Document:

Exhibit
10.1

 

Confidential material omitted and
files separately with the Securities and Exchange Commission. Asterisks denotes
such omissions.

 

 

 

MASTER
LEASE/LOAN PURCHASE PROGRAM AGREEMENT

 

This MASTER LEASE/LOAN PURCHASE PROGRAM AGREEMENT, dated as of February
28, 2005 (“Effective Date”), is
made and entered into by and between Omnicell, Inc., a Delaware corporation (“Omnicell”) and De Lage Landen Financial
Services, Inc., a Michigan corporation (“Buyer”)
(each individually, a “Party,” and
collectively, the “Parties”) and
includes the General Terms and Conditions and all Schedules, Attachments,
Exhibits, and Riders hereto as specified below.

 

	
  Signature Page (This Page)

  	
   

  	
   

  
	
  General Terms and Conditions

  	
   

  	
   

  
	
  Exhibit A — Required Documents

  	
   

  	
  Rider A — Government Finance
  Program

  
	
  Exhibit B — Assignment Forms

  	
   

  	
  Rider B — International Finance
  Program

  
	
  Exhibit C — Omnicell Customer Forms

  	
   

  	
   

  
	
  Exhibit D — Formulas

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Omnicell 

  	
   

  	
  Buyer 

  
	
  Mailing Address

  	
   

  	
  Mailing Address

  
	
   

  	
   

  	
   

  
	
  Omnicell, Inc.

  	
   

  	
  De Lage Landen Financial Services, Inc.

  
	
  1201 Charleston Rd

  	
   

  	
  111 Old Eagle School Road

  
	
  Mountain View, CA 94043

  	
   

  	
  Wayne, PA 19087

  
	
  Attn.: Accounts Payable

  	
   

  	
  Attn: Healthcare

  
	
  Tel: 1-800-251-6664; Fax: 650-251-6266

  	
   

  	
  Tel: 1-800-669-9441; Fax: 800-743-0177

  

 

Each Party agrees to all of the terms and conditions of this Master
Lease/Loan Purchase Program Agreement. These terms and conditions are a
complete and exclusive statement of the agreement of the Parties with respect
to the subject matter hereof and may be modified only by a written agreement
signed by both of the Parties and not by course of performance. By signing this
Master Lease/Loan Purchase Program Agreement, each Party represents that it has
the authority to bind itself to this Master Lease/Loan Purchase Program Agreement.

 

	
  Accepted:

  	
   

  
	
   

  	
   

  
	
  Omnicell, Inc.

  	
  De Lage Landen Financial Services,
  Inc.

  
	
   

  	
   

  
	
  Signature

  	
  Signature

  
	
   

  	
   

  
	
  Print Name:

  	
  Print Name:

  
	
   

  	
   

  
	
  Title:

  	
  Title:

  

 

This document contains the
Confidential Information of Omnicell.

Use or disclosure of this
document is prohibited without Omnicell’s express written consent.

 

 

GENERAL
TERMS AND CONDITIONS

 

1.     DEFINITIONS. 
As used herein, all capitalized terms shall have the meanings set forth below:

 

1.1.          “Agreement”means this Master Lease/Loan
Purchase Program Agreement and all exhibits, attachments, riders, schedules and
written amendments annexed hereto and made a part hereof, as it may be amended,
supplemented, and/or modified in writing from time to time by the Parties.

 

1.2.          “Amount Recovered” has the meaning given to
such term in Section 5.7(b).

 

1.3.          “Application”means an application
(including credit and financial information concerning the prospective
Customer) and related documents reasonably required by Buyer in accordance with
its standard procedures to initiate its consideration of a proposed Transaction
which will usually consist of the items listed in Section A of
EXHIBIT A hereto.

 

1.4.          “Assigned Payments”means all Assigned
Rental Payments and, if applicable, all Assigned Service Payments.

 

1.5.          “Assigned Rental Payments” means all Rental
Payments which are specified in an Assignment Agreement as being assigned to
Buyer.

 

1.6.          “Assigned Service Payments”means all
Service Payments which are specified in an Assignment Agreement as being
assigned to Buyer.

 

1.7.          “Assignment Agreement”means an assignment
agreement substantially in the form attached in EXHIBIT B hereto,
pursuant to which Omnicell sells and assigns to Buyer: (i) the right to certain
Rental Payments, (ii) in some cases, a security interest in, or title (subject
to the terms and conditions of Section 4.4)
to, the related Equipment, and/or (iii) if so specified in the Assignment
Agreement, the right to certain Service Payments.

 

1.8.          “Assignment Letter”means the original
customer-executed amendment to the Lease Supplement, substantially in the form
attached in EXHIBIT B hereto, whereby the Customer acknowledges and
agrees, among other things, that (a) Omnicell is assigning the right to certain
Rental Payments and/or Service Payments under a Contract to Buyer and (b) the
Customer’s obligation to remit Assigned Rental Payments to the assignee is
absolute and unconditional.

 

1.9.          “Contract”means a Lease Supplement, Service
Agreement, conditional sale agreement, or other evidence or form of Customer
payment obligation and/or security interest in favor of Omnicell.

 

1.10.        “Contract Default”means, other than any
default arising out of a Service Default, (a) the failure of a Customer to make
any Assigned Rental Payment or perform any obligation due under a Contract for
a period of 60 days or (b) an Event of Bankruptcy relating to such Customer.

 

1.11.        “Customer” means a qualified customer of
Omnicell who is an obligor under a Contract or a guarantor of such Customer.

 

1.12.        “Documentation Period” has the meaning given
to such term in Section 3.5.

 

2

 

1.13.        “Event of Bankruptcy” means as to either
Party or a Customer, its insolvency, inability to pay debts as they mature,
failure to operate as a going concern, filing under Title 11 of the United
States Code or any successor or similar federal or state statute, assignment
for the benefit of creditors, appointment of a receiver or dissolution.

 

1.14.        “Event of Cancellation” means (i) a
Material Adverse Change of Omnicell since the date of this Agreement or of a
Customer since the date of the related Application, or (ii) the occurrence
of an event which causes a representation made by Omnicell or a Customer in
connection with a Transaction or related Contract to be false in any material
respect when made, or (iii) notification by such Customer to Omnicell or
to Buyer of its intent to cancel all or any part of such related Contract or to
refuse to accept any part of the related System.

 

1.15.        “Event of Default” has the meaning given
such term in Section 12.1.

 

1.16.        “Final Document Package” means such
properly completed and duly executed documentation, consisting of the items
listed in Section B of EXHIBIT A heretoand such other documents
as Buyer may reasonably require in accordance with its standard procedures in
order to finalize a Transaction and to pay the Purchase Price to Omnicell.

 

1.17.        “Lease Supplement” means an executed
contract supplement to a Master Agreement, incorporating the terms and
conditions of such Master Agreement, that sets forth the terms of the lease
from Omnicell to a Customer of the subject Equipment, including, without
limitation, the terms of the Rental Payments that are the subject of a
Transaction.

 

1.18.        “Master Agreement” means Omnicell’s Customer
purchase, rental or lease agreement, including all support terms (or a separate
Master Service Agreement if applicable), schedules, riders, addenda or
amendments thereto, in the forms substantially similar to those set forth in
EXHIBIT C hereto (or other form reasonably approved by and acceptable to
Buyer) that includes the Lease Supplement(s) with respect to which Buyer
purchases Rental Payments or Service Payments under this Agreement.

 

1.19.        “Material Adverse Change” means, with
respect to any person, (i) a change that is materially adverse to the financial
condition of such person, or (ii) its insolvency, inability to pay debts
as they mature, failure to operate as a going concern, filing by it under
Title 11 of the United States Code or any successor or similar federal or
state statute, assignment for the benefit of creditors, appointment of a
receiver, or dissolution.

 

1.20.        “Net Book Value” means, with respect to a
particular Contract, as of the date of determination, the sum of the following
amounts: (i) all accrued and unpaid Assigned Rental Payments due under the
Contract; plus (ii) the remaining
Assigned Rental Payments scheduled to become due during the remainder of the
term of the Contract, with each such remaining scheduled Assigned Rental Payment
discounted to its present value from the due date thereof to the date of
determination at the applicable Standard Rate.

 

1.21.        “Pass-Through Equipment”has the meaning
given such term in the Contract.

 

1.22.        “Payments” means all Rental Payments and all
Service Payments.

 

3

 

1.23.        “Penalty for Early Termination”means the
penalty to be charged to a Customer for the early termination of a Contract,
calculated in accordance with the terms of the Contract or as set forth in
Section A of EXHIBIT D.

