire;
                              and

                        (iii) No more frequently than once each Performance
                              Year, if DO believes that any of the assumptions
                              underlying the Annual Minimum Performances and/or
                              the Cumulative Annual Minimum Targeted Market
                              Performances (including any assumptions about
                              market size or market penetration for any of the
                              Targeted Markets) have been shown to be not
                              accurate, DO may request that CCSI revisit the
                              Annual Minimum Performances and/or the Cumulative
                              Annual Minimum Targeted Market Performances. CCSI
                              agrees to consider such request but shall be under
                              no obligation under this subparagraph to agree to
                              any specific change in the Annual Minimum
                              Performances and/or the Cumulative Annual Minimum
                              Targeted Market Performances.

            7. Terms of Payment. (a) CCSI shall invoice DO for Products,
promptly after Products are shipped to DO, as follows: for all Products other
than

                                       26
<PAGE>

Calibration Standards or Charges per Use, Demo Calibration Standards/Charges per
Use and Evaluation Calibration Standards/Charges per Use, at the Minimum
Transfer Price for such Products as set forth in Attachment A hereto; for
Calibration Standards or Charges per Use, at the Minimum Transfer Price as set
forth in Attachment A, provided, however, that the invoice shall also state
separately the Initial Transfer Price payable within 30 days, as provided for in
paragraph 5(e)(vii) of Section III and Attachment A, and the remainder of the
invoiced amount will not be due until the earlier of 365 days after invoicing or
the time when a Reconciled Amount is due pursuant to the following subparagraph;
and for Product Components and Accessories, Software, Demo Calibration
Standards/Charges per Use, and Evaluation Calibration Standards/Charges per Use,
at the prices set forth in Attachment A. Except for the special provision in the
preceding sentence relating to the portion of the invoice price for Calibration
Standards or Charges per Use in excess of the Initial Transfer Price, DO shall
pay all such invoices within thirty (30) days after receipt of same.

                  (b) Within thirty (30) days following the close of each
quarter, DO shall calculate the DO Purchase Price as set forth in paragraph 5 of
Section III and Attachment A for Products sold, leased or placed in a
loan-for-use placement during such just-completed quarter. DO shall also
calculate the difference between the DO Purchase Price owed to CCSI and the
Minimum Transfer Price stated on the Firm Purchase Order paid to CCSI for
Products other than Calibration Standards/Charges per Use, and the difference
between the DO Purchase Price owed to CCSI and either the Initial Transfer Price
or the Minimum Transfer Price stated on the Firm Purchase Order paid for
Calibration Standards/Charges per Use. Each such difference is referred to
herein as a "Reconciled Amount." Within three (3) business days after completing
such calculations, DO shall then remit to CCSI the net sum of such Reconciled
Amounts. DO may deduct any credit due DO from future balances due to CCSI. With
each such quarterly payment, DO shall deliver to CCSI a quarterly report that
includes at least the following information: (i) Total quantity of each Product
sold by DO; (ii)Total amount invoiced for each Product; and (iii)Total
compensation payable to CCSI.

                  (c) With respect to any Calibration Standard/Charges per Use
that is maintained in inventory by DO for more than one year, DO shall be
obligated to pay to CCSI the balance due between the Minimum Transfer Price and
the Initial Transfer Price stated on the Firm Purchase Order for such Products.
Such payments shall be made 365 days after delivery to DO of such Products. Once
such payment is made, and the Calibration Standard/Charges per Use is
subsequently sold, the Reconciled Amount for such sale shall be the difference
between the DO Purchase Price and the Minimum Transfer Price previously paid to
CCSI. However, to satisfy Annual Minimum Performances or Annual Minimum Targeted
Market Performances, DO must have paid CCSI any such balance due within the
Applicable Performance Year.

                  (d) All payments payable by DO hereunder shall be paid to CCSI
in U.S. dollars by wire transfer or by such other method mutually agreeable to
the parties, to such bank account as CCSI shall designate in writing (with
appropriate wiring instructions, if applicable) within a reasonable time prior
to such due date. DO shall provide CCSI with notice of each such wire transfer.
Any payments received by CCSI shall be applied first to the satisfaction of any
unpaid accrued interest and then to the satisfaction of any unpaid principal.

                                       27
<PAGE>

                  (e) In the event that any payment due hereunder is not made
when due, the payment shall accrue interest beginning on the first day after the
payment was due, calculated at the annual rate of the sum of (i) one percent
(1%) plus, (ii) the prime interest rate quoted by Citibank, N.A., New York, New
York, on the date such payment is due, or on the date payment is made, whichever
is higher, the interest being compounded on the last day of each calendar month;
provided that in no event shall said annual rate exceed the maximum legal
interest rate for corporations. Such payment when made shall be accompanied by
all interest accrued. Said interest and the payment and acceptance thereof shall
not negate or waive the right of CCSI or DO to any other remedy, legal or
equitable, to which CCSI or DO may be entitled under this Agreement because of
the delinquency of the payment.

                  (f) DO shall keep full and accurate books of account
containing all particulars that may be necessary for the purpose of calculating
all payments due to CCSI. Such books of account shall be kept by DO with all
necessary supporting data and shall, for the two (2) years next following the
end of the calendar year to which each shall pertain, be open for audit by an
independent certified accountant selected by CCSI and reasonably acceptable to
DO upon reasonable notice during normal business hours at CCSI's expense for the
sole purpose of verifying payments or compliance with this Agreement, but in no
event more than once in each calendar year. All information and data offered
shall be used only for the purpose of verifying payments, and any post-audit
claims shall be paid only if made by CCSI within two (2) years after CCSI's
receipt of payment pursuant to this paragraph 7. CCSI shall disclose to DO the
results of the audit and in the event that such audit indicates that in any
calendar year that the payments which should have been paid by DO are at least
ten percent (10%) greater than those which were actually paid by DO, then DO
shall pay the cost of such inspection. In all other instances, CCSI shall be
responsible for such payment. All underpayments and/or overpayments are due and
payable to the respective party within three (3) business days after
computation.

      8. Delivery. The Products shall be shipped to DO's place of destination,
as described herein, at CCSI's expense. DO shall be responsible for obtaining
any necessary insurance during this shipment. Title to and risk of loss of the
Products shall pass to DO upon shipment of the Products from CCSI or CCSI's
third-party manufacturer's manufacturing facilities to DO. The place of
destination for all Products purchased by DO shall be a single location in the
U.S. to be designated by DO. CCSI represents that its third-party manufacturer
is obligated to deliver to CCSI at CCSI's request a "Certificate of Conformance"
to Specifications for each Product manufactured by that third-party manufacturer
for CCSI. CCSI agrees to provide delivery of a copy to DO of such a "Certificate
of Conformance" for each Product manufactured by its third-party manufacturer
for CCSI.

      9. CCSI Failure to Supply.

            (a)   Except in connection with and to the extent of a Force Majeure
                  Event, and subject to paragraph 4 of this Section III and
                  Attachment A, CCSI shall fail to cause to be delivered the
                  type and quantity of Products specified in any Firm Purchase
                  Order (and, in the case of Firm Purchase Orders exceeding the
                  forecasted quantity, expressly accepted by CCSI), delivered in
                  a timely manner, and (i)

                                       28
<PAGE>

                  such failure shall continue for sixty (60) days following
                  written notice of such failure from DO, or (ii) such failure
                  shall occur and continue for at least thirty (30) days
                  following written notice of such failure from DO more than
                  three (3) times in any eighteen (18) month period (provided
                  that only one (1) event shall count toward such total of three
                  (3) in any three (3) month period), CCSI shall be deemed to be
                  in Default (which Default shall not be subject to cure under
                  paragraph 2 of Section VI of this Agreement or otherwise).
                  Notwithstanding the foregoing, in the event DO terminates this
                  Agreement, it will cooperate with CCSI to use commercially
                  reasonable efforts to implement the Exit Transition.

            (b)   CCSI shall not be liable in any respect (or be subject to
                  termination of this Agreement), for any failure of supply or
                  delay in supply, to the extent such failure or delay shall
                  have been due to a Force Majeure Event. Such failure or delay
                  shall not be deemed a Default by CCSI. In any such case,
                  prompt written notice shall be given by CCSI to DO of the
                  existence of such cause and of readiness to resume performance
                  and CCSI shall use commercially reasonable efforts to rectify
                  the Force Majeure Event. It is understood that neither party
                  shall be required to settle a labor dispute against its will.

            (c)   In the event that CCSI is unable to satisfy DO's requirements
                  for Products (whether or not caused by a Force Majeure Event),
                  CCSI shall allocate any available supply of Products to DO
                  [*]. In addition, the parties recognize that, depending on the
                  success of DO's efforts, DO may experience insufficient
                  supplies of Products, possibly due to CCSI's failure to supply
                  due to a Force Majeure Event or for any other reason (other
                  than DO's failure to order Product within the required lead
                  times hereunder in quantities which, had such orders been
                  filled on a timely basis by CCSI, would have provided DO with
                  adequate quantities of Product necessary for DO to satisfy its
                  Annual Minimum Performances and Cumulative Annual Minimum
                  Target Market Performances for the applicable period in
                  question), but also even if all allowable orders are being
                  placed and filled on a timely basis. In any such event, DO
                  shall have the right during such periods of insufficient
                  supplies to curtail its marketing and distribution activities
                  to match the availability of Products, and such curtailment
                  should not be deemed a Default by DO.

      10. Acceptance. DO shall have the right (but not the obligation) at its
own expense to inspect Products for compliance with the Specifications at the
Product Inspection and Acceptance Location during regular business hours on a
schedule reasonably agreed upon by DO and CCSI. Failure to give written notice
of rejection of the Products prior to the shipment of such Products to DO shall
be deemed to be acceptance of such Products by DO, but shall not constitute a
waiver or release by DO of any of CCSI's product warranties herein, and shall
not be an indication that DO has

                                       29
<PAGE>

determined that such warranties are satisfied, as such Products will be under
the warranty of paragraph 1 of Section IV from the date of shipment to DO.
Following receipt of DO's written notice of rejection of Products prior to
shipment to DO, at DO's request, CCSI shall use commercially reasonable efforts
to have available for inspection and shipment to DO 100% of the necessary
replacement (conforming) Products at the Product Inspection and Acceptance
Location within thirty (30) days of receiving such notice.

      11. Customer Support. CCSI and DO shall provide customer support for the
Products as set forth in Attachment D hereto.

IV. COVENANTS, REPRESENTATIONS AND WARRANTIES

      1. Product Warranty. CCSI warrants that the Products shall be free from
defects in material and workmanship and will conform to the Specifications
(which among other things include that the manufacture, assembly, labeling and
packaging of the Products have been performed under the regulatory standards of
FDA QSR and GMP), in each case for a period of eighteen (18) months from the
date of shipment to DO of Products hereunder. If any Product so shipped, or
replacement part for the Product during the Product's warranty period, does not
conform as aforesaid, CCSI will, at its sole cost and expense (excluding
reimbursement of inbound freight charges but including outbound freight
charges), and within a reasonable period of time not to exceed thirty-five (35)
days, repair or replace (at the choice of CCSI) such non-conforming Product, or
replacement part. The foregoing warranty does not extend to normal wear and
tear, damage caused by the end user, Product misused or modified in a manner not
authorized by the Specifications of the Product or by CCSI, or Product repaired
by persons other than CCSI or its authorized manufacturers. Subject to the
provisions of Section V below, it is understood and agreed by the parties herein
that such repair or replacement shall be the exclusive remedy for DO with
respect to a breach of this warranty, and that a breach of this warranty shall
not be considered a Default provided that CCSI timely complies with the
repair/replacement remedy specified above. It is also understood and agreed that
such warranty for any Devices shall be immediately void and of no further force
and effect if the Device is not calibrated with the Calibration Standard
(TLc-Lensette(trademark)). CCSI warrants that the medium upon which the Software
is provided by CCSI to DO shall be free from defects in material and workmanship
under normal use for a period of 90 days from the date of DO's receipt thereof.
Subject to the provisions of Section V below, it is understood and agreed that
DO's exclusive remedy for breach by CCSI of this limited warranty shall be
replacement of any defective medium within fifteen (15) days following its
return to CCSI and that a breach of this warranty shall not be considered a
Default provided that CCSI timely complies with such replacement remedy. Except
as expressly stated herein, CCSI disclaims all warranties, whether express or
implied, with respect to the Products, including, without limitation, any
warranties of merchantability or fitness for a particular purpose.