 

1.24.        “Pro Rata Share” has the meaning given such
term in Section 5.7(b).

 

1.25.        “Purchase Price” means for any Assigned
Rental Payments and/or Assigned Service Payments purchased hereunder, the
amount agreed on between Buyer and Omnicell as the amount to be paid to
Omnicell for such Assigned Rental Payments and/or Assigned Service
Payments.  The typical method for determining the Purchase Price is set
forth in more detail in Section B of EXHIBIT D, and the Purchase
Price for each particular Transaction shall be fixed for that Transaction
provided the applicable Contract is delivered and executed by the Customer
within ninety (90) days of receiving credit approval by Buyer.

 

1.26.        “Purchase Program” means the Transactions
where Buyer purchases the Rental Payments and/or Service Payments under
Contracts, all pursuant to the terms and conditions of this Agreement.

 

1.27.        “Remarketing Period” means the period
beginning on the date Buyer tenders to Omnicell the legal right to possession
of any Equipment, and ending ninety (90) days later.

 

1.28.        “Remarketing Proceeds” means, as to any
Equipment remarketed pursuant to this Agreement, the sale price of any re-sold
Equipment, or the discounted present value (discounted at the Discount Rate, as
defined in Section C of EXHIBIT D hereto) of all lease payments
on any re-leased Equipment, net of any applicable taxes.

 

1.29.        “Rental Payments” means all amounts that a
Customer is required to pay periodically under a Contract as rental under a
lease, or principal and interest under a loan, with respect to the Equipment
and the Software subject to such Contract.

 

1.30.        “Service Agreement” means any agreement, or
any schedule, exhibit or attachment thereto, that sets forth the terms and conditions
upon which Omnicell provides service, maintenance and updated versions of
existing Software capabilities for Equipment or Systems set forth in a
Contract; provided, however, that
in the event that such service terms are incorporated into a Master Agreement,
or any similar document, in which there are obligations to make payments for
both (i) the lease of a System and (ii) the provision of related services, the
term “Service Agreement” shall refer to such combined agreement only insofar as
it relates to the provision of related services, maintenance and updated
versions of existing Software capabilities, and not the lease of equipment and
software.

 

1.31.        “Service Default”means (i) a Customer’s
assertion of any offset or recoupment rights, cancellation or early termination
rights, or defense to payment based upon Omnicell’s failure to fully perform
its obligations under any Service Agreement or (ii) a breach by Omnicell under Section 9.2(c)(i).

 

1.32.        “Service Payments”means all amounts that a
Customer is required to pay periodically under a Service Agreement.

 

1.33.        “Standard Rate” means the standard discount
rate to be applied to each Transaction in order to determine the Purchase Price
thereof.  The typical method for determining the Standard Rate is set
forth in more detail in Section B of EXHIBIT D.

 

4

 

1.34.        “System”means the Equipment and Software
included in a Contract that is subject to a Transaction.

 

(a)   “Equipment”
means certain equipment manufactured by Omnicell and Pass Through Equipment
together with all components and parts incorporated therein, and other
acquisitions, replacements, substitution and accessories incorporated therein
leased to a Customer as set forth in a Lease Supplement.

 

(b)   “Software”
means the Omnicell software products related to the Equipment licensed for use
to the Customer and embedded in the Equipment or specifically listed in a Lease
Supplement.

 

1.35.        “Title Transfer” has the meaning given to
such term in Section 4.4.

 

1.36.        “Transaction”means the purchase by, and
assignment to Buyer hereunder, of Rental Payments and/or Service Payments under
a lease or financing of a System, as set forth in Contract, for a specified
term during which Omnicell, or its assigns, may, if applicable, be the owner of
the relevant Equipment, and the Customer shall be allowed the use of the System
and/or Service Payments.

 

2.     ESTABLISHMENT
AND STRUCTURE OF PROGRAM.

 

2.1.          Financing Options Offered to Customers. Subject
to the terms of this Agreement, Buyer will assist Omnicell in the development
of new financing options that Omnicell may, in its sole discretion, offer to
prospective Customers in connection with this Purchase Program.  Financing
options or products that differ from the program described in the General Terms
and Conditions section of this Agreement, shall be specifically set forth and
incorporated in this Agreement via written and executed Riders attached
hereto.  Buyer and Omnicell each acknowledge and agree that the actual
financing options (i) offered and made available by Buyer under this Purchase
Program will be determined by Buyer in its sole and absolute discretion and may
change from time to time; and (ii) offered to any particular Customer will be
determined and offered by Omnicell in its sole and absolute discretion, and may
change from time to time; provided, however,
that Buyer may elect to enter into or not enter into a Transaction in its sole
and absolute discretion in accordance with the terms set forth in Section 3 hereof.

 

2.2.          Referral of Customers to Buyer Omnicell
will use commercially reasonable efforts to (i) advise prospective Customers of
the financing options offered by Omnicell under the Purchase Program; and (ii)
refer to the Purchase Program, on a nonexclusive basis, each prospective
Customer that has requested financing pursuant to the Purchase Program. 
Notwithstanding the above, nothing herein shall prohibit Omnicell from advising
such prospective Customers of options offered by other Omnicell programs, or
from running limited marketing programs whereby special options offered by
other entities are made available to prospective Customers without advisement
on Buyer’s offerings.

 

2.3.          Relationship Managers.  Buyer and
Omnicell will each appoint a relationship manager (“Relationship Manager”) to supervise the Purchase Program
described herein and to serve as the primary management contact between Buyer
and Omnicell under the Purchase Program.  Buyer’s Relationship Manager
shall be charged with monitoring the following areas:  Purchase Program
roll-out, Customer satisfaction, sales support, sales training, the development
of appropriate documentation, and the development of requested marketing
materials.

 

5

 

2.4.          General Administrative Support.  Buyer
shall provide general administrative and operations services in connection with
the Purchase Program, including but not limited to field sales support (when
and where mutually agreed upon by Omnicell and Buyer), credit investigation and
evaluation, document preparation, billing and collection, collection and
remittance of payment of applicable property, sales, use or similar taxes
pertaining to the System and customer service. Buyer will (i) advise Omnicell on
a weekly basis of the Standard Rates that are applicable to all Transactions,
(ii) maintain and operate systems which track the status of each Application
and Transaction, (iii) invoice Customers, collect payments, process and apply
funds, and (iv) collect and remit all applicable property, sales, use or
similar taxes pertaining to the System and prepare and file tax returns in
connection therewith.  In the event a Customer, serviced by Buyer, has a
good faith dispute with Buyer regarding the provision of the services described
in this Section 2.4, Buyer will
apply best efforts to resolve the dispute with such customer in such manner
that Omnicell’s relationship with the Customer is not negatively affected; provided, however, that in all cases,
subject to Section 5.1, Buyer
reserves the right to employ (or decline to employ) such lawful collection
procedures (including without limitation, litigation) as Buyer may determine
prudent in its sole and absolute discretion.

 

2.5.          Customer Support. Buyer personnel will
be available to answer Customer and Omnicell inquiries relating to the Purchase
Program or Transactions on business days (via a toll free telephone line)
between the hours of 8:00 a.m. and 5:00 p.m., Central Time in the United
States. Customer inquiries received when no personnel are available will be
recorded electronically and promptly responded to.  Buyer will conduct its
communications with Customers in a courteous, prompt and efficient manner.
Buyer shall use its best efforts to resolve all Customer complaints relating to
Transactions within two business days of receipt and, failing that, will keep
the affected Customer informed of the progress toward resolution on a regular
basis; provided, however, that
nothing in this Section 2.5 shall
be deemed to require Buyer to resolve or endeavor to resolve any Customer
complaints relating to the System, or the maintenance or servicing thereof,
which shall remain the sole responsibility of Omnicell.  Buyer shall use
its best efforts to immediately notify Omnicell in writing of all Customer
complaints relating to service, maintenance or the performance of the System.
Omnicell will take such actions it deems reasonable and appropriate in
resolving such complaints. Buyer shall periodically monitor the quality of
customer service and other aspects of the Program through scorecards or other
measurements, and shall seek improvement of such areas as are necessary. 
The rights and obligations of Buyer and Omnicell under this Agreement shall
remain unaffected by any such quality improvement activity.

 

2.6.          Sales Support. Buyer shall work with
Omnicell’s field sales organization (when and where mutually agreed upon by
Omnicell and Buyer) to structure and negotiate new Transactions and otherwise
support the Purchase Program and Omnicell sales efforts.

 

2.7.          Ongoing Training.  At the request of
Omnicell, Buyer may agree, in Buyer’s sole and absolute discretion, to sponsor
periodic training programs for Omnicell sales representatives and employees, at
which such individuals shall be trained on the techniques and benefits of using
leases and other financial products as sales tools, proper documentation, and
such other topics as the parties mutually agree upon.  Such training shall
be performed at sites as the parties mutually agree upon, and Buyer shall be
responsible for such training expenses as the parties mutually agree upon in
advance (which expenses shall not include transportation, and travel and living
expenses of Omnicell employees).

 

6

 

2.8.          Product Support.  Omnicell shall be
responsible for service and maintenance of Customer Systems, and shall offer
Service Agreementsto prospective Customers which provide for Systems service
and maintenance and updated versions of existing Software capabilities. 
The Service Payments due by the Customer are to be included as separate line
items in each Contract.

 

2.9.          Government and International Programs. With
respect to finance products for equipment/software provided to government entity
Customers or Customers in countries other than the U.S., each of Omnicell and
Buyer agrees that, in its sole discretion, it may choose to negotiate in good
faith any additional or differing terms and conditions from this Purchase
Program, to be set forth in one or more Rider attachments to this Agreement, as
the parties may require to take into account special terms for government
entities, local laws and customs and such other matters as the parties may
require.  If Buyer and Omnicell choose to negotiate such terms and
conditions in accordance with the preceding sentence, then Buyer agrees to
provide to Omnicell with drafts of such written Rider terms, together with
drafts of appropriate Customer financing documentation, within 30 days after
Omnicell requests that Buyer provide such additional or differing terms and
conditions with respect to a Purchase Program for government entities or for a
particular country.

 

3.     OFFER
AND ACCEPTANCE.

 

3.1.          Assets to be Sold.  The Parties hereby
agree that unless otherwise agreed in writing, each Transaction pursuant to
this Agreement shall include the sale and assignment of all of Omnicell’s
right, title and interest, but not its obligations or responsibilities, in, to
and under the Rental Payments, and, if so specified in the Assignment Agreement
the Service Payments, under the applicable Contract, and, if so specified in
the Assignment Agreement, all of Omnicell’s title or other interest in the
Equipment subject thereto, which Omnicell has offered, and Buyer has approved
and accepted, for purchase and assignment in accordance with the terms and
conditions hereof.  Buyer shall have the option with respect to each
Transaction (i) to provide pass-through service billing in accordance with Section 5.7 with respect to the applicable
Contract or (ii) to purchase the Service Payments under the applicable
Contract, and in either case Buyer shall at its sole cost and expense, perform
all the billing and collection of Assigned Payments and Service Payments due
and to become due with respect to such Transaction in accordance with the terms
of this Agreement.  If Buyer chooses to purchase the Service Payments
under the applicable Contract, the Assignment Agreement shall specify that such
Service Payments have been purchased by Buyer.

 

3.2.          Credit Submission.  In each instance
in which Omnicell invites Buyer to make an offer to purchase a Transaction
hereunder, Omnicell will, or shall cause a prospective Customer to, furnish
Buyer with a completed Application in order for Buyer to make a credit
determination. All information and materials furnished to Buyer shall be held
strictly confidential and shall be used by Buyer solely for the purpose of
making a decision whether or not to offer to purchase the Transaction.

 

3.3.          Credit Decision.  Buyer shall review
each Application upon receipt and either approve (which approval shall
constitute an offer to enter into a Transaction) or reject it, and shall notify
Omnicell: (a) of its determination, and (b) if Buyer has approved such Transaction,
as to whether Buyer will provide pass-through service billing in accordance
with Section 5.7 or purchase the
applicable Service Payments.  Buyer shall attempt to approve or decline an
Application, classify each prospective Customer and notify Omnicell of its
decision within: (i) two (2) business days after receipt of a complete
Application in the case of any proposed Transaction in which the proposed

 

7

 

Purchase Price does not exceed $2,000,000, and (ii) a reasonable time
(not to exceed five (5) days) after receipt of a complete Application in the
case of any proposed Transaction in which the proposed Purchase Price exceeds
$2,000,000.  Upon notification, Omnicell shall advise the prospective
Customer of the approval or rejection of the Application.

 

3.4.          Credit Rejection.  If the Application
has been rejected, then upon request of Omnicell, Buyer shall return to
Omnicell all credit information and materials furnished by Omnicell, and shall,
upon the prospective Customer’s request, provide Customer with an explanation
as to why the credit has been denied in accordance with the requirements of the
Federal Equal Credit Opportunity Act.  Buyer is not a credit reporting
agency and consequently Omnicell agrees that any details provided to
substantiate Buyer’s reason(s) for rejection of a specific proposed transaction
represent strictly Buyer’s opinion of the credit and financial risk(s) involved
in the proposed transaction, and not statements of fact.  Omnicell agrees
to keep all such details and statements of opinion strictly confidential, to
the extent permitted by applicable law.  Buyer agrees to provide to any
such proposed Customer any notice required by the Federal Equal Credit
Opportunity Act.

 

3.5.          Credit Approval.  If the Application
has been approved by Buyer, then, subject to acceptance of Buyer’s offer by
Omnicell in its sole discretion, either Omnicell or Buyer shall arrange for
delivery to, and completion by the Customer of, the Final Document Package and
for the subsequent delivery of the Final Document Package to Buyer.  A
credit approval shall be valid for a period of ninety (90) days after the date
Buyer notifies Omnicell of its approval of such Transaction (the “Documentation Period”).

 

3.6.          Revocation Rights After Approval. At
any time prior to payment of the Purchase Price, Buyer may revoke its agreement
to enter into a Transaction or to purchase the related Equipment and/or finance
the license of the related Software, and may transfer to Omnicell any right,
title or interest which it acquired in such Transaction or System if (i) Buyer
does not receive the Final Document Package from the Customer within the
Documentation Period); or (ii) prior to Buyer’s receipt of the Final Document
Package from the Customer or payment of the Purchase Price, Buyer determines,
in its sole and absolute discretion, that an Event of Cancellation has
occurred.  Upon revocation of its agreement to enter into a Transaction or
to purchase the related Equipment and/or finance the license of the related
Software, Buyer shall have no further liability to the Customer or to Omnicell
in connection with such proposed Transaction.

 

3.7.          Acceptance Certificate. Omnicell shall
provide Buyer with a certified copy of the Customer acceptance certificate duly
executed by the Customer indicating its unconditional acceptance for each item
of Equipment within 90 days of the date on which Buyer pays the Purchase Price
for the related Transaction;  provided,
however, that if Omnicell does not provide Buyer with such duly
executed certified copy of the Customer acceptance certificate for each item of
Equipment within 90 days of the date on which Buyer pays the Purchase Price,
then, for each affected item of Equipment, Omnicell agrees , at Buyer’s
request, to repurchase the Assigned Payments and related Equipment for a price
equal to the sum of the amount paid by Buyer for such Assigned Payments plus interest on such amount calculated
at an interest rate equal to the rate set forth in Section D of Exhibit
D hereto.  In the event of such purchase of Assigned Payments and
Equipment by Omnicell, Buyer shall make to Omnicell no representations or
warranties as to the sale of such Assigned Payments and Equipment except that
Buyer shall represent and warrant that it is conveying to Omnicell the title to
such Assigned Payments and Equipment that it received from Omnicell, that there
are no liens or encumbrances respecting such Assigned Payments or Equipment in
favor of any person claiming by, through or under Buyer, and that no act or
omission

 

8

 

of Buyer has adversely affected the amount, timing of payment, or
collectibility of the Assigned Payments unless disclosed in writing by Buyer to
Omnicell and as to which the parties have agreed to a price adjustment to the
repurchase price for the Assigned Payments.  Upon delivery to Buyer of a
duly executed certified copy of the Customer acceptance certificate for an item
of Equipment, a true sale of the Assigned Rental Payments related to such item
of Equipment shall be deemed to have occurred.

 

4.     ASSIGNMENT
AND PURCHASE OF TRANSACTIONS

 

4.1.          Limited Recourse to Omnicell.  Each
Party agrees that each sale of Assigned Rental Payments covered by this
Agreement is, and shall in all cases be treated as, a true sale and not as a
loan.  Except as expressly provided in
Sections 3.7, 10.1 and 12.2,
Assigned Rental Payments shall be sold and assigned hereunder without recourse
to Omnicell.  Buyer hereby assumes all risk of the Customer’s failure to
make Assigned Rental Payments, due to bankruptcy, insolvency, or other
financial inability to pay.