      2. Legal Compliance. CCSI agrees to use its best efforts to cause the
manufacture and distribution of the Products to DO to be in compliance with the
provisions of all applicable U.S., state and local statutes, regulations and
other governmental requirements including, but not limited to, the medical
device provisions of the Federal Food, Drug and Cosmetic Act and regulations
promulgated by the FDA

                                       30
<PAGE>

relating to clearance for commercial distribution, labeling and good
manufacturing practices.

      3. General Representations. CCSI represents and warrants to DO that:

            (a)   CCSI is a corporation duly organized, validly existing and in
                  good standing under the laws of the State of New York and is
                  duly licensed or qualified to do business as a foreign
                  corporation in each jurisdiction in which the nature of the
                  business transacted by it or the character of the property
                  owned or leased by it makes such licensing or qualification by
                  it necessary, except to the extent that such failure to be so
                  licensed or qualified does not have a material adverse affect
                  on CCSI. CCSI has all requisite corporate power and authority
                  to own and operate its properties and to carry on its business
                  as it is now being conducted and to execute and deliver this
                  Agreement and to perform its obligations hereunder.

            (b)   The execution and delivery by CCSI of this Agreement and the
                  Confidence Agreement entered into between CCSI and Ohmeda,
                  Inc. (predecessor of interest to DO) dated as of October 16,
                  1998 (the "Confidence Agreement") and the consummation by it
                  of the other transactions contemplated hereby and thereby have
                  been duly authorized by all necessary corporate action of
                  CCSI. This Agreement and the Confidence Agreement constitute
                  the legal, valid and binding obligation of CCSI, enforceable
                  against it in accordance with their terms, except to the
                  extent that such enforcement may be limited by applicable
                  bankruptcy, insolvency and other similar laws affecting
                  creditors' rights generally.

            (c)   The execution and delivery by CCSI of this Agreement and the
                  Confidence Agreement and the performance of its obligations
                  hereunder and thereunder does not violate (i) the Certificate
                  of Incorporation or By-Laws of CCSI, or (ii) any law, rule,
                  regulation, judgment, award or decree of any court or other
                  governmental authority, or (iii) except for the Medical
                  International Agreement, any note, indenture, mortgage,
                  agreement or other instrument to which CCSI is a party, or by
                  which CCSI or any of its properties or assets is bound, or
                  conflict with, result in a breach of or constitute (with due
                  notice or lapse of time or both) a default under, any such
                  note, indenture, mortgage, agreement or other instrument, or
                  result in the creation or imposition of any lien of any nature
                  whatsoever upon any of the properties or assets of CCSI,
                  limited in the case of clauses (ii) or (iii), to those matters
                  which would have a material adverse effect on CCSI or the
                  transaction contemplated hereby. As to the Medical Instruments
                  Agreement, CCSI represents, warrants and covenants that it is
                  free to terminate such agreement without penalty upon thirty
                  (30) days' prior written notice to Medical Instruments, that
                  it shall immediately provide such written notice of
                  termination to Medical Instruments upon execution of this

                                       31
<PAGE>

                  Agreement, such termination to be effective in thirty (30)
                  days, and that in the event of any claim by Medical
                  Instruments against DO, DO shall be defended, indemnified and
                  held harmless by CCSI in accordance with the procedures set
                  forth in paragraph 5 of Section V of this Agreement.

            (d)   No material authorization, approval, order, license, permit,
                  franchise or consent and no material registration,
                  declaration, notice or filing by or with any court,
                  administrative agency or other governmental authority is
                  required for the execution and delivery by CCSI of this
                  Agreement and the Confidence Agreement or the consummation by
                  it of the transactions contemplated hereby and thereby.

            (e)   The Device and the Calibration Standards have all necessary
                  FDA clearances and approvals so that OM may begin distribution
                  of these specific Products immediately upon execution of this
                  Agreement.

            (f)   CCSI is not aware of any infringement by a third party of any
                  of the United States patents identified in paragraph 2(b) of
                  Section III.

            (g)   The representations and warranties contained in this paragraph
                  3 of Section IV do not contain any untrue statement of a
                  material fact, or omit to state a material fact necessary to
                  make the statements contained therein not misleading.

      4. Non-Compete Covenants. During the Term of this Agreement, (i) DO shall
not directly or indirectly market, sell or distribute any other product for the
noninvasive measurement or detection of newborn bilirubinemia (infant jaundice),
nor will DO permit any of DO's Affiliates to do so, and (ii) CCSI shall not
directly or indirectly market, sell or distribute the Products or any other
product for the monitoring of newborn bilirubinemia (infant jaundice), or
treatment of same using photo-elevtive equipment in the Targeted Markets within
the Territory, except as may be expressly provided otherwise herein, nor will
CCSI permit any of its Affiliates to do so, nor will CCSI knowingly permit any
third party to directly or indirectly market, sell or distribute the Products in
the Targeted Markets within the Territory for use in monitoring newborn
bilirubinemia (infant jaundice), nor will CCSI sell the Products to any third
party that CCSI knows intends to divert the Products for use or sale in the
Targeted Markets within the Territory for use in monitoring newborn
bilirubinemia (infant jaundice). Without limiting the generality of CCSI's
obligation under clause (ii) of this paragraph, CCSI specifically agrees that if
at any time during the Term of this Agreement it markets, sells or distributes
any product (including any device and/or calibration standard or other
disposable) for the monitoring of newborn bilirubinemia (infant jaundice) in a
market within the Territory other than the Targeted Markets, or authorizes any
third party to do so, CCSI shall take all reasonably necessary steps, including
without limitation labeling, product design, regulatory approvals, and/or
distributor training, to prevent such products from being sold into or marketed
for use in the monitoring of newborn bilirubinemia (infant jaundice) in the

                                       32
<PAGE>

Targeted Markets within the Territory. DO and DO's Affiliates may market, sell
and distribute (a) other stand-alone products for the invasive measurement or
detection of newborn bilirubinemia (infant jaundice), provided, however, that
the marketing, sales and distribution of any product for such invasive
measurement or detection is conducted by personnel other than personnel
conducting the marketing, sales and distribution of the Products, and (b) other
products that use invasive detection techniques for an array of conditions
including newborn bilirubinemia (infant jaundice), provided that (i) DO may not
develop or introduce such a product to the market, (ii) DO believes that it must
offer such a product or products to be competitive, and (iii) an equivalent
product, taking into account all aspects of medical, commercial and regulatory
factors, is not available from CCSI.

      5. Marketing and Distribution Efforts. Subject to the second sentence of
paragraph 8 of this Section IV, DO agrees to use commercially reasonable efforts
to implement its Marketing and Distribution Plan for the Targeted Markets within
the Territory and to provide sales, marketing, training, in-servicing and
distribution coverage for the Products in the Targeted Markets within the
Territory. If and when Charges per Use becomes legally marketable and
commercially available, DO may market, sell and distribute Calibration Standards
and/or Charges per Use in such ratios as DO may determine.

      6. Marketing Abilities. DO warrants and represents that OM, together with
relevant supporting personnel and resources from DO within the home healthcare
marketing channel, has the ability to provide sales, marketing, training,
in-servicing and distribution coverage for the Products in the Targeted Markets
within the Territory.

      7. Training. Subject to the second sentence of paragraph 8 of this Section
IV, DO agrees to provide applicable Product Information in accordance with
Attachment B to DO's representatives and dealers to whom DO distributes the
Products in the Targeted Markets within the Territory and to use commercially
reasonable efforts to ensure, within a reasonable period of time, that
distribution representatives and dealers of DO to whom DO distributes Products
are provided training reasonably equivalent to that which DO provides to its own
sales force, as described in its Marketing and Distribution Plan, which training
includes information regarding in-servicing of customers and end users.

      8. DO's Performance by OM. The legal parties to this Agreement are CCSI
and DO, each of which shall be liable for its non-performance of all of its
obligations under this Agreement, subject to the limitation of liability set
forth in paragraph 6 of Section V of this Agreement. However, notwithstanding
the foregoing or any other provision hereunder to the contrary, DO shall have no
obligation hereunder (and is not expected) to utilize any of its marketing or
distribution personnel or resources in the performance of any of its obligations
under this Agreement other than (i) its OM division, and (ii) its home
healthcare marketing channel (and with CCSI's acknowledgment and agreement that
OM may, but is not obligated to, assume management of that home healthcare
marketing channel at some time in the future).

      9. Records. DO agrees to maintain proper books and records (including OM's
books and records) with respect to the Products, such books and records to be
kept in accordance with sound accounting principles consistent with DO's ongoing

                                       33
<PAGE>

bookkeeping practices so as to accurately reflect DO's sales and revenue
information relating to the Products.

      10. Force Majeure. DO shall not be liable in any respect (or be subject to
termination of this Agreement), for delay or failure to perform any of DO's
obligations under this Agreement (including OM's obligations to market and
distribute the Products) to the extent that such failure or delay shall have
been due to a Force Majeure Event. In any such case, prompt notice shall be
given by DO to CCSI of the existence of such cause and of readiness to resume
performance and DO shall use commercially reasonable efforts to rectify such
Force Majeure Event. It is understood that neither party shall be required to
settle a labor dispute against its will.

      11. General Representations. DO represents and warrants to CCSI that:

            (a)   DO is a corporation duly organized, validly existing and in
                  good standing under the laws of the State of Delaware and is
                  duly licensed or qualified to do business as a foreign
                  corporation in each jurisdiction in which the nature of the
                  business transacted by it or the character of the property
                  owned or leased by it makes such licensing or qualification by
                  it necessary, except to the extent that such failure to be so
                  licensed or qualified does not have a material adverse affect
                  on DO. DO has all requisite corporate power and authority to
                  own and operate its properties and to carry on its business as
                  it is now being conducted and to execute and deliver this
                  Agreement and to perform its obligations hereunder.

            (b)   The execution and delivery by DO of this Agreement and the
                  Confidence Agreement and the consummation by it of the other
                  transactions contemplated hereby and thereby have been duly
                  authorized by all necessary corporate action of DO. This
                  Agreement and the Confidence Agreement constitute the legal,
                  valid and binding obligation of DO, enforceable against it in
                  accordance with their terms, except to the extent that such
                  enforcement may be limited by applicable bankruptcy,
                  insolvency and other similar laws affecting creditors' rights
                  generally.

            (c)   The execution and delivery by DO of this Agreement and the
                  Confidence Agreement and the performance of its obligations
                  hereunder and thereunder does not violate (i) the Certificate
                  of Incorporation or By-Laws of DO, or (ii) any law, rule,
                  regulation, judgment, award or decree of any court or other
                  governmental authority, or (iii) any note, indenture,
                  mortgage, agreement or other instrument to which DO is a
                  party, or by which DO or any of its properties or assets is
                  bound, or conflict with, result in a breach of or constitute
                  (with due notice or lapse of time or both) a default under,
                  any such note, indenture, mortgage, agreement or other
                  instrument, or result in the creation or imposition of any
                  lien of any nature whatsoever upon any of the properties or
                  assets of DO, limited in the case of clauses (ii) or (iii), to
                  those matters which

                                       34
<PAGE>

                  would have a material adverse effect on DO or the transaction
                  contemplated hereby.