 

4.2.          Final Document Package Delivery.  As
soon as practicable after Buyer’s approval of a proposed Transaction, the Final
Document Package shall be delivered to the office designated by Buyer. 
Upon receipt of the Final Document Package, Buyer shall immediately examine all
documents submitted and shall promptly advise Omnicell of existing
deficiencies, if any.

 

4.3.          Standard Rates.    Buyer
shall have no obligation to enter into any Transaction, including, without
limitation, any Transaction that provides for a rate different from the then
current Standard Rate (or any special rate previously approved by Buyer in
writing).  With respect to Transactions approved by Buyer, Buyer shall
honor all Standard Rate quotations by Omnicell that predate the effective date
of a new Standard Rate, provided
that a Final Document Package is received by Buyer prior to the date of such
new quotation.  Standard Rates shall be effective upon notice to
Omnicell.  All Standard Rates that apply to Transactions that are intended
to be true leases for federal income tax purposes shall expire on December 31
of each year, unless otherwise indicated in writing by Buyer

 

4.4.          Equipment Title and Warranties.

 

(a)  Omnicell
(i) consents to the assignment from a Customer to Buyer of any purchase order
for Equipment represented in a Transaction hereto; (ii) consents to assignment
by Buyer to such Customer of all warranty rights in connection with the
Equipment related to such Transaction and acknowledges that Buyer intends to
permit the Customer to enforce such warranty rights in the Customer’s name
provided a Contract Default has not occurred, (iii) acknowledges that it has
transferred to the applicable Customer all warranty rights in connection with
the Software related to such Transaction, (iv) shall, upon the acceptance of
the related System by the applicable Customer, deliver to Buyer a properly
executed Assignment Agreement and a certified copy of the acceptance
certificate.  Omnicell and Buyer hereby agree that (i) any transfer to
Buyer, with respect to any Transaction, of title to the Equipment (a “Title Transfer”) is for the sole purpose of
facilitating Buyer’s billing and collecting of property taxes with respect to
such Equipment, (ii) the Title Transfer together with the corresponding option
of Omnicell to repurchase such Equipment as set forth in Sections 6.1 and 6.3, the formula for distribution of remarketing proceeds
under Section 8.5, and the formula
for distribution of insurance proceeds under
Section 4.8, are intended to convey to Buyer a security interest in
such Equipment to secure payment to Buyer of the Net Book Value of such
Equipment, and (iii) Buyer does not have any interest in the residual value of
the Equipment after payment to Buyer of the applicable Net Book Value.  In
the event Omnicell is

 

9

 

audited by a taxing authority with respect to any taxes paid by Buyer
pursuant to the terms of this paragraph, Omnicell agrees to hold Buyer and each
Customer harmless from and against any such tax liability and shall not assert
any claims against Buyer or Customer for reimbursement of the same to the
extent that Buyer can specifically show that such taxes were already paid by
Buyer and the Customer.

 

(b)  The
parties intend for each Transaction to be a true sale upon Buyer’s receipt of a
certified copy of a duly executed acceptance certificate for the Equipment
under such Transaction and not a loan by Buyer to Omnicell.  To the extent
that any Transaction is deemed to be a secured financing, Omnicell grants to
Buyer a security interest in the Assigned Rental Payments and the Equipment
(and the proceeds of each) subject to each Transaction to secure the payment of
the Net Book Value for such Transaction and authorizes Buyer to file financing
statement(s) to perfect such security interest;
provided, however, that Buyer shall provide Omnicell with a
reasonable opportunity to review and approve such financing statement(s) prior
to the filing of such financing statement(s).  Notwithstanding the
foregoing, Buyer may file a financing statement against Omnicell noting the
sale of Transactions hereunder without the approval of or notice to Omnicell,
except that such financing statements shall be in substantially the form sent
by DLL to Omnicell and approved by Omnicell prior to execution of this
Agreement.

 

4.5.          Risk of Loss.  Omnicell will bear all
risk of loss to the System until the date of its acceptance by the
Customer.  In the event any Customer returns or fails to accept any part
of the System for any reason whatsoever prior to the date on which Buyer pays
the Purchase Price to Omnicell, Buyer may assign its rights to Omnicell (and
Omnicell shall be required to accept such assignment) and Buyer will thereafter
have no further liability to Omnicell or to such Customer with regards to the
particular Transaction.

 

4.6.          Payment of Purchase Price.  Provided
that Buyer has not revoked its approval of a Transaction pursuant to Section 3.6 above, Buyer will fund the
applicable Transaction by paying Omnicell the applicable Purchase Price within
five (5) business days (or such other period as the parties mutually agree in
writing) following receipt by Buyer of the Final Document Package.  Upon
payment of the Purchase Price by Buyer, Buyer shall be deemed to have received
the Final Document Package in form and substance satisfactory to Buyer.

 

4.7.          Limitation on Acceptance of Transaction. The
purchase by Buyer of any Transaction hereunder shall not constitute or be
deemed an assumption or acceptance by Buyer or an imposition on Buyer of any
representation, warranty, obligation, covenant, liability or duty of Omnicell,
or of any manufacturer or supplier of the Equipment, under the Transaction or
any other agreement relating to the Transaction or the Equipment.

 

4.8.          Proceeds of Insurance.  Omnicell and
Buyer agree that any proceeds of insurance on the Equipment shall be paid (a)
first to Buyer, in an amount up to the Net Book Value of the affected Equipment
determined as of the date of the casualty to such Equipment, and (b) second to
Omnicell, in the amount of any surplus over the applicable Net Book Value.

 

4.9.          Perfection of a Contract. Omnicell
shall provide Buyer with a copy of each Contract containing a complete
description of the Equipment subject thereto, prior to or within five (5) days
of the delivery date of the first item comprising the System to a Customer with
respect to any Transaction.  Buyer shall then file aUCC-1 Financing
Statement against the Customer with respect to the System (which UCC-1 will
provide Buyer with a first priority security interest in the System

 

10

 

or Buyer shall have obtained lien subordination agreements from any
creditors of Customer with a conflicting, higher priority interest in the
System).

 

4.10.        Lease Extensions; Holdover Rent. This
Agreement covers the purchase and sale of Assigned Payments due under the
original term of certain Contracts.  If within 90 days after the
expiration of the original term of a Contract an extension of such Contract is
not entered into between the Customer and Omnicell then Buyer may, in its sole
discretion, with 30 days prior written notice to Omnicell, cease providing
billing and collection services with respect to such Contract, without any cost
or penalty to Buyer whatsoever. If a Customer extends a Contract beyond its
original term, Buyer shall have no interest in the Payments payable for the
extension unless such Payments are specifically purchased hereunder.

 

5.     COLLECTION
AND ADMINISTRATION

 

5.1.          Billing and Collection of Assigned Payments. 
Buyer will, at its sole cost and expense, perform all the billing and collection
of Assigned Payments due and to become due with respect to the Transactions
sold and/or assigned under this Agreement.  Buyer shall bill Customers and
pursue the collection of all amounts due under such Transactions in accordance
with its standard billing and collection procedures, but in no case shall Buyer
be obligated to take any affirmative steps (including, without limitation,
initiation of litigation or any other affirmative collection action(s)) to bill
or collect any Assigned Payments. Notwithstanding anything contained in this
Agreement to the contrary, Buyer may, from time-to-time in its sole and
absolute discretion, with prior written notice to Omnicell, decline to bill or
stop billing a Customer for any Assigned Payments, without any cost or penalty
to Buyer (but without recourse to Omnicell);
provided, however, that if Buyer declines to bill or stops billing a
Customer for any Assigned Payments, then Buyer shall (i) assign the affected
Assigned Payments and related Equipment to Omnicell for $1 and (ii)
notwithstanding anything to the contrary in this Agreement, Buyer shall not
have any recourse to Omnicell for any such Assigned Payments.  In the
event of such purchase of Assigned Payments and Equipment by Omnicell, Buyer
shall make to Omnicell no representations or warranties as to the sale of such
Assigned Payments and Equipment except that Buyer shall represent and warrant
that it is conveying to Omnicell the title to such Assigned Payments and
Equipment that it received from Omnicell, that there are no liens or
encumbrances respecting such Assigned Payments or Equipment in favor of any
person claiming by, through or under Buyer, and that no act or omission of
Buyer has adversely affected the amount, timing of payment, or collectibility of
the Assigned Payments unless disclosed in writing by Buyer to Omnicell and as
to which the parties have agreed to a price adjustment to the repurchase price
for the Assigned Payments.

 

5.2.          Deposit of Checks. Omnicell hereby
authorizes Buyer to deposit in its account all checks and collections delivered
to Buyer in the name of, or payable to, Omnicell and representing funds due to
Buyer in connection with any Transaction.

 

5.3.          Reporting.  Buyer shall provide
Omnicell with quarterly reports detailing:  (i) Application activity, (ii)
volume of funded Transactions, (iii) approved Transaction backlog, (iv)
delinquencies under the Program and (v) quote activity.

 

5.4.          Enforcement.  Omnicell agrees to
cooperate with Buyer in the enforcement of its rights under any Transaction,
including but not limited to support in litigation or other proceedings (at the
reasonable request and expense of Buyer) pertaining to or arising out of any
such Transaction;

 

11

 

provided however,
Omnicell shall not be required to itself take any legal action or to commence
any legal proceeding against the Customer.

 

5.5.          No Modification After Assignment. 
Except as contemplated by Sections 6.2
and 6.3 and by Service Agreements
of Omnicell, Omnicell shall have no right or authority to, and will not,
without the prior written consent of Buyer, (i) repossess or consent to the
return of any Equipment or (ii) modify the terms of any Transaction, if such
modification would adversely affect Buyer’s rights and remedies with respect to
the Assigned Payments.

 

5.6.          Repurchase of Transactions by Omnicell. 
In the event Omnicell repurchases any Transaction pursuant to this Agreement,
Buyer shall reassign the Transaction to Omnicell and its title to or security
interest in the related Equipment as is, where is, without representations or
warranties, other than that the Equipment is free of all liens and encumbrances
attributable to Buyer.  All documents, instruments, and other information
on such repurchased Transaction that Omnicell gave or provided Buyer with
respect to the Customer shall be returned upon request.

 

5.7.          Pass-Through Service Billing.

 

(a)  This Section 5.7 shall apply to Transactions
only to the extent that Buyer has not purchased the Service Payments under the
applicable Contracts.  With respect to each Service Agreement which
relates to Equipment under a Lease Supplement with respect to which Rental
Payments have been assigned to Buyer hereunder, Omnicell shall retain the right
to receive the related Service Payments but Buyer will, as an accommodation to
Omnicell, bill the applicable Customer for such Service Payments as provided
for herein.  Prior to Buyer undertaking such Service Payment billing,
Omnicell shall provide Buyer with a complete and accurate description of the
amount and frequency of the Service Payments to be billed.  Buyer will
remit to Omnicell on a monthly basis the Service Payments collected provided
that Buyer shall be entitled to deduct therefrom any or all amounts then due
Buyer from Omnicell, but Buyer shall not be entitled to deduct therefrom any
amounts owing to Buyer from Customers.

 

(b)  Provided
that no Contract Default has occurred and is continuing, in the event that any
Customer makes a payment to Buyer for amounts owed with respect to either or
both of Assigned Rental Payments and related Service Payments, and the amount
recovered (the “Amount Recovered”)
is insufficient to cover amounts then owing with respect to either or both of
Assigned Rental Payments and such related Service Payments, then the portion of
the Amount Recovered which is attributable to Assigned Rental Payments shall be
payable to Buyer and the amount of the Amount Recovered which is attributable
to Service Payments shall be paid to Omnicell;
provided that if it can not be reasonably determined whether the
Amount Recovered is attributable to Assigned Rental Payments or Service
Payments because the Customer has not made the payment with reference to a
particular invoice that relates only to Assigned Rental Payments or Service
Payments or the Customer has not otherwise specified to what the payment is to
be applied, then (except as otherwise required by law) Buyer shall pay over to
Omnicell, Omnicell’s Pro Rata Share.  “Pro
Rata Share” shall mean an amount equal to the Amount Recovered multiplied by: (i) in the case of
Omnicell, a fraction (A) the numerator of which is the amount of all Service
Payments then due under the applicable Service Agreement and (B) the
denominator of which is the sum of all Service Payments then due under the
applicable Service Agreement and the Assigned Rental Payments then due under
applicable Contract, and (ii) in the case of Buyer, a fraction (A) the
numerator of which is the sum of all Assigned Rental Payments then due under
the applicable Contract and the denominator of which is the sum of all Service
Payments then due

 

12

 

under the applicable Service Agreement and the Assigned Rental Payments
then due under applicable Contract.

 

(c)  Other
than sending regular, periodic bills to the Customer in accordance with the
express terms of the Service Agreement, Buyer shall not be required to take any
affirmative steps to collect any Service Payments.  Notwithstanding
anything contained in this Section 5.7
to the contrary, with respect to any given Service Agreement(s), Buyer may,
from time-to-time in its sole discretion, with prior written notice to
Omnicell, decline to provide or cease providing such billing services, without
any cost or penalty to Buyer whatsoever.

 

(d)  Omnicell
shall, upon demand, reimburse, indemnify, save and hold harmless Buyer, it
affiliates, subsidiaries, parents, shareholders, directors, officers, agents,
employees, attorneys, successors and assigns (each an “Billing Indemnified Party”), for, from and
against any and all third-party claims, demands, actions, losses, liabilities,
damages, penalties, fines costs and expenses (including without limitation,
court costs and reasonable attorney’s fees) (collectively, “Billing Claims”) made against or incurred
by a Billing Indemnified Party, directly or indirectly, which result from Buyer’s
billing and/or collection of the Service Payments provided such billing and
collection is performed in a manner consistent with this Section 5.7; provided further, however, that Omnicell shall not be
required to indemnify Buyer for any Billing Claims arising out of the
negligence or willful misconduct of Buyer.  Buyer shall not be responsible
for any indirect, incidental or consequential liabilities, losses, injuries or
cost, claims, demands, actions or damages (including without limitation lost
profits) incurred as a result of, or relating, directly or indirectly, to,
Buyer’s failure to perform in accordance with this subsection.  This
subsection shall survive the termination of this Agreement.

 

6.     END
OF TERM, EXTENSIONS AND UPGRADES, EARLY TERMINATION

 

6.1.          End of Term. Upon a Transaction
reaching its end-of-term, provided that Buyer has been paid the applicable Net
Book Value of such Transaction determined as of the end of the term of such
Transaction, Omnicell shall have the option to purchase the Equipment from
Buyer on an “as-is where-is” basis for One Dollar ($1.00). Buyer makes no
representations or warranties as to the condition of the Equipment, other than
that the Equipment will be free of all liens and encumbrances attributable to
Buyer.

 

6.2.          Extensions and Upgrades (Rollovers). If,
prior to the end of the initial term of a Contract, a Customer wishes to extend
the term of its existing Contract (an “Extension”),
which extension may or may not include new Equipment and/or new Software that
offers new capabilities (as opposed to an updated version of existing
capabilities) (an “Upgrade”),
Omnicell shall request, and Buyer shall provide, the Net Book Value for a
Customer buy-out of the Assigned Rental Payments together with the remaining
Assigned Service Payments discounted at the Standard Rate under the particular
Contract.  Omnicell will then offer to Buyer the proposed new Transaction
for approval and acceptance in accordance with the procedures set forth in Section 3 of this Agreement.  All
proposed Extension or Upgrade Transactions submitted hereunder will have a
Purchase Price that exceeds the Net Book Value of the original
Transaction.  Upon acceptance by Buyer of the new Transaction involving an
Extension and/or Upgrade, the original Transaction shall be deemed cancelled
without application of any Penalty for Early Termination, and the new
Transaction shall be deemed to have replaced, in total, such original
Transaction, and the amount due to Omnicell for the new Transaction involving
an Extension and/or Upgrade shall be the new Purchase Price less the Net Book
Value of the original Transaction determined as of the date of the

 

13

 

new Transaction and less
the Repurchase Price of any remaining Assigned Service Payments related
thereto.  If for any reason Buyer rejects funding of the new Transaction
involving an Extension and/or Upgrade then Buyer shall notify Omnicell of the
decline, and Buyer shall permit the Customer to terminate the original
Transaction(s) without penalty, upon Customer’s payment to Buyer of the then
current Net Book Value of such original Transaction, together with payment by
Omnicell of the Repurchase Price with respect to any remaining Assigned Service
Payments related thereto.  In each case, upon receipt of the Repurchase
Price, Buyer will pass title to the Remaining Unearned Payments to Omnicell free
and clear of all liens attributable to Buyer, and reassign any financing
statements related thereto.   Notwithstanding the foregoing, Omnicell
will not agree with a Customer to terminate a Contract prior to the expiration
of its original term in order to take advantage of lower interest rates.