            (d)   No material authorization, approval, order, license, permit,
                  franchise or consent and no material registration,
                  declaration, notice or filing by or with any court,
                  administrative agency or other governmental authority is
                  required for the execution and delivery by DO of this
                  Agreement and the Confidence Agreement or the consummation by
                  it of the transactions contemplated hereby and thereby.

            (e)   OM is a division of DO.

            (f)   The representations and warranties contained in this paragraph
                  11 of Section IV do not contain any untrue statement of a
                  material fact, or omit to state a material fact necessary to
                  make the statements contained therein not misleading.

      12. Third Party Infringement. In the event of infringement of any CCSI
U.S. Patent on the Device or on the Calibration Standard by a third-party whose
infringing sales in the Targeted Markets within the Territory for use in
monitoring newborn bilirubinemia (infant jaundice) constitute or, in the good
faith judgment of the parties and as agreed to by them, highly probably will
constitute [*] or more on an annualized basis of DO's total annual sales of
these Products in the Targeted Markets within the Territory: (a) CCSI and DO
shall jointly bring and actively prosecute a civil action against the infringing
third-party; or, at DO's election made before the bringing of any civil action
and made within thirty (30) days of receiving notice of CCSI's intent to file
such an action, (b) CCSI shall bring a civil action in CCSI's name alone or in
the name of both CCSI and DO against the infringing third-party and DO shall
assign to CCSI DO's right to sue for and recover on DO's claims for past,
present and future damages against that infringing third-party relating to such
infringement and CCSI shall bear all of the expenses of such civil action and
retain all of the monetary recovery in that civil action. If DO elects option
(a) above, CCSI shall be responsible at its expense for and control the
preparation and trial by counsel of its choice of the patent liability issues of
validity, enforceability and infringement and the damage issues of CCSI's damage
claim and DO shall be responsible at its expense for and control the preparation
and trial by counsel of its choice of the damage issues of DO's damage claim and
the parties shall share in the sum total of any monetary recovery, or settlement
agreed to in good faith by both parties, in that action, after reimbursement of
the expenses (other than internal costs) incurred in that action by the parties,
with CCSI's share being [*] and DO's share being [*]. If DO elects option (b)
above, DO shall cooperate reasonably with CCSI in such action at CCSI's request
and expense. Nothing herein shall preclude CCSI from brining a civil action
against such infringing third-party notwithstanding that the [*] or more percent
of annual sales requirement is not met.

      The foregoing provisions also shall apply (i) to any infringement action
that CCSI chooses to bring where the infringing sales do not meet the [*] or
more of annual sales requirements; and (ii) to a counterclaim for patent
infringement in the event of a declaratory judgment action being commenced by
such a third-party infringer, except

                                       35
<PAGE>

that the [*] or more of annual sales requirement shall not be applicable to such
declaratory judgment. DO shall not charge any third-party, directly or
indirectly, with infringement of any CCSI patent so as to create a case or
controversy permitting that third-party to bring such a declaratory judgment
action.

      Each party shall promptly give notice to the other of any such
infringement or threatened infringement which shall at any time come to either
party's knowledge.

      13. Other CCSI Covenants.

            (a)   LED and Modified Devices. CCSI will use its best efforts to
                  develop a mass manufacturing prototype for the LED Device
                  within one (1) year of the date of this Agreement. CCSI will
                  also attempt to obtain FDA clearance as soon as reasonably
                  possible. If FDA clearances are obtained for the LED Device,
                  CCSI will manufacture or cause a third party manufacturer to
                  manufacture the LED Device for availability to DO under the
                  terms of this Agreement. CCSI shall use commercially
                  reasonable efforts to complete work on the Modified Devices as
                  soon as reasonably possible. If regulatory, including FDA and
                  UL clearances, are obtained, CCSI shall manufacture or cause a
                  third-party manufacturer to manufacture such Devices for
                  availability to DO under the terms of this Agreement. Failure
                  to obtain FDA or UL clearances for such LED Device or Modified
                  Devices will not be a breach of this Agreement as long as such
                  best efforts or commercially reasonable efforts required by
                  this Agreement, respectively as the case may be, are made by
                  CCSI.

            (b)   Y2K. The transition to the Year 2000 will not affect the
                  correct functioning or performance of any date or time-related
                  functions contained within any Products.

      14. DO Subdistributors and Agents. DO shall be entitled to use
subdistributors and/or third-party agents in respect of satisfying its
obligations hereunder regarding solely the marketing, distribution, servicing
and training in respect of the Products. Any such subdistributor or third-party
agent shall only be authorized by DO to market, sell and distribute the Products
in the Targeted Markets within the Territory for use in monitoring newborn
bilirubinemia (infant jaundice) in accordance with DO's license under paragraph
2 of Section III. Any such subdistributor or third-party agent who receives any
information that is specifically and clearly identified or marked by CCSI as
CCSI confidential information (and, if communicated orally, confirmed in a
single written document to DO) with respect to the Products or CCSI, before
receiving such CCSI confidential information from CCSI or DO, shall have signed
a confidentiality form agreement to be prepared by CCSI that will obligate such
subdistributor or third-party agent to protect the CCSI confidential
information. DO will undertake to have this agreement signed and provided to
CCSI, but shall have no obligation to enforce any such agreement, provided,
however, subject to paragraph 7 of Section V, DO will not disclose any CCSI
confidential information to such subdistributor or third-party agent who has not
signed such an agreement. CCSI shall have the right to enforce such agreements
with any such

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<PAGE>

subdistributor and/or third-party agent and shall be a third-party beneficiary
of any further confidentiality agreement between DO and any such subdistributor
and/or third-party agent. The breach by any such subdistributor and/or
third-party agent of its confidentiality obligations hereunder or under the
terms of its appointment as a subdistributor and/or third-party agent shall not
be deemed to be a Default by DO under this Agreement, provided, however, that DO
will cooperate with CCSI should CCSI deem it necessary to take all reasonably
necessary steps to address such breach, including where appropriate termination
by DO of its supply of Products to such subdistributor and/or third-party agent.

V. INDEMNIFICATION AND CONFIDENTIALITY

      1. CCSI General Indemnification. CCSI shall indemnify, defend and hold DO,
its officers, directors, shareholders and employees harmless from and against
any and all claims, demands, actions, and suits ("Claims") made or brought by
third parties (unaffiliated with DO) for any resulting losses, liabilities,
damages, injuries, fines, penalties, costs and expenses, including, without
limitation, court costs and reasonable fees of attorneys and other professionals
and experts retained for trial and on appeal where the Claim is based on (i) any
material breach by CCSI of the warranties set forth herein (or the warranties
made or approved by CCSI, if any, set forth in the Product Information) or any
material breach by CCSI in the observance or performance of any of its
obligations pursuant to this Agreement or the Confidence Agreement, (ii) the
negligent handling of the Products by CCSI, (iii) defects of the Products in
design, manufacture, materials or workmanship, (iv) any incorrect or inadequate
warning labels or written instructions relating to the use, handling or function
of the Products that accompany the Products when shipped, or (v) any other Claim
based on any theory of product liability not falling within clauses (i) through
(iv) other than one arising out of or based upon DO's negligent, reckless or
willful misconduct. DO shall give CCSI prompt written notice of any such Claim.

      2. DO General Indemnification. DO shall indemnify, defend and hold CCSI,
its officers, directors, shareholders and employees harmless from and against
any and all Claims made or brought by third parties (unaffiliated with CCSI) for
any resulting losses, liabilities, damages, injuries, fines, penalties, costs
and expenses, including, without limitation, court costs and reasonable fees of
attorneys and other professionals and experts retained for trial and on appeal,
where the Claim is based on (i) any material breach by DO of the warranties set
forth herein or any material breach by DO in the observance or performance of
any of its obligations pursuant to this Agreement and the Confidence Agreement,
(ii) claims whether written or oral made by DO or its subdistributors or
third-party agents relating to the Products in its advertising, publicity,
promotion, distribution or sale of the Products where such claims were outside
the scope of the Product Information made or approved by CCSI and not otherwise
made or approved in writing by CCSI, (iii) the negligent handling of the
Products by DO, or (iv) failure by DO or any of its subdistributors or third
party agents who market the Products to comply with applicable FDA regulatory
requirements. CCSI shall give DO prompt written notice of any such Claim.

      3. CCSI Intellectual Property Indemnification. CCSI shall indemnify,
defend and hold DO, its officers, directors, shareholders and employees harmless
from and against

                                       37
<PAGE>

any and all Claims made or brought by third parties (unaffiliated with DO)
arising out of or relating to any infringement or claim of infringement of
patents, trademarks, copyrights, or trade secrets by (i) any Products, (ii) any
portion of any labeling affixed to any Products at CCSI's request, (iii) trade
marks or service marks owned or used by CCSI to name or identify itself or any
of its products, including the Products, (iv) any operating manuals,
instructions for use or licensing folder for software used in connection with
the Products that accompany the Products when shipped, and/or (v) any portion of
any advertising, publicity or promotional material published by or at CCSI's
request (but not as to any trademarks or service marks owned or used by DO or
its subdistributors or third party agents to name or identify itself or any of
its products other than the Products). DO shall give CCSI prompt written notice
of any such Claim.

      4. DO Intellectual Property Indemnification. DO shall indemnify, defend
and hold CCSI, its officers, directors, shareholders and employees harmless from
and against any and all Claims made or brought by third parties (unaffiliated
with CCSI) arising out of or relating to infringement or claim of infringement
of trademarks or copyrights by (i) any of DO's products other than the Products,
(ii) any portion of any labeling affixed to any Products at DO's request, (iii)
trade marks or service marks owned or used by DO to name or identify itself or
any of DO's products (other than the Products), (iv) any portion of any
advertising, publicity or promotional material published by or at DO's request
(but not as to any trademarks or service marks owned or used by CCSI to name or
identify itself or any of its products, including the Products). CCSI shall give
DO prompt written notice of any such Claim.

      5. Defense of Third Party Claims. A party (the "Indemnifying Party")
indemnifying another party (the "Indemnified Party") pursuant to this Agreement
shall have the right, in its discretion and at its election, to assume and
control the defense of any Claim provided that the Indemnifying Party notifies
the Indemnified Party of such election within a reasonable time period under the
circumstances. The Indemnified Party if notified of the Indemnifying Party's
election to do so within such reasonable time frame, will permit the
Indemnifying Party to assume and control the defense of such Claim in the name
of the Indemnified Party in any appropriate administrative or judicial
proceedings and will take whatever actions may be reasonably requested of the
Indemnified Party to permit the Indemnifying Party to conduct such defense and
to settle or to obtain an adjudication of such Claim on the merits, including
the signing of pleadings and other document, if necessary; provided, however,
that the Indemnifying Party shall defend the Claim with counsel reasonably
satisfactory to the Indemnified Party and provide the Indemnified Party with
evidence reasonably satisfactory to the Indemnified Party that the Indemnifying
Party can satisfy the Claim if it is upheld. In addition to the liability for
ultimate settlement or judgment, if any, arising out of any such Claim under
this Agreement, the Indemnifying Party shall be solely responsible for all the
expenses incurred in connection with such defense, regardless of the outcome.
However, the Indemnifying Party shall not be responsible for any expenses,
including attorneys' fees and costs, incurred by the Indemnified Party to
monitor the defense of the Claim by the Indemnifying Party. In the event that
the Indemnifying Party does not elect to assume the defense of any such Claim
under the terms of this Agreement, the Indemnified Party shall be entitled to
conduct such defense, and to settle such Claim (but such settlement, in those
cases where the Indemnifying Party has acknowledged and confirmed its
indemnification obligation, including its obligation to indemnify for any
settlement entered into with its

                                       38
<PAGE>

consent, shall be with the consent of the Indemnifying Party), and the
Indemnifying Party's indemnification obligation under this Agreement shall apply
to such defense or settlement.

      6. Damages.

            (a)   Except as provided in subparagraph (b) of this paragraph 6 of
                  Section V, neither party shall be liable to the other party
                  for special, incidental, consequential, indirect or punitive
                  damages. Without limiting the generality of the foregoing
                  sentence, DO shall not be liable to CCSI for any consequential
                  damages for DO's failure to successfully market and distribute
                  the Products.

            (b)   A party shall not be entitled to rely upon or receive the
                  benefit of the limitation on damages set forth in subparagraph
                  (a) of this paragraph 6 of Section V if such party: (i)
                  terminates this Agreement or the license for any Targeted
                  Market prior to the expiration thereof, other than as
                  termination is expressly permitted by this Agreement in
                  paragraph 6 of Section III or paragraph 2 of Section VI, or
                  violates the Agreement with respect to DO's option for the
                  Extended Term as provided in paragraph 1 of Section VI; (ii)
                  violates its respective non-compete covenant as set forth in
                  paragraph 4 of Section IV; or (iii) violates its obligation to
                  protect the other party's Confidential Information, as set
                  forth in paragraph 14 of Section IV, paragraphs 7, 8, and 10
                  of this Section V, and in the Confidence Agreement.

      7. CCSI Confidential Information. DO acknowledges that all technical,
financial, marketing, or sales information and business plans disclosed by CCSI
to DO relating to the Products, together with any other information designated
as confidential and provided by CCSI to DO hereunder, is confidential
proprietary information and shall remain the exclusive property of CCSI (the
"CCSI Confidential Information"). Except as otherwise expressly provided in this
Agreement, DO shall not disclose or use CCSI Confidential Information for any
purpose other than the performance of its obligations pursuant to, or to enforce
its rights under this Agreement, without the prior written consent of CCSI, and
in no event shall DO use such information to reverse engineer the Products. DO's
obligations under this paragraph 7 of Section V and under the Confidence
Agreement shall survive the termination of each of such agreements.

      8. DO Confidential Information. CCSI acknowledges that all technical,
financial, marketing, or sales information and business plans disclosed by DO to
CCSI relating to the Products, together with any other information designated as
confidential and provided by DO to CCSI hereunder is confidential proprietary
information and shall remain the exclusive property of DO (the "DO Confidential
Information"). Except as otherwise expressly provided in this Agreement, CCSI
shall not disclose or use DO Confidential Information for any purpose other than
the performance of its obligations pursuant to, or to enforce its rights under
this Agreement, without the prior written consent of DO. CCSI's obligations
under this paragraph 8 of Section V and under the Confidence Agreement shall
survive the termination of each of such agreements.

                                       39
<PAGE>

      9. Exclusions. "CCSI Confidential Information" and "DO Confidential
Information," as those terms are defined above, shall not include information
which:

            (a)   at the time of disclosure by one party to the other party was
                  in the public domain;

            (b)   after disclosure by one party to the other party becomes part
                  of the public domain by publication or otherwise, except by
                  breach of this Agreement, or of the Confidence Agreement;

            (c)   the receiving party can establish, by clear and convincing
                  evidence, was in its possession at the time of disclosure by
                  the other party and was not acquired, directly or indirectly,
                  from the other party; or

            (d)   is received from a third party and, the receiving party can
                  establish by clear and convincing evidence, was in that third
                  party's possession at the time of disclosure by the other
                  party to the receiving party and was not acquired by the third
                  party directly or indirectly from the other party.

            Proof of the existence of information qualifying under the
exclusions (c) or (d) above shall not be deemed to negate the confidential and
proprietary nature of the information.

      10. Required Disclosure. In the event that the receiving party is
requested or becomes legally compelled (by oral questions, interrogatories,
requests for information or documents, subpoena, criminal or civil investigative
demand or similar process) to disclose any confidential information of the other
party (including disclosures to regulatory agencies such as the FDA), the
receiving party will, to the extent it is aware of such fact, provide the other
party with prompt written notice of such requirement prior to any disclosure so
that the other party may seek (with the cooperation of the receiving party) a
protective order or other appropriate remedy against disclosure and/or waive
compliance with the provisions of paragraphs 7 and 8 of this Section V. In the
event that such protective order or other remedy is not obtained, the receiving
party shall furnish only that portion of the confidential information which it
is then legally required to furnish.

      11. Return of Confidential Information. Upon termination of this Agreement
for any reason, the parties shall return to each other all confidential
information of the other party, except that each party shall be entitled to have
its legal counsel maintain one archival copy.

      12. Injunctive Relief. The parties recognize that damages at law would be
an insufficient remedy in the event of a material breach by a party hereto of
the terms of paragraph 14 of Section IV and paragraphs 7, 8 and 10 of this
Section V and that the other party shall be entitled, upon application to a
court of competent jurisdiction, to seek preliminary (without the posting of a
bond) and permanent injunctive relief to enforce the terms of paragraph 14 of
Section IV and paragraphs 7, 8 and 10 of this Section V. Subject to paragraph 6
of this Section V, nothing contained herein shall be construed as

                                       40
<PAGE>

prohibiting the aggrieved party from pursuing such other remedies as may be
available for such a breach or threatened breach of paragraph 14 of Section IV
or paragraphs 7, 8 or 10 of this Section V, including, but not limited to,
recovery of monetary damages.

VI. TERM AND TERMINATION

      1. Term.

            (a)   The initial term of this Agreement shall begin on the date of
                  this Agreement and shall end on October 7, 2004 (the "Initial
                  Term"), unless earlier terminated in a manner expressly
                  permitted hereunder. Subject to paragraph 1(b) of this Section
                  VI below, in the event that the Annual Minimum Performances
                  are satisfied (including purchasing the required quantities)
                  during each of the applicable Performance Years (subject to
                  paragraph 6(e) of Section III above), the Initial Term may be
                  extended at DO's option for an additional term of five (5)
                  years (the "Extended Term"), provided, however, that such
                  Extended Term shall not apply to any Targeted Markets for
                  which DO's rights to exclusively market and distribute the
                  Products have been terminated by CCSI (and as of the end of
                  the Initial Term remains terminated) as a result of DO having
                  failed to satisfy the Cumulative Minimum Targeted Market
                  Performances (subject to paragraph 6(e) of Section III above),
                  for each of the applicable Performance Years.

            (b)   If DO exercises its option for the Extended Term, then the
                  Annual Minimum Performances and the Cumulative Annual Minimum
                  Targeted Market Performances set forth in the following tables
                  shall be DO's Annual Minimum Performances and Cumulative
                  Annual Minimum Targeted Market Performances to be purchased by
                  DO at the DO Purchase Price from CCSI and sold by DO within
                  each applicable Performance Years 6-10; provided, however,
                  that DO's failure to meet such Annual Minimum Performances and
                  Cumulative Annual Minimum Targeted Market Performances shall
                  not constitute a Default by DO under this Agreement.

                           ANNUAL MINIMUM PERFORMANCES

<TABLE>
<CAPTION>
Performance Year        Minimum Performance for Units           Minimum Performances
                        of Devices                              for Units of Calibration
                                                                Standards or Charges per Use
<S>                              <C>                                         <C>
         6                       [*]                                         [*]

         7                       [*]                                         [*]
</TABLE>

                                       41
<PAGE>

<TABLE>
<S>                              <C>                                         <C>
         8                       [*]                                         [*]

         9                       [*]                                         [*]

         10                      [*]                                         [*]
</TABLE>

              CUMULATIVE ANNUAL MINIMUM TARGETED MARKET PERFORMANCE

Performance Year     Cumulative Annual Minimum Performance for Hospital Devices
Cumulative Annual Minimum Performance for Home Healthcare Devices  Cumulative
Annual Minimum Performance for Pediatrician Devices

6        [*]               [*]              [*]
7        [*]               [*]              [*]
8        [*]               [*]              [*]
9        [*]               [*]              [*]
10       [*]               [*]              [*]

      All terms and conditions of this Agreement, including all explanatory
footnotes contained in paragraph 6 of Section III, shall apply during the
Extended Term except as follows: (i) there shall be no opportunity for Strategic
Remediation under paragraph 6(d) of Section III; (ii) there shall be no Grace
Period Years under paragraph 6(e)(ii) of Section III; (iii) the Minimum Transfer
Price for Calibration Standards/Charges per Use at the beginning of Performance
Year 6 shall be the higher of [*] or the Minimum Transfer Price in effect at the
end of Performance Year 5, provided, however, that the provisions of paragraph
5(e) of Section III shall continue to apply to such Minimum Transfer Price; (iv)
DO purchases in excess of the Annual Minimum Performance for any Performance
Year shall not be carried over and applied to a subsequent Performance Year on a
cumulative basis; (v) Annual Minimum Performances may not be satisfied through
pre-payments or adding Products to inventory; (vi)[*]; (vii) there shall be
annual termination rights by CCSI if Annual Minimum Performances or Cumulative
Annual Targeted Market Minimum Performances are not paid in full by DO to CCSI
within each Performance Year and sold, leased, or placed on loan for use within
each Performance Year; and (viii) prices for Demo Calibration Standards/Charges
per Use and Evaluation Calibration Standards/Charges per Use will be
reestablished by CCSI for Performance Years 6-10.

      If DO wishes to exercise its option for the Extended Term but in good
faith believes that any of the foregoing minimums are not achievable, DO shall
so notify CCSI at least ninety (90) days before the end of the Initial Term.
Thereafter, the parties will negotiate in good faith and attempt to reach a new
set of minimums. If no agreement can be reached before the end of the Initial
Term, the Agreement shall terminate and the Exit Transition shall begin.

            (c)   Notwithstanding any of the foregoing, upon any termination of
                  this Agreement (other than a wrongful termination by CCSI or
                  DO in breach of this Agreement), the parties will cooperate to
                  implement the Exit Transition.

                                       42
<PAGE>

      2. Termination for Default. Subject to paragraph 9(b) of Section III and
paragraph 10 of Section IV, either party may terminate this Agreement by giving
written notice of such termination in the event of a Default by the other party
and such Default has not been cured within thirty (30) days after the defaulting
party has received written notice specifying the Default and requesting that it
be cured. Except as otherwise provided herein, termination of this Agreement for
Default shall not impair the terminating party's other rights and remedies for
such Default.

      3. Default. A party shall be in "Default" and shall be deemed to have
committed a material breach of this Agreement if:

            (a)   it voluntarily files a petition under the federal Bankruptcy
                  Act or any similar or successor law relating to bankruptcy,
                  insolvency, arrangement, or reorganization or under any state
                  bankruptcy or insolvency act, or admits its insolvency or the
                  inability to pay its debts, or fails within ninety (90) days,
                  to gain a discharge or stay of involuntary proceedings brought
                  for its reorganization, dissolution, or liquidation, or is
                  adjudged as bankrupt, or has a trustee or receiver appointed,
                  or makes an assignment for the benefit of its creditors, or if
                  there is an attachment, execution, or other judicial seizure
                  of any material portion of its assets which is not discharged
                  or stayed within ninety (90) days; or

            (b)   it materially breaches any term of this Agreement.