 

6.3.          Early Termination. If any Customer
notifies a Party hereto that it wishes to terminate a Contract prior to the end
of the initial term of such Contract, other than in connection with an
Extension and/or Upgrade, such Party shall notify the other Party of the
Customer’s request.  Following such notification, Buyer shall permit the
Customer to terminate the applicable Contract upon (i) the expiration of a
thirty (30) day notice period and (ii) the payment to Buyer of an amount equal
to the Net Book Value of the applicable Transaction as of the date of
termination, plus the Penalty for Early Termination, plus the Repurchase Price
of any remaining Assigned Service Payments related thereto. Upon any
termination of a Contract hereunder and provided that Buyer has received the
Net Book Value of the applicable Transaction determined as of the date of
termination plus the Penalty for Early Termination plus the Repurchase Price
with respect to any remaining Assigned Service Payments related thereto,
Omnicell shall have the option to purchase the Equipment from Buyer on an “as-is
where-is” basis for One Dollar ($1.00).  Buyer makes no representations or
warranties as to the condition of the Equipment, other than that the Equipment
will be free of all liens and encumbrances attributable to Buyer.  Upon
receipt of the Repurchase Price, Buyer will pass title to such Remaining
Unearned Payments to Omnicell free and clear of all liens attributable to
Buyer, and reassign any financing statements related thereto.

 

7.     CUSTOMER
DEFAULTS

 

7.1.          Service Default.

 

(a)  If a
Customer alleges a Service Default with respect to a Transaction which includes
the sale of Service Payments to Buyer, then Buyer shall promptly give Omnicell
written notice of such alleged Service Default.  For a period of thirty
(30) days from the date of such notice (the “Investigation
Period”) (i) Buyer shall attempt to collect all Assigned Service
Payments owed by the applicable Customer to Buyer under the defaulted Contract
related to such alleged Service Default, and (ii) Omnicell shall have the right
to investigate the alleged Service Default and, if Omnicell determines such
allegation to be valid, to cure any and all Service Defaults.  If at the
expiration of such Investigation Period, Buyer has been unable to collect such
payments, Buyer shall so notify Omnicell in writing (a “Notice of Continuing Nonpayment”).

 

(b)  Upon
receipt of such Notice of Continuing Nonpayment, Omnicell shall, as Buyer’s
sole and exclusive remedy for a Service Default, cure the Service Default as
set forth below; provided, however,
that if by the expiration of the applicable Investigation Period Omnicell has,
with respect to each Service Default (A) cured such Service Default or (B) provided
Buyer with satisfactory (determined in Buyer’s reasonable discretion) evidence
that Customer’s Service Default allegation

 

14

 

is invalid, then Omnicell shall not be required to pay to Buyer any
amounts relating to such Service Default under this Section 7.1:

 

(i)   in
any case where the Service Agreement will remain in effect with the Customer,
Omnicell shall cure the Service Default by paying to Buyer, within thirty (30)
days of the expiration of the Investigation Period, the accrued and unpaid
Assigned Service Payments due under such Service Agreement as of the date of
Buyer’s Notice of Continuing Non-Payment, or

 

(ii)  in
any case whereby the Customer has terminated the Service Agreement prior to the
expiration of the stated term of such Service Agreement, then Omnicell shall
repurchase the unearned Assigned Service Payments from Buyer for a purchase
price equal to the Remaining Unearned Payments (defined below) originally
purchased by Buyer with each such payment discounted to its present value from
the date thereof to the date of the repurchase by Omnicell at the applicable
Standard Rate (the “Repurchase Price”). 
Upon receipt of the Repurchase Price, Buyer will pass title to such Remaining
Unearned Payments to Omnicell free and clear of all liens attributable to
Buyer, and reassign any financing statements related thereto. “Remaining Unearned Payments” means Assigned
Service Payments under Service Agreements to the extent that: (A) such payments
would have come due if not for the early termination of the applicable Service
Agreement, (B) such payments have not been paid by Customer as of the date of
such repurchase by Omnicell, and (C) Omnicell is no longer obligated to perform
the obligations relating to such payments.

 

7.2.          Contract Default.  The Parties hereby
acknowledge and agree there shall be no recourse to Omnicell for any Contract
Defaults; however, provided that Buyer has made the applicable Equipment
legally available for repossession by Omnicell, in the event of a Contract
Default, Omnicell agrees to use commercially reasonable efforts to obtain
possession of the System (with the assistance of Buyer where appropriate) for
the benefit of Buyer.  Omnicell shall not be required to take any legal action
or to commence any legal proceeding against the Customer to obtain
possession.  If possession of the Equipment is obtained under this
Section, Omnicell shall, at the request of Buyer, act on behalf of Buyer in
storing, repairing and remarketing the Equipment in accordance with the terms
of Section 8 below.

 

7.3.          Customer Bankruptcy.  If the Equipment
cannot be made legally available due to a Customer’s Event of Bankruptcy, and a
court of competent jurisdiction determines that the value of the System is less
than the value determined by Buyer, or the net present value of the payments
approved by such court may be less than the Net Book Value (determined as of
the date of default) of such defaulted Transaction,  Buyer shall notify
Omnicell of any relevant court proceeding of which Buyer receives notice at
which the value of the System may be discussed, and may appear at such
proceeding and submit evidence relating to the value of the System.
Notwithstanding anything in this Agreement to the contrary, Omnicell shall not
be required to repurchase any Assigned Rental Payments or Assigned Service
Payments under any Transaction, which Assigned Rental Payments or Assigned
Service Payments Buyer is unable to collect due to the insolvency, bankruptcy,
or financial inability to pay of any Customer.

 

8.     REMARKETING
ASSISTANCE

 

8.1.          Agreement to Remarket.  Upon any
repossession by Buyer of Equipment, Buyer shall promptly deliver such Equipment
to Omnicell.  In order to allow Omnicell to control the aftermarket for its
Equipment and in an attempt to obtain reasonable proceeds from Equipment
related to a Contract

 

15

 

Default in order to protect Omnicell’s residual interest in the
Equipment, Omnicell shall remarket such Equipment on behalf of Buyer as
provided below.  Omnicell shall have the exclusive right, and the
obligation to use commercially reasonable efforts, to remarket the Equipment on
a non-discriminatory, non-priority basis during the Remarketing Period in
accordance with the remarketing guidelines set forth in Sections 8.4 below.

 

8.2.          Appraisal.  Omnicell shall appraise
the Equipment and advise Buyer in writing of its best estimate of the Equipment’s
market value in an “as is/where is” condition.  Additionally, Omnicell
shall promptly provide Buyer with a written estimate of its costs of repair,
refurbishment, Software upgrade, insurance and remarketing (“Out-Of-Pocket Costs”).  If Buyer does
not approve such Out-Of-Pocket Costs, which approval shall not be unreasonably
withheld or delayed, Omnicell shall have a right of first refusal to purchase
the Equipment for an amount equal to the Net Book Value determined as of the
date of the applicable Contract Default.  If Omnicell does not exercise
such purchase option within 10 days after written notice of a decision by Buyer
to not approve the Out-of-Pocket Costs, Omnicell shall, at Buyer’s reasonable
expense, promptly cause the Equipment to be crated and safely delivered to a
location selected by Buyer.

 

8.3.          Repairs.  If Buyer approves the
Out-Of-Pocket Costs, Omnicell shall repair and refurbish the System, including
replacing the existing Software configuration with its most recent available
Software upgrades (if necessary), and attempt to remarket the System as set forth
below.  Buyer shall not be obligated to pay actual Out-Of-Pocket Costs
that exceed the estimated Out-Of-Pocket Costs by more than 10%.

 

8.4.          Manner of Remarketing.  During the
ninety (90) day Remarketing Period, Omnicell shall:

 

(a)  use
commercially reasonable efforts to remarket the System on a non-discriminatory,
non-priority basis, as compared to substantially similar used equipment and
software owned by Omnicell or owned by another party to whom Omnicell may be
bound to provide remarketing assistance (except that Omnicell shall not be
required to market the Equipment to any third party that would not be the
end-user of such Equipment, and Buyer acknowledges that Omnicell in the
ordinary course of its business will be engaged in the marketing of other
equipment and such activity shall not be a breach of any duty or warranty of
Omnicell as contained herein);

 

(b)  make
available maintenance service to any subsequent purchaser or lessee of the
Equipment and licensee of the Software at Omnicell’s then current market rates;

 

(c)  grant
a valid license to the Software to any subsequent purchaser or lessee of the
Equipment upon such purchaser’s or lessee’s acceptance of Omnicell’s standard
software license agreement;

 

(d)  not
permit any lien or encumbrance to attach to the System by or through Omnicell,
and will waive any right or claim to the Equipment which may arise in
connection with its remarketing services;

 

(e)  warrant
that the System that is delivered to customers will be in good working order,
condition and repair, conforming to specifications according to Omnicell’s
current warranty policy for used equipment and will meet all applicable
governmental standards; and

 

(f)   not
agree to any sales price or lease terms without Buyer’s prior approval, which
shall not be unreasonably withheld or delayed.

 

16

 

8.5.          Distribution of Remarketing Proceeds. 
If a buyer or new lessee is obtained by Omnicell or Buyer, the Remarketing
Proceeds shall be distributed as follows:

 

(a)  first
to the recovery by Omnicell of the costs and expenses of repossession,
remarketing and reconditioning the Equipment as directed by Buyer but not
previously paid to Omnicell by Buyer;

 

(b)  then
to Buyer for recovery of its Net Book Value (determined as of the date of the
applicable Contract Default) of the Transaction; and

 

(c)  last,
the remainder, if any, to Omnicell.

 

8.6.          Unsuccessful Remarketing.  In
Transactions involving Equipment, if the Equipment has been made legally
available for repossession and Omnicell has been unable to remarket the System
during the Remarketing Period, Omnicell shall return the Equipment to Buyer who
may remarket it and retain all proceeds from any resulting sale (unless the
Transaction does not constitute a lease, in which case any proceeds received by
Buyer that exceed the applicable Net Book Value (determined as of the date of
the applicable Contract Default) shall be remitted to the applicable Customer
or as otherwise required by law).

 

9.     REPRESENTATIONS,
WARRANTIES AND COVENANTS

 

9.1.          With Respect to this Agreement. Each
Party hereby represents, warrants and covenants to the other (and such other
Party’s permitted successors and assigns), as of the date hereof, of the
Application, and on each date that a Transaction is sold by Omnicell and
purchased by Buyer, that:

 

(a)  it
is a duly organized and validly existing corporation in its state of
incorporation and has full power to enter into this Agreement and to carry out
the transactions contemplated hereby;

 

(b)  the
execution and delivery of this Agreement and the performance by it of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action;

 

(c)  this
Agreement constitutes a legal, valid and binding obligation on its part,
enforceable in accordance with its terms;

 

(d)  neither
the execution of this Agreement nor the consummation of the transactions
contemplated hereby will constitute (i) a violation or default of any material
statute, rule, or decree of any court, administrative agency or governmental
body to which it is subject, or (ii) a material default with respect to any
material indenture, loan agreement or other material agreement to which it is
bound;

 

(e)  there
are no suits or proceedings pending or, to its knowledge, threatened in any
court or before any regulatory commission, or other administrative or
governmental agency against or affecting it which is reasonably likely to
materially impair its ability to perform its obligations hereunder or in connection
with any Transaction; and

 

(f)   it
shall notify the other Party promptly upon becoming aware of a Material Adverse
Change it experiences.

 

17

 

9.2.          With Respect to Each Transaction.

 

(a)  Omnicell
hereby warrants and represents with respect to each Transaction assigned
hereunder, as of the later of the date that the related Assigned Rental
Payments or Assigned Service Payments are sold by Omnicell and purchased by
Buyer or the date that Omnicell delivers a Customer acceptance certificate in
accordance with the terms of Section 3.7,
that:

 

(i)       neither Omnicell, nor
its agents have participated in or have any knowledge of any fraudulent act in
connection with such Transaction;

 

(ii)      all documents relating
to a Transaction to which Omnicell is a party or by which it is bound will be
genuine, legal, valid, and binding obligations of Omnicell;

 

(iii)     to the best of Omnicell’s
knowledge, in all documents where Omnicell is responsible for obtaining the
Customer’s signature, the signature of the named Customer is genuine, the
individual signing on behalf of the Customer holds the office set forth below
his signature and;

 

(iv)      it has not received and
kept any rent or other monies from any Customer in respect of any Transaction
(other than any required down payments) which is owed to Buyer and Omnicell
will promptly remit any funds owed to Buyer which it may receive;

 

(v)       the System will have
been delivered to the Customer after, or no more than five (5) days prior to,
Omnicell’s provision of a copy of the Contract to Buyer pursuant to Section 4.9 and thereafter accepted by the
named Customer, properly installed (in the customary manner) at the location
indicated in the applicable Application, and will be in good working order,
condition and repair, conforming to specifications, reasonable wear and tear
excepted, on the date title (subject to the terms and conditions of Section 4.4) to said specific Equipment is
transferred to Buyer;

 

(vi)      Buyer will have good
title (subject to the terms and conditions of
Section 4.4) to the Equipment and a first priority security interest
in the related licenses of Software governed by any Transaction, free and clear
of all liens, claims, and encumbrances on the date it is accepted by a Customer
on behalf of Buyer, subject only to the interest of the Customer under the
Contract and the interest of Omnicell under this Agreement;

 

(vii)    all sales, use, or property taxes applicable to the
System assessed or imposed prior to the time Buyer pays the applicable Purchase
Price, shall have been paid or shall be timely remitted by Omnicell to the
appropriate taxing authority and Omnicell shall on request provide Buyer with
proof of such payment as promptly as possible;

 

(viii)   the financial statements of Omnicell delivered to Buyer
from time to time fairly present the financial position of Omnicell as of the
dates thereof and the results of operations of Omnicell for the periods covered
thereby, all in conformity with generally accepted accounting principles
applied on a consistent basis; and

 

(ix)     Omnicell has or will deliver to Buyer concurrently
with payment of the Purchase Price the lessor’s sole original executed chattel
paper constituting the Lease Supplement to the Contract (and certified copies
of any master agreement not constituting chattel paper).

 

(b)  Buyer
hereby warrants, represents and covenants with respect to each Transaction
assigned hereunder, as of the date such Transaction is sold by Omnicell and
purchased by Buyer, that:

 

18

 

(i)       neither Buyer, nor its
agents have participated in or have any knowledge of any fraudulent act in
connection with such Transaction;

 

(ii)      it will honor any agreements made or warranties
given by Buyer, or its agents, under the Transaction to any Customer in
connection with such Transaction, provided they are in writing and duly
executed; and

 

(iii)     all documents relating to a Transaction to which
Buyer is a party or by which it is bound will be genuine, legal, valid, and
binding obligations of Buyer.

 

(c)  Omnicell
hereby covenants with respect to each Transaction assigned hereunder that:

 

(i)       it will not transfer or assign its obligation to
provide maintenance or to maintain service capability without the prior written
consent of Buyer, which consent will not be unreasonably withheld or delayed,
provided that this subparagraph will not prohibit the routine subcontracting of
maintenance or service obligations by Omnicell, and, provided further, that the
Customer shall not be obligated to have its System serviced by Omnicell; and

 

(ii)      it shall deliver to Buyer within one hundred twenty
(120) days of the close of each fiscal year, its audited financial statements
or annual report, and, within ninety (90) days of the close of the second
fiscal quarter, its six month unaudited financial report, certified by its
chief financial officer.

 

10.   INDEMNITIES

 

10.1.        By Omnicell.  Omnicell shall indemnify
and hold harmless Buyer, its officers, directors, employees and agents (each a “Buyer Indemnified Party”), from any losses,
claims, liabilities, demands and expenses, including reasonable attorneys’ fees
and additional tax liabilities (collectively “Buyer
Claims”) arising out of actions against such Buyer Indemnified Party
by any third-party resulting from (i) any breach by Omnicell of its
representations, warranties or obligations hereunder, or (ii) any act, failure
to act, omission, representation or misrepresentation by Omnicell, its
employees or agents in connection with any Transaction or with the sale, use,
operation, ownership, licensing, servicing or maintenance of the System,
including any strict liability therefor, or (iii) the failure of the System to
meet all federal and state standards applicable to the existence and operation
of the System, or (iv) the expiration or earlier termination of any patent or
copyright pertaining to any item of the System, or (v) any swap of Equipment or
Software comprising the System by Omnicell pursuant to the terms of any Service
Agreement; provided, however,
that for any Buyer Claim arising out of actions against such Buyer Indemnified
Party by any Customer, Omnicell shall not indemnify such Buyer Indemnified
Party for any failure to collect Assigned Rental Payments under any Transaction
or the cost of collection and enforcement of such Assigned Rental Payments.