      4. Direct Purchases.

            (a)   In the event of a Default defined in paragraph 9 of Section
                  III by CCSI relating to the delivery (or failure or delay in
                  delivery) of the Products (a "Delivery Breach"), DO shall have
                  the irrevocable right and license, but not the obligation, to
                  purchase Products directly with third-party manufacturers
                  under contract with CCSI for the manufacture of the Products
                  at the DO Purchase Price under relevant terms of this
                  Agreement until such time as the occurrence or condition that
                  gave rise to such Delivery Breach has been remedied to DO's
                  and CCSI's reasonable satisfaction. In such event, DO shall
                  pay the DO Purchase Price less a reasonable administration fee
                  to CCSI and CCSI shall remit to such third-party manufacturer
                  the amount that such third-party manufacturer would ordinarily
                  receive from CCSI for the manufacture of such Products under
                  CCSI's agreement with its third-party manufacturer. Any such
                  Products purchased by DO would count towards the satisfaction
                  of DO's applicable Annual Minimum Performances and Cumulative
                  Annual Minimum Targeted Market Performances.

            (b)   In the event of a Delivery Breach of the kind that allows CCSI
                  the right to terminate its agreement with its third-party
                  manufacturer, DO has the right to require CCSI either, at
                  CCSI's option, (i) to begin direct manufacturing of Products
                  itself, or (ii) to select and

                                       43
<PAGE>

                  negotiate in good faith a contract with a new U.S. based
                  third-party manufacturer that is FDA compliant and ISO 9001/EN
                  46001 or ISO 9002/EN 46002 certified as required (reasonably
                  satisfactory to DO and CCSI) to manufacture the Products for
                  CCSI on terms and conditions substantially equivalent to
                  CCSI's agreement with its third-party manufacturer, at least
                  until such time as the occurrence or condition that gave rise
                  to such Delivery Breach has been remedied to DO's reasonable
                  satisfaction. Before the contract with any new U.S. based
                  third-party manufacturer for the LED Device is finalized, DO
                  shall have the right to match the terms and conditions of such
                  contract and assume responsibility for the manufacture of the
                  LED Device on such further terms and conditions relating to
                  protection for CCSI's manufacturing needs in the event of
                  termination of this Agreement as will be mutually agreed upon
                  by the parties and DO shall, in good faith, revise any
                  relevant terms of this Agreement in accordance with DO being
                  the third party manufacturer. CCSI shall have the right to
                  verify that such manufacturer can specifically comply with FDA
                  requirements and ISO 9001/EN 46001 or ISO 9002/EN 46002
                  requirements, as required relative to the manufacture of the
                  Products before being obligated to use such manufacturer.

VII MISCELLANEOUS

      1. Insurance. Within thirty (30) days of the effective date of this
Agreement, and throughout the Term of this Agreement thereafter, CCSI and DO
shall each maintain one or more commercial general liability insurance policies
(i) that, in the aggregate, shall provide coverage, including products liability
coverage, of not less than [*] per occurrence and [*] aggregate, and (ii) that,
in the aggregate, shall have a maximum deductible of [*] per occurrence and [*]
aggregate. The policies shall be issued by an insurance company with a minimum
Best's rating of A-XII or an equivalent rating from a nationally recognized
credit rating agency. Each policy shall provide coverage for Claims arising
within the Territory. In addition, CCSI and DO shall each maintain an excess
liability policy of no less than [*]. CCSI and DO shall provide each other with
evidence that none of its insurance policies for the foregoing insurance may be
modified or terminated without the carrier providing at least thirty (30) days
prior written notice to both parties hereunder except for ten (10) days notice
prior to cancellation for non-payment of premiums. Upon request, CCSI and DO
shall annually exchange certificates of insurance evidencing compliance with the
provisions of this paragraph.

      2. Media Releases. No media releases, public announcements or public
disclosures by either party or its employees relating to this Agreement or the
subject matter of this Agreement, including, without limitation, promotional or
marketing material, shall be made without the prior written approval of the
other party, which approval shall not be unreasonably withheld or delayed,
except to the extent that CCSI or DO (or its parent) is required to make public
disclosure or announcements of any information relating to this Agreement in
accordance with the requirements of applicable securities laws or U.S. generally
accepted accounting principles.

                                       44
<PAGE>

      3. Notice. Any notice permitted or required to be given under this
Agreement may be sent by personal delivery, commercial courier service,
facsimile transmission or registered or certified mail, return receipt
requested, properly directed to the recipient at the address set forth below the
party's signature in this Agreement. Notices shall be deemed given as and when
received. Either party may change its address by giving written notice of the
change in the manner provided above for giving notice.

      4. Integration; Amendment; Nonwaiver. This Agreement, including all
Attachments, constitutes the entire agreement of the parties with respect to its
subject matter and supersedes and cancels all other prior and contemporaneous
agreements, discussions or representations, whether written or oral with the
exception of the Confidence Agreement between the parties. No modification of
this Agreement shall be enforceable unless reduced to writing and signed by duly
authorized representatives of both parties. Failure of either party, at any
time, to enforce any provision of this Agreement shall not preclude any other or
further enforcement of such provisions or the exercise of any rights. No waiver
of a breach of this Agreement shall be valid unless in writing and signed by the
party against whom enforcement of such waiver is sought.

      5. Severability. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provision. If any provision is deemed invalid or unenforceable, the remainder
shall be construed to give effect to the parties' intent to the extent permitted
by applicable law.

      6. Choice of Law. This Agreement shall be governed by and interpreted
according to the laws of the State of New York, and of the U.S. without
reference to their laws relating to conflicts of law, and shall not be governed
or affected by the United Nations Convention for the International Sale of
Goods.

      7. Successors and Assigns. This Agreement, and all rights and obligations
hereunder, are personal as to the parties hereto and shall not be assigned in
whole or in part by either of the parties hereto to any other person, firm or
corporation without the prior written consent of the other party hereto, except
that either party may assign this Agreement to a subsidiary without releasing
the assignor from liability hereunder, such assignment to remain effective so
long as the assignee remains a subsidiary of assignor; provided, however, that
if there is a change of control of a majority of the voting common stock of such
party or such assignee, the other party may as its sole remedy under this
paragraph 8 of Section VII terminate this Agreement. Subject to the foregoing,
this Agreement shall be binding upon the respective successors and assigns of
the parties. The foregoing provisions shall not require that DO obtain consent
from CCSI with regard to the appointment or use of third-party agents, dealers
or subdistributors relating to the marketing and distribution of the Products.

      8. Independent Contractor. The relationship between the parties will be
that of independent contractors. Neither party will be or hold itself out as an
employee, agent or franchisee of the other, and neither party will have the
authority to create or assume any obligation, expressed or implied, on behalf of
the other. This Agreement shall not be interpreted or construed as creating or
evidencing any association, joint venture or partnership between the parties or
as imposing any partnership obligations or partnership liability on any party.

                                       45
<PAGE>

      9. Survival. The payment obligations under paragraphs 5(f) and 7 of
Section III, paragraphs 1, 3, 11, and 12 of Section IV and Section V of this
Agreement shall survive its expiration or termination for any reason, as shall
any other provisions of this Agreement which by their express terms may
reasonably be construed as surviving its expiration or termination. Expiration
or termination of this Agreement shall not affect either party's obligations to
comply with all legal and regulatory requirements related to the manufacture,
sale or use of Products.

                                       46
<PAGE>

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

CHROMATICS COLOR SCIENCES                       DATEX-OHMEDA, INC.
INTERNATIONAL, INC.

By ___________________________                  By ____________________________
Name:  Darby S. Macfarlane                      Name:  Andrew Krakauer
Title: Chief Executive Officer                  Title:  President of Ohmeda
                                                Medical

Address: 5 East 80th Street                     Address: Ohmeda Medical
         New York, New York  10021              9065 Guilford Road
                                                Columbia, Maryland 21046

                                       47
<PAGE>

                                  ATTACHMENT A

                        PRODUCT DESCRIPTION AND PRICING*

A. PRODUCTS

1. DEVICE (Model 1)

Status: Available now.

This product incudes a TLc Bili(trademark)Sensor with a built in calibration
verification standard in the Sensor cap, which is packaged in a durable, soft
carry case, a TLC Touch(trademark) palmtop computer and an RS232 cable.

The TLcBili(trademark)Sensor is a non-invasive, light weight
Trans-Light-Cutaneous-Bilirubin Monitor. Using optical filter color science
technology, this color measurement instrument flashes a light on the skin and
performs a color measurement to detect the yellow content of the newborn's skin
and provides a numerical result in mg/dl, or u/moles corresponding to the serum
bilirubin within a clinically useful range.

The TLc Touch(trademark) palmtop computer features the TLc Soft(trademark)
program on a Flash Ram card. This Product offers 4 AA batteries for the
TLcBili(trademark)Sensor and 2 AA batteries for the TLc Touch(trademark)
palmtop. This Product includes labels and shipping/packaging, and an Operator's
Manual. This Product is used with the TLc Lensette(trademark) individual
calibration standards packaged in a box of 25 individual TLc Lensette(trademark)
("the TLc LensPak(trademark)") and is contemplated for use with the "Charges per
Use" component described herein under Optional Upgrades.

--------
      *As provided in the Agreement, items currently in development are not
considered "Products" until they are legally marketable and commercially
available for distribution under the Agreement.

      Prices in this Attachment A are subject to increase in accordance with the
Price Adjustment provisions in the last Section (Section D) of this Attachment
A. Prices may also be charged as per paragraph 5 of Section III of the
Agreement.

      CCSI will not be deemed to be in breach of this agreement for any
regulatory clearance (including 510K clearances) that is not obtained on any
items currently in development. It is understood that products and items
described in Attachment A shall not be included under this Agreement until they
are legally marketable, have any required FDA or other regulatory clearance, and
are commercially available.

                                       48
<PAGE>

Minimum Transfer Price for
Device as described above:          [*]/unit in lots of up to [*] for first [*]
                                    units purchased under Firm Purchase Orders.
                                    Thereafter, price to be equal to CCSI Cost
                                    Amount in lots of up to [*]. (Note: Upon
                                    DO's request from time to time, CCSI will
                                    provide price quotations for quantities less
                                    than [*]) to be adjusted quarterly to the DO
                                    Purchase Price if sold.

DO Purchase Price for Device
as described above:                 The higher of the Minimum Transfer Price or
                                    60% of Invoice Price in Performance Years 1
                                    & 2 or 50% of Invoice Price in Performance
                                    Years 3, 4 and 5 of this Agreement, as per
                                    the terms of the Agreement.
                                    e.g. If Invoice Price is $3000, then DO
                                    Purchase Price is:
                                    $1800 (60%) in Performance Years 1 & 2 of
                                    the Agreement;
                                    $1500 (50%) in Performance Years 3, 4 & 5 of
                                    the Agreement.

                                    Initial invoice to DO to be at Minimum
                                    Transfer Price, adjusted quarterly to DO
                                    Purchase Price as per terms of the
                                    Agreement. Lead Time =[*] in lots of up to
                                    [*] (not to exceed [*] as per the Agreement)

2. CALIBRATION STANDARDS

TLc Lensette(trademark) Calibration Standards for single use:

Status: Available now.

TLc Lensette (trademark) Calibration Standards are used to calibrate the Device
before each TLc BiliTest(trademark) System measurement of a patient to ensure
accuracy of the color measurement and includes a protective shield to prevent
cross-contamination between patients. The TLc Lensette(trademark) Calibration
Standards are available packaged 25 per box (TLc LensPak(trademark)).

Initial Transfer Price                 Price is the Minimum Transfer Price)

(Only applicable for
Performance Years 1 and 2 after
which time the Initial Transfer        Minimum Transfer Price
                                       for TLc Lensette(trademark)

                                       49
<PAGE>

Calibration Standards as               [*] in lot volumes as specified below for
described above:                       Performance Years 1 and 2, subject to
                                       change as per the terms of the Agreement
                                       to be adjusted quarterly to the DO
                                       Purchase Price if sold.

                                       [*] in lot volumes as specified below for
                                       Performance Years 1 & 2 to be adjusted
                                       quarterly to the DO Purchase Price if
                                       sold. [*] in lot volumes as specified
                                       below for Performance Years 3, 4 & 5 to
                                       be adjusted quarterly to the DO Purchase
                                       Price if sold.

                                       Price for Performance Years 1 & 2 or 50%
DO Purchase Price for                  of Invoice Price for Performance Years 3,
TLc Lensette(trademark) Calibration    4 & 5 of this Agreement, as per the terms
Standards as described above:          of the Agreement. e.g. If Invoice Price
                                       is $10, then DO Purchase Price is: $6
                                       (60%) in Performance Years 1 & 2 of the
                                       Agreement; $5 (50%) in Performance Years
                                       3, 4 & 5 of the Agreement.

                                       [*] unit in lot volumes as specified
                                       below for the first [*] such units, and
                                       [*] for units in excess of [*].
Purchase Price for Demo
Calibration Standards:

                                       [*] for the first [*] units per
                                       Performance Year, and [*] for units in
                                       excess of [*] in any Performance Year,
                                       provided there is an equal
Purchase Price for Evaluation
Calibration Standards:

The higher of the Minimum
Transfer Price or 60% of Invoice

                                       50
<PAGE>

number of Calibration
Standards/Charges per Use that
are purchased by DO at the
same time as such excess
Evaluation Calibration
Standards are purchased the
Initial Transfer Price during
Performance Years 1 and 2 and
at the Minimum Transfer Price
for Years 3, 4 and 5, subject
to DO Purchase Price
reconciliation.

The Initial Invoice to DO to
be at the Purchase Price
subject to paragraph 7 of
Section III.

      Lot volumes: [*] to [*] units, for demo units and also for the non-demo
units, but not to exceed [*] units per month.

      Lead time: [*] for [*] lot volumes.

3. LED DEVICE

Status: Not available now. Under Design Controls - availability following such
time as becomes legally marketable as per terms of the Agreement.

[*]. The working engineering prototype for this Product including all FDA
required design controls. If FDA clearances are then obtained and other QSR
requirements are instituted and obtained for the LED Device; CCSI will
manufacture or cause a third party manufacturer to manufacture the LED Device
under the terms of this Agreement. [*] This model includes labels,
shipping/packaging and an Operator's Manual.

Minimum Transfer Price for
LED Device as described
above:                                 If the [*] of parts and manufacture for
                                       the LED Device (the "Cost Amount") is
                                       greater than [*] in lots of [*], the
                                       Minimum Transfer price is the higher of
                                       [*] or (ii) the Cost Amount. If the Cost
                                       Amount is [*] or less in lots of [*], the
                                       Minimum Transfer Price is the

                                       51
<PAGE>

                                       Cost Amount [*] of such Cost Amount. This
                                       Minimum Transfer Price is applicable to
                                       lot volume [*] of in Performance Years
                                       [*] of this Agreement, but only following
                                       such time as it becomes legally
                                       marketable and commercially available and
                                       is adjusted quarterly to the DO Purchase
                                       Price if sold.

DO Purchase Price for LED
Device as described above:             The higher of the Minimum Transfer Price
                                       or 60% of the Invoice Price in
                                       Performance Years 1 & 2 or 50% of the
                                       Invoice Price in Performance Years 3, 4 &
                                       5 of this Agreement, as per the terms of
                                       the Agreement. e.g. If Invoice Price is
                                       $3000, then DO Purchase Price is: $1800
                                       (60%) in Performance Years 1 & 2 of the
                                       Agreement: $1500 (50%) in Performance
                                       Years 3, 4 & 5 of the Agreement;

                                       Initial invoice to DO to be at Minimum
                                       Transfer Price, adjusted quarterly to DO
                                       Purchase price as per terms of the
                                       Agreement.

      Lead time (following such time as becomes legally marketable and
commercially available): Approximately [*] in lots of [*].

4. MODIFIED DEVICES

      a. Model 2: Model 1 with Laptop

Status: Not available now. (Going through UL approvals now). Will be available
when legally marketable.

The Laptop Modified Device consists of a Model 1 Device bundled with the laptop
accessory, as described below.

Minimum Transfer Price:                [*] per unit (plus tax and shipping to
                                       CCSI) for first [*] units in lots of [*]
                                       (must be ordered as part of Model 1 [*]
                                       lot volume) and adjusted quarterly to DO
                                       Purchase Price if sold.

                                       DO Purchase Price:

                                       52
<PAGE>

Thereafter, price to be
determined based on [*] for
laptop computer in lots of
[*], with lower prices
available for larger lot sizes
(must be ordered as part of
Model 1 [*] lot volume).
(Note: Upon DO's request from
time to time, CCSI will
provide price quotations for
quantities between [*]).

The higher of the Minimum
Transfer Price or 60% of the
Invoice Price in Performance
Years 1 & 2 or 50% of the
Invoice Price in Performance
Years 3, 4 & 5 of this
Agreement, as per the terms of
the Agreement.

Initial invoice to DO to be at
Minimum Transfer Price,
adjusted quarterly to DO
Purchase price as per terms of
the Agreement.

      Lead time (following such time as becomes legally marketable and
commercially available): Same lead time as Model 1 Device, except Laptop as
component available with [*] lead time in quantities of [*].

      b. Model 3: Model 2 with Printer

Status: Not available now. Going through Design Controls. Will be available when
legally marketable. Has been through some UL testing/needs to finish.

[*]

Minimum Transfer Price:                [*] per unit plus tax and shipping for
                                       first [*] units in lots of [*] (must be
                                       ordered as part of Model 1 [*] lot
                                       volume) adjusted quarterly to DO Purchase
                                       Price if sold. Thereafter, price to be
                                       determined based on [*] for laptop
                                       computer and printer, in lots of [*],
                                       with lower prices available for larger
                                       lot sizes (must be ordered as part of
                                       Model 1 [*] lot volume).

DO Purchase Price:                     The higher of the Minimum Transfer Price
                                       or 60% of the Invoice Price in
                                       Performance Years 1 & 2 or

                                       53
<PAGE>

50% of the Invoice Price in            Initial invoice to DO to be at Minimum
Performance Years 3, 4 and 5           Transfer Price, adjusted quarterly to DO
of this Agreement, as per the          Purchase Price as per terms of the
terms of the Agreement.                Agreement.

      Lead time (following such time as becomes legally marketable and
commercially available): [*] in quantities of [*].

      c. Model 4: THE COLORMATE(R) TLc BRIEFCASE(trademark) SYSTEM

Status: Not available now. Going through Design Controls. Available following
such time as becomes legally marketable.

The TLc Briefcase(trademark) System includes [*] This model includes labels,
shipping/packaging and an Operator's Manual.

Minimum Transfer Price for
The Briefcase System as
described above:                       [*] per unit in lots of [*] plus tax and
                                       shipping to CCSI adjusted quarterly to DO
                                       Purchase Price if sold.

DO Purchase Price for Device
as described above:                    The higher of the Minimum Transfer Price
                                       or 60% of the Invoice Price in
                                       Performance Years 1 & 2 or 50% Invoice
                                       Price in Performance Years 3, 4 and 5 of
                                       this Agreement, as per the terms of the
                                       Agreement.

                                       Initial invoice to DO to be at Minimum
                                       Transfer Price, to be adjusted quarterly
                                       to DO Purchase Price as per the terms of
                                       the Agreement.

      Lead time (following such time as becomes legally marketable and
commercially available): [*} in quantities of [*].

5. CHARGES PER USE

                                       54
<PAGE>

Status: Not available now. Available following such time as becomes legally
marketable. Going through design controls. Anticipated availability is within a
few months from the date of signing this Agreement.

The "Charges per Use" is the Charges per Use component defined [*] that would be
applicable under the terms and conditions of this Agreement for [*]" In the
event that a "Charges per Use" component defined herein is ordered from CCSI by
DO as a "Charges per Use" and the applicable [*] subject to DO Purchase Price
quarterly reconciliation,[*]

The Charges per Use component would have a [*] In the event this Charges per Use
component is ordered,[*]

DO Initial Transfer Price:             [*] and adjusted quarterly to DO Purchase
                                       Price if sold.

DO Minimum Purchase Price:             [*] and adjusted quarterly to DO Purchase
                                       Price if sold.

DO Purchase Price:                     [*]

      Lead time (following such time as becomes legally marketable and
commercially available): Same lead time as Device when ordered with a Device and
[*] lead time when [*] is ordered separately from Device.

6. MANAGED USE

                                       55
<PAGE>

Status:  Not available now.  May be available when agreed to by the parties.

      The "Managed Use" is a potential selling structure wherein the Device and
"Charges per Use" or a variation of "Charges per Use" would be used as follows:

      The Device would include [*] as defined in "Charges Per Use", but the
Calibration Standards provided to DO with the Device would be ones used [*] and
the Lensettes(trademark) supplied to DO [*] ordered by DO would be [*]. The
Minimum Transfer Price and the DO Purchase Price structure (including DO and
CCSI margins) would be the same as the Charges per Use [*]

7. MODEM/WITH DEVICE MODELS 1.2 OR 3

Status: Not available now. Going through Design Controls. Available following
such time as becomes legally marketable.

The modem is a component for the Device which allows transfer of certain data
[*] from the Device to another computer by standard modem technology. At this
time CCSI plans to include this component with the Device [*]. However, if
during the design phase there is more than the planned cost per Device, then
CCSI will inform OM of such event. First [*] (per unit) of the planned modem
cost to be paid by CCSI.

B. ACCESSORIES

1. Mounting Pole

      Status: Available now

OM can purchase at Transfer Price from CCSI at CCSI cost of [*] plus tax and
shipping in [*] lot volume a custom pole with wheels for mounting of the Device
or the Device with Laptop [*].

Transfer Price for Mounting
Pole as described above:                     [*]  of CCSI Cost Amount plus
                                             tax and shipping.

      Lead time (now): [*] for [*] lot volume Mounting Poles.

C. PRODUCT COMPONENTS

1. Laptop Computer

                                       56
<PAGE>

Status: Not available now. (Going through UL approvals now). Available following
such time as becomes legally marketable.

DO can purchase at transfer price following such time as legally marketable from
CCSI an [*] laptop computer for use with the Device as a Product Component,
which will be delivered with the original manufacturer's warranty but not CCSI's
warranty.

Transfer Price for laptop
as described above:                    [*] per unit for first [*] units in lots
                                       of [*]. Therefore, price to be equal to
                                       [*] of CCSI Cost Amount for laptop
                                       computer, in lots of [*], plus tax and
                                       shipping. (Note: Upon DO's request from
                                       time to time CCSI will provide price
                                       quotations for quantities between [*])

      Lead time (following such time as becomes legally marketable and
commercially available): [*] for [*] lot volume of laptop computers.

Note: A [*] laptop will be available when legally marketable but takes [*] to go
through UL. Same terms and conditions will apply and CCSI will notify OM on
progress.

2. Printer

Status: Not available now. Going through Design Controls. Available following
such time as becomes legally marketable. Has been through some UL testing/needs
to finish. Printer is [*] for use when legally marketable with the [*].

DO can purchase printer when legally marketable at Transfer Price from CCSI in
lots of [*] units, which will be delivered with the original manufacturer's
warranty but not CCSI's warranty.

Transfer Price for Printer
as described above:                    Transfer Price to be equal to[*] of CCSI
                                       Cost Amount for printer, in lots of [*],
                                       plus tax and shipping. Current Transfer
                                       Price is [*] plus tax and shipping.

      Lead time (following such time as becomes legally marketable and
commercially available): [*] for [*] lot volume for printers.

3. Software of the Device

CCSI will supply replacement [*] containing the Software of the Device at the
CCSI Cost Amount, which CCSI currently estimates to be [*].

D. Price Adjustments based upon changes in CCSI's Cost Amount

                                       57
<PAGE>

      Unless otherwise expressly indicated in writing to the contrary, all
prices in this Attachment A are subject to change based upon (and only to the
extent of) changes in the CCSI Cost Amount (as such term is defined in the
Agreement) for that Product, Product Component or Accessory (as the case may
be), provided that CCSI has provided reasonably satisfactory evidence of such
change in Cost amount and provided further that:

      (i)   there will be no price change to Calibration Standards or Charges
            per Use based upon changes in Cost amount; provided, however, that
            following the Initial Term of the Agreement CCSI may, upon 30 days'
            prior written notice to DO, increase the price of Calibration
            Standards and charges per Use based upon (and only to the extent of)
            changes in CCSI's Cost amount for same, provided that such price
            increase does not result in a minimum Transfer Price or DO Purchase
            Price greater than [*] of DO's Invoice Price for such Calibration
            Standards and/or Charges per Use;

      (ii)  CCSI may not increase the Minimum Transfer Price or DO Purchase
            Price for the first [*] Devices (Model 1) purchased by DO under one
            or more Firm Purchase Orders (issued by DO under paragraph 4(a) of
            Section III of the Agreement) based upon any change in Cost Amount;

      (iii) CCSI's transfer price to DO for Product Components and Accessories
            shall never exceed [*] of CCSI's Cost Amount during the Initial Term
            of this Agreement and, as to the replacement [*] containing the
            Software of the Devices, CCSI's transfer price to DO shall never
            exceed of CCSI's Cost Amount during the Initial Term of this
            Agreement.

      (iv)  All price changes based upon changes in cost Amount shall take
            effect upon written notice from CCSI to DO and shall apply to Firm
            Purchase Orders issued after DO's receipt of such notice from CCSI.
            CCSI shall provide such notice within five (5) business days after
            becoming aware of any change in a Cost Amount.

                                       58
<PAGE>

                                                                    PURCHASE
                                       Attachment 2                   ORDER
[*]

      SHOW OUR ORDER NUMBER ON ALL INVOICES, PACKAGES SHIPPING PAPERS AND
                                      CORRESPONDENCE

<TABLE>
<CAPTION>

PURCHASE ORDER NO.            CHANGE ORDER NO.           DATES ISSUED            PAGE

                                                         S
T                                                        H   T
O                                                        I   O
                                                         P

             FOB                  SHIP                   Mass. Tax Exempt
                                  VIA                    / / YES        #000-089-100   / / NO

<S>     <C>          <C>  <C>                            <C>                     <C>           <C>              <C>
LINE    QUANTITY     U/M  P/N/DWG/ REV                   DESCRIPTION             DUE DATE      UNIT PRICE       AMOUNT
                                                                                                TOTAL
/ / DRAWINGS ENCLOSED          / / CONFIRMING ORDER            TO:

                                                                                               AUTHORIZED SIGNATURE
</TABLE>

                                       59

<PAGE>

                                  Attachment 3
                      Pricing for Section 1 of Attachment 1

Chromatics Color Sciences Inc

<TABLE>
<CAPTION>

                                     Estimated      Estimated
Item No.:        Description         Mat'l Cost     Labor Cost          Comments
<S>               <C>            <C>              <C>         <C>       <C>
  1                     [*]             n/a                             assumed to be supplied by CCSI
  2                     [*]             n/a                             assumed to be supplied by CCSI
  3                     [*]                          [*]                build, test & inspect
  3a                    [*]             n/a                             assumed to be supplied by CCSI
  3b                    [*]             $[*]                            per [*]
  3c                    [*]             $[*]                            per [*], -[*] or almond was priced
  3d                    [*]             $[*]
  3e                    [*]             $[*]
  3f                    [*]             $[*]
  3g                    [*]             $[*]
  3h                    [*]             $[*]
                        [*]                          [*]                build or assemble, kit, test & inspect
                        [*]                                             Unknown
  5                     [*]
  5a                    [*]             $[*]                            [*]
  5b                    [*]                          [*]                Program, verify, label & inspect
  5c                    [*]             $[*]
  6                     [*]             n/a
  7                     [*]             n/a                             Assumed to be supplied by CCSI
  8                     [*]             $[*]         [*]                Assembly & inspect, there will be a one time charge of
                                                                        $[*] to [*] for tooling to produce the [*]
  9                     [*]             $[*]
                                 Total: $[*]         [*]

  Material        Material O/H      Labor         Lab O/H     Total     Margin        Transfer Price
   $[*]           $[*]              $[*]          $[*]        $[*]      $[*]          $[*]

</TABLE>

Other Items:

     1   The cost to transact an order, including both order entry and shipping
         will be a $[*] flat rate.

     2   Current FedEx shipping costs, for [*], for all of the US is $[*]
         overnight, $[*] next day and $[*] 2nd day.

     3   NOVA requires [*] days from receipt of order for the 1st delivery.

     4   Incoming inspection costs for CCSI supplied materials will be charged
         at $[*] per hour, we estimate that the time will be [*] to [*] hours
         per line item per lot.

Extended Warranty Cost: The cost of extending the warranty to [*] from NOVA's
[*] warranty period will be [*]% of NOVA's selling/transfer price of each
Product to CCSI.

                                       60

<PAGE>

                                  Attachment 3
                      Pricing for Section 2 of Attachment 1

                                 Pricing Method

NOVA will use the following method to price [*] Units to CCSI

Calculation of standard cost
- ----------------------------

          Actual Material Cost Plus
          Material overhead rate - Currently [*]% Plus
          Labor cost (hours x $[*] (current rate)) Plus
Labor overhead rate       -     Currently [*]%
             Equals
Total Standard Cost

Note for year one only, NOVA will bid on smaller quantities and will use a
margin of [*]%

Price depends on volume:

     Units per year                         Margin
     --------------                         ------

               [*]                          No bid
               [*]                           [*]%
               [*]                           [*]%
               [*]                           [*]%

<TABLE>
<CAPTION>

Example                                                     Example                    Example
                                                            Cost ($)                   Cost ($)
                                                            --------                   --------

             <S>                                                <C>                       <C>
             Material Cost (key item)                            [*]                       [*]
             [*]% material overhead*                             [*]                       [*]
             Labor cost ([*] hours @ $[*]/hr)                    [*]                       [*]
             [*]% labor overhead*                                [*]                       [*]
             Standard Cost                                      $[*]                      $[*]
             -------------                                      ----                      ----
</TABLE>

Based on our current forecast, we expect our [*] to be [*] next year. These
numbers reflect our current forecast.

<TABLE>
<CAPTION>

Year 2 Forward                                        Price if Standard                    Price if Standard
Units per year                Margin                       Cost is $[*]                       Cost is $[*]
- --------------                ------                       ------------                       ------------

          <S>                 <C>                          <C>                                <C>
          [*]                 no bid                       no bid ([*])                       no bid ([*])
          [*]                  [*]%                              [*]                                  [*]
          [*]                  [*]%                              [*]                                  [*]
          [*]                  [*]%                              [*]                                  [*]
          ---                  ----                              ---                                  ---
</TABLE>

Note: Example assumes constant materials cost.  [*].

Extended Warranty Cost:

The cost of extending the warranty to [*] from NOVA's [*] warranty period will
be [*]% of NOVA's selling/transfer price of each Product to CCSI.

                                       61

<PAGE>

                                  ATTACHMENT B

                               PRODUCT INFORMATION

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
Item/Information                 Initial Action                       Ongoing Action
------------------------------------------------------------------------------------------------------------------------------------
<S>                              <C>                                  <C>
Operating Manual                 CCSI to provide 100 copies for DO's  CCSI creates and revises as required.  CCSI includes within
                                 use                                  each product carton, DO to provide input for upgrading the
                                                                      Manual.
------------------------------------------------------------------------------------------------------------------------------------
Instructions for Use for         CCSI to provide 10 copies for DO's   CCSI creates and revises as required. CCSI includes within
Lensettes & Charge per Use       use                                  each Lensette box
------------------------------------------------------------------------------------------------------------------------------------
Product Labels and Licensing     CCSI to provide 10 copies for DO's   CCSI creates and revises as required. CCSI includes within
Folder for Software              use                                  each Product and software package.
------------------------------------------------------------------------------------------------------------------------------------
Sales Training Manual            CCSI to provide 2 copies for DO's    DO to revise as required for all Targeted Markets with CCSI
                                 use                                  input and sign off**
------------------------------------------------------------------------------------------------------------------------------------
Quick Reference Guide            CCSI to provide 10 copies for DO's   DO creates/revises as required and supplies quantities
                                 use                                  necessary to service all Targeted Markets with CCSI input and
                                                                      sign off**
------------------------------------------------------------------------------------------------------------------------------------
Inservice/Training support       CCSI to provide 10 copies for DO's   DO creates/revises as required and supplies quantities
materials                        use                                  necessary to  service all Targeted Markets with CCSI input and
                                                                      sign off**
------------------------------------------------------------------------------------------------------------------------------------
Sales support materials such as  CCSI to provide one copy of all      CCSI to continue to distribute existing literature as per
brochures, cost consideration    existing material for DO's use       Attachment D until supply runs out. DO creates/revises as
etc.                                                                  required and supplies quantities necessary to service all
                                                                      Targeted Markets with  CCSI input and sign off**
------------------------------------------------------------------------------------------------------------------------------------
Advertising & Promotion          CCSI to provide copy of all existing DO creates/revises as required and supplies quantities
Materials such as journal ads,   materials for DO's use               necessary to  service all Targeted Markets with CCSI input and
direct mail piece, booth                                              sign off**
graphics etc.
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

      *CCSI will promptly provide DO with at least one free copy (complete) of
any revised Operating Manual Instructions for use and/or licensing folder.

      **CCSI must review and enter sign off or provide specific revisions or
deletions and reasons therefor (within 7 days) on all Product Information,
including but not limited to such Product Information listed above for
distribution in to the field, solely for regulatory and intellectual property
review. This includes all labeling (by FDA definition) and/or
advertising/promotional materials, to the extent that it is a regulatory or CCSI
intellectual property issue. (It is not just for commenting on product claims,
but description, presentation or other statements regarding the products that
implicate regulatory or CCSI intellectual property). Product Information created
or revised by DO will be the subject to analysis or a documented "No 510(k)"
rationale for compliance with FDA 510(k) requirements. CCSI's approval of any
such Product information shall not be unreasonably withheld. CCSI shall not have
the right to object to, or withhold approval on style, color or quality of any
such information. The purposes of CCSI's review of Product Information include,
without limitation, allowing CCSI to ensure that (i) CCSI can protect its
trademark, logos and other intellectual property rights on Product Information,
(ii) all Product Information including written materials relating to the
Products sent to dealers, distributors and end-users distributed in the Targeted
Markets within the Territory shall bear CCSI's copyright, trademark and patent
notices, licenses and restrictions as may reasonably be required by CCSI and
(iii) CCSI's trademarks shall always be used in such a manner as to ensure that
those trademarks are associated with CCSI. DO shall only distribute the
materials covered by this Attachment B in connection with the marketing and
distribution of Products for use in monitoring of bilirubinemia (infant
jaundice) in the Target Markets within the Territory.

      Sample of approved labeling is attached to this Attachment B.

                                       59
<PAGE>

                                  ATTACHMENT C

                   EXTERNAL MARKET FACTORS FOR MINIMUMS REVIEW

1.    One or more Firm Purchase Orders is issued by DO in compliance with the
      lots sizes, lead times and other requirements under Attachment A and
      Products are not delivered as per the terms of such Firm Purchase
      Order(s), causing Product shortages.

2.    A new prevention or cure for the condition of newborn bilirubinemia
      (infant jaundice), other than phototherapy treatment currently in use, is
      marketed or there is another accepted, legally marketed medical practice
      which eliminates or restricts the need to measure or monitor
      bilirubinemia.

3.    The FDA clearance for [*] by CCSI for the Colormate(R) TLc
      BiliTest(trademark) System (or any Upgraded Device or LED Device when
      commercially available and legally marketable) and there is no reasonable
      method to transmit the [*] for a patient to the pediatricians' offices or
      the home healthcare market agency locations necessary to input such [*]
      information.

4.    The use, sale or distribution of the Device or the Calibration Standard
      (or any other Product that becomes commercially available and legally
      marketable), is precluded or restricted by applicable law, product recall
      or other Corrective Action in any Targeted Markets within the Territory.

5.    Private or government insurance reimbursement for the use of the
      Calibration Standards or Charges per Use is precluded or restricted and
      such preclusion or restriction (as the case may be) cannot be or is not
      solved in a timely manner (i.e., within sixty (60) days of DO's request to
      CCSI) by an appropriate reduction in the DO Purchase Price for the
      Calibration Standards/Charges per Use in the affected Targeted Markets.

6.    If DO loses its right under paragraph 6(d) of Section III of the Agreement
      to distribute Products in one or more Targeted Markets within the
      Territory, then the Annual Minimum Performances will be reduced
      accordingly.

7.    If CCSI (or one of its other distributors) markets any product which is
      the same or substantially similar to any of the Products, into the
      consumer home healthcare market within the Territory (e.g. where the test
      is not solely administered by a healthcare professional).

8.    If a third party markets or distributes a product in any Targeted Market
      within the Territory that both parties agree constitutes an infringement
      of CCSI's intellectual property right(s) relating to any Product which
      have impaired sales.

9.    If CCSI is unable to provide quantities of Product in any Performance Year
      equal to DO's Annual Minimum Performances for such Performance Year but
      not limited to monthly volume restriction or lot size limitation other
      than minimum lot sizes when DO has submitted reasonable rolling forecasts
      for such quantities within lead times for Products as set forth in
      Attachment A.

                                       60
<PAGE>

                                  ATTACHMENT D

                                CUSTOMER SUPPORT

                   I. INITIAL SALES START UP TRANSITION ITEMS

This table contains CCSI services to be provided on behalf of DO while DO is
preparing for sales launch. This transition period is not expected to last more
than sixty (60) days from contract signature but in no event will be longer than
90 days from date when part configurations/numbers and other necessary product
support information are made available for input into DO's system.

Goals:   (1) provide smooth customer transition from CCSI to Ohmeda Medical
         (2) maintain current sales momentum while DO in start up transition.

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
                        ITEM                                                                ACTION
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                    <C>
Selling Activities                                     CCSI to continue selling activities as usual; CCSI to attempt to close sales
                                                       on Evaluation until CCSI to provide information sharing and updates to DO
------------------------------------------------------------------------------------------------------------------------------------
         Customer Demos & Inservice                    CCSI to continue demo, DO to pay for Lensettes on new demo orders (i.e.,
                                                       excluding demos currently with customers), with DO approval (and processed
                                                       through DO ordering and shipping)
------------------------------------------------------------------------------------------------------------------------------------
         Customer Evaluation Units                     CCSI to continue 30-60 day Evaluation program (both for existing and new
                                                       Evaluation units) supplied by DO
------------------------------------------------------------------------------------------------------------------------------------
         Lead Processing                               CCSI to continue present practice
------------------------------------------------------------------------------------------------------------------------------------
         Invoicing                                     CCSI provides invoicing during transition.  DO will take on invoicing prior
                                                       to end of transition.
------------------------------------------------------------------------------------------------------------------------------------
Technical Support                                      CCSI to continue present practice
------------------------------------------------------------------------------------------------------------------------------------
Loaner Pool                                            CCSI to Manage/DO to provide
------------------------------------------------------------------------------------------------------------------------------------
Literature                                             CCSI to continue sending existing literature to customers until stock is
                                                       depleted. DO to provide literature when available. At DO's option and
                                                       expense. DO may reprint CCSI literature.
------------------------------------------------------------------------------------------------------------------------------------
Support personnel for conventions                      DO to provide booth/CCSI to assist with staffing
------------------------------------------------------------------------------------------------------------------------------------
Training of Ohmeda Marketing, Sales & Technical        CCSI to provide trainer(s) at its expense at up to six (6) regional sales
Support Personnel                                      meetings (1 1/2 days each) DO to organize and pay for regional sales
                                                       meetings.  CCSI will provide at its expense trainers for one training session
                                                       in Columbia, Maryland for 2-5 days DO's sales and Marketing administration.
------------------------------------------------------------------------------------------------------------------------------------
Product Support to launch in OM System                 CCSI to provide a copy of Configurations and Part Numbers, Prices, Clinical
                                                       Articles & Training Book Master.
------------------------------------------------------------------------------------------------------------------------------------
Customer Transition Letter                             CCSI will provide DO with the Data Base of customers.  DO will contact
                                                       customers to inform them that DO is exclusive distributor.  DO will pay for
                                                       printing and mailing of one-page test (no graphics) letter that is jointly
                                                       developed.
------------------------------------------------------------------------------------------------------------------------------------
Direct Mail Piece                                      CCSI will format, add DO's name to mail piece & obtain printing costs.  DO to
Mailer already developed & four color separated (black assume cost to print, label & mail.  CCSI will handle response calls and
plate changes only required.)                          refer calls to DO when DO is ready.
------------------------------------------------------------------------------------------------------------------------------------
Sales Rep Hand-Off                                     CCSI reps will hand-off customer lists, issues, opportunities, pending sales,
                                                       etc., to DO sales team at the regional training or earlier.
------------------------------------------------------------------------------------------------------------------------------------
Demo Inventory to Reps                                 CCSI reps have [*] existing demo units. DO to purchase or deduct from their
                                                       [*] demo units.
------------------------------------------------------------------------------------------------------------------------------------
Demo Inventory to Hospitals                            CCSI to provide Lensettes for hospital evaluation and DO pay for Lensettes
                                                       with an approved plan from DO.
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

                                       61
<PAGE>

                          II. ONGOING CUSTOMER SUPPORT

SUPPORT TO BE PROVIDED BY DO

Full sales and customer support activities:
o     Lead qualification and processing
o     Order entry
o     Stocking and shipping
o     Customer in service on site
o     Billing and receivable
o     Maintaining and processing [*]
o     First-line trouble-shooting/clinical support "on call program"[*]
o     Recording and tracking return goods
o     First line technical/clinical support [*]

SUPPORT TO BE PROVIDED BY CCSI

o     Providing warranty and non-warranty repair/replacement services through
      3rd party contract manufacturer
o     Processing leads and requests for information to DO
o     Delivering Products on a timely basis
o     Second stage technical support
o     Sell parts/accessories to DO

SALES AND CLINICAL SUPPORT ACTIVITIES (FIRST TWELVE MONTHS AFTER DATE OF
SIGNING)

CCSI will assist DO to maximize their selling efforts int he Targeted Markets as
stated in the marketing plan objectives. This effort will be coordinated with
senior marketing and sales management of CCSI and DO's OM Division. Initial
support will focus on technical training and selling assistance to bring DO
sales and clinical team to level of expertise necessary for success (DO to
control use of demos and demo Lensettes that DO is expected to pay for). Follow
up support will be geared toward driving the business primarily [*] and
expanding market penetration. Examples of such support are:
o     Management review of overall objectives and goals for targeting accounts,
      inservicing, and sales of devices
o     Assist DO regional managers with targeting accounts
o     Make sales calls/presentations (independent of local reps) to key neonatal
      and pediatric groups
o     Work with local reps to make sales calls, assist in closing key accounts
o     Work with Corporate account managers to call on Corporate Accounts
o     Assist with in servicing for key accounts (including independent of local
      reps)
o     Will assist in attending trade shows and trade show activities
o     Cooperate with educational activities with DO Clinical Specialists
o     Marketing support for DO marketing activities and Strategy development

The foregoing sales and clinical support shall be provided by CCSI's 10 person
team of sales and clinical specialists at [*]: provided, however that in
providing such support, no member of such 10 person team shall be obligated to
spend, in the aggregate, more than [*] overnight hotel nights or more than [*]
in air travel, in a 12 month period. If any member of such 10 person team
exceeds these maximums, it will be at CCSI's expense but CCSI has no obligation
to exceed those maximums. CCSI sales and marketing team shall continue to remain
employees of CCSI and shall officially report solely to the General Manager /VP
Sales and marketing of CCSI.

                                       62
<PAGE>

                       III. EXIT TRANSITION CONSIDERATIONS
                         UPON TERMINATION OF AGREEMENT*

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
ITEM                                            ACTION
------------------------------------------------------------------------------------------------------------------------------------
<S>                                             <C>
Inventory                                       CCSI may at CCSI's option purchase all inventory back at DO cost.  If CCSI does not
                                                purchase all DO inventory DO shall have the right to sell in the targeted market
                                                until inventory is exhausted and to continue to [*].

                                                As to Devices placed with end users DO [*].  DO shall have the right to receive the
                                                anticipated benefit from sales of Lensettes Charges per Use to such customers as
                                                follows:

                                                     If as of the termination of the Agreement, DO shall have received at least [*]
                                                in gross margin [*], then DO's ownership rights in such Device shall be transferred
                                                to CCSI at no cost to CCSI.  If as of the termination of the Agreement, DO shall
                                                have received less than [*] in gross margin on [*] placement, then CCSI must either
                                                promptly pay DO an amount equal to difference between (A)[*] on such specific
                                                placement and (B) [*] or (2) permit DO to continue to sell [*] for use with such
                                                specific placement (and if equested by DO, CCSI shall continue to supply DO with
                                                [*]) until DO receives [*] in gross margin on such specific placement.  Upon DO's
                                                receipt of such payment form CCSI or such [*] gross margin (as the case may be),
                                                then DO's ownership rights in such Device shall be transferred to CCSI at no cost to
                                                CCSI.
------------------------------------------------------------------------------------------------------------------------------------
Customer Invoicing                              DO will have the right to collect on outstanding invoices, fill orders and invoice
                                                and collect for any new sales which occur after the termination if CCSI does not
                                                purchase inventory.
------------------------------------------------------------------------------------------------------------------------------------
Customer Notice - within 30 days                Depends on inventory decision.  In all cases DO & CCSI will jointly decide content
                                                of notification
------------------------------------------------------------------------------------------------------------------------------------
Customer Transition                             DO to provide CCSI with Customer List, Sales history, Technical call history, DO
                                                will refer all calls regarding product to CCSI
------------------------------------------------------------------------------------------------------------------------------------
Marketing Efforts Literature, Advertising,      DO marketing efforts will cease immediately, except that DO shall have the right to
Conventions, Sales training , Direct Mails      market as necessary to sell off inventory.  CCSI will have the right to purchase any
                                                available literature at DO cost and utilize such literature bearing DO logos. If
                                                requested, DO will continue to provide technical support during the Exit Transition
                                                (up to six months) at its standard rates for service, to be billed to and paid by
                                                CCSI. CCSI will label DO literature to indicate the change in distribution, if used.
                                                CCSI will pay for reprints.
------------------------------------------------------------------------------------------------------------------------------------
Technical Support                               DO will refer customer calls to CCSI.
------------------------------------------------------------------------------------------------------------------------------------
Regulatory Support                              DO will perform any regulatory action legally required by DO under applicable law.
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

      *Applies only to termination of Agreement by DO or CCSI (as the case may
be) in accordance with (and not in breach of ) the terms of the Agreement.

                                       63

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