 

10.2.        Buyer.  Buyer shall indemnify and hold
harmless Omnicell, its officers, directors, employees and agents (each an “Omnicell Indemnified Party”), from any
losses, claims, liabilities, demands and expenses, including without limitation
reasonable attorneys’ fees and additional tax liabilities (“Omnicell Claims”), arising out of (i) any
breach by Buyer of its representations, warranties or obligations hereunder or
(ii) any act, failure to act, omission, representation or misrepresentation by
Buyer, its employees or agents in connection with any Transaction.

 

19

 

10.3.        Limitations.  Notwithstanding anything
in this Agreement to the contrary, Omnicell shall not be required to indemnify
a Buyer Indemnified Party for any failure to collect Assigned Rental Payments
under any Transaction due to the insolvency, bankruptcy, or financial inability
to pay of any Customer.  In no event shall Omnicell or Buyer indemnify a
Buyer Indemnified Party or an Omnicell Indemnified Party, as applicable,
against liability for indirect, special, consequential or incidental damages
including loss of use, revenue or profit regardless of the form of the cause of
action. Neither a Buyer Indemnified Party nor an Omnicell Indemnified Party
shall be required as a condition to receipt of payments hereunder to contest or
to permit Omnicell or Buyer, as applicable, to participate in any contest in
connection with the foregoing or to attempt to recover from any Customer
through legal proceedings or otherwise.  All indemnities and obligations
under this Section 10.3 shall
survive the expiration or termination of this Agreement and the expiration or
termination of any Transaction, but shall not apply in the case of Buyer
Indemnified Party’s or Omnicell Indemnified Party’s negligence, gross
negligence or intentional misconduct.

 

10.4.        Notice.  If any Buyer Claim or action,
or any Omnicell Claim or action is brought or threatened against a Buyer
Indemnified Party or an Omnicell Indemnified Party, as applicable, and for
which Omnicell or Buyer, as applicable, is required to provide indemnity
hereunder (the “Indemnifying Party”),
such Buyer Indemnified Party or Omnicell Indemnified Party, as applicable,
shall promptly notify Indemnifying Party in writing of such Buyer Claim or
Omnicell Claim, as applicable.

 

10.5.        Defense of Claims.  Following the
receipt of notice if the Indemnifying Party has been given full authority,
information and assistance for the defense of same by Buyer Indemnified Party
or Omnicell Indemnified Party, as applicable, Indemnifying Party shall defend
such actions or Buyer Claims or Omnicell Claims, as applicable, at its expense
and pay all costs, damages and attorneys’ fees which may be awarded in any such
action against Buyer Indemnified Party or Omnicell Indemnified Party, as
applicable.  Buyer Indemnified Party or Omnicell Indemnified Party, as
applicable, shall take all reasonable actions (at the expense of Indemnifying
Party) as may be reasonably requested by Indemnifying Party to assist it in the
settlement and defense of such Buyer Claim or Omnicell Claim, as applicable.

 

11.   TERM
AND TERMINATION

 

11.1.        Term.  This Agreement shall be
effective as of the Effective Date first set forth on the Signature Page of
this Agreement and shall continue until terminated by either Party as set forth
in Section 11.2 below.

 

11.2.        Termination.  This Agreement may be
terminated (i) without cause with ninety (90) days prior written notice, or
(ii) upon the occurrence of the other Party’s breach of any material covenant
of this Agreement, which breach is not cured within thirty (30) days after
written notice to such breaching Party.  Upon the termination of this Agreement
for any reason, the obligations of the parties with respect to Transactions not
funded by Buyer shall cease, but all obligations with respect to Transactions
which have been funded by Buyer shall survive.

 

12.   EVENTS
OF DEFAULT, REMEDIES

 

12.1.        Events of Default.  Each of the
following shall be an “Event of Default”
under this Agreement.

 

20

 

(A)  If
any representation or warranty made by either Omnicell or Buyer in this
Agreement shall have proved to have been inaccurate in any substantial and
material respect as of the date or dates with respect to which it is deemed to
have been made.

 

(b)  If
either Omnicell or Buyer shall breach in any substantial and material respect
any material covenant in this Agreement.

 

(c)  If
either Omnicell or Buyer breaches any obligation to indemnify Buyer or
Omnicell, as applicable and as set forth in
Sections 10.1 or 10.2, hereof, as applicable.

 

12.2.        Remedies.

 

(a)  Upon
the occurrence and during the continuance of (i) an Event of Default by
Omnicell with respect to a particular Contract and (ii) a failure on the part
of the Customer under such Contract to pay Assigned Rental Payments when due
because of such Event of Default, which failure continues for more than sixty
(60) days, Buyer may by written notice to Omnicell declare Omnicell to be in
default of this Agreement or an Assignment Agreement and, as its sole remedy,
upon demand by Buyer require Omnicell to purchase for cash from Buyer in an
amount equal to the applicable Net Book Value, all unpaid Assigned Rental
Payments under any Contract as to which such Event of Default directly relates,
together with the related Equipment.  In the event of such purchase of
Assigned Rental Payments and Equipment by Omnicell, Buyer shall make to
Omnicell no representations or warranties as to the sale of such Assigned
Rental Payments and Equipment except that Buyer shall represent and warrant
that it is conveying to Omnicell the title to such Assigned Rental Payments and
Equipment that it received from Omnicell, that there are no liens or
encumbrances respecting such Assigned Rental Payments or Equipment in favor of
any person claiming by, through or under Buyer, and that no act or omission of
Buyer has adversely affected the amount, timing of payment, or collectibility
of the Assigned Rental Payments unless disclosed in writing by Buyer to
Omnicell and as to which the parties have agreed to a price adjustment to the
repurchase price for the Assigned Rental Payments.

 

(b)  Upon
the occurrence of an Event of Default by Buyer, Omnicell may by written notice
to Buyer declare Buyer to be in default of this Agreement and, upon demand by
Omnicell, Buyer shall pay in a lump sum to Omnicell, Omnicell’s actual damages
incurred and reasonably to be incurred by Omnicell by reason of such breach or
misrepresentation.

 

13.   MISCELLANEOUS

 

13.1.        No Joint Venture. Buyer and Omnicell
acknowledge that they are separate entities, each of which has entered into
this Agreement for independent business reasons.  Nothing in this
Agreement shall be deemed to constitute the creation of a partnership or joint
venture for legal purposes.

 

13.2.        Assignments.  Neither Party may assign
any of its rights or obligations hereunder without written consent of the other
Party; provided that either Party may without prior written consent assign any
of its rights hereunder or under any Transaction to an affiliate or other
entity in which a majority of the common stock is owned directly or indirectly
by such assigning Party, and Omnicell may without prior written consent assign
any of its rights to payment hereunder to any party.  Buyer may, in its
sole discretion, securitize or syndicate its rights under any Transaction.

 

13.3.        Confidentiality.  From time to time
either Party may provide information to the other Party which is plainly marked
as “Confidential.”  The Parties agree to take reasonable steps to preserve
the

 

21

 

confidential nature of such information and to prevent its disclosure
to third parties. Such information shall not be considered confidential if (i)
it is already in the public domain, or (ii) it is obtained from an independent
source (unless such independent source is known by the recipient to be legally
bound to refrain from such disclosure), or (iii) it is independently developed
by the receiving party without reference to the confidential information, as
demonstrated by the receiving party’s files and records immediately prior to
the date of disclosure.  The Parties will fulfill their obligations
hereunder if they exercise the same degree of care to preserve and safeguard
such confidential information as they use to preserve and safeguard their own
confidential information, but no less than “reasonable care.”  The Parties
may disclose confidential information to their respective affiliates, and
confidential information relating to specific Transactions may be disclosed by
Buyer to its representatives and agents, in the event that such Transactions
are referred for collection, and to any purchaser or administrator, in the
event that such Transactions are syndicated or securitized, provided that the
receiving party agrees to be bound by the terms hereof in writing. Nothing
herein shall be deemed to prohibit disclosure of confidential information that
is required by law, so long as the disclosing party, so far as practicable,
consults with the other party prior to such disclosure and takes such steps as
the other party may reasonably request to mitigate the effect of such
disclosure.

 

13.4.        Notices.  All notices, consents,
requests, instructions, approvals and communications provided herein shall be
validly given, made or served, effective only if in writing, except as
otherwise provided herein, and sent by (i) U.S. registered or certified mail,
postage prepaid, and return receipt requested, (ii) a nationally recognized
overnight delivery; or (iii) electronic facsimile (promptly confirmed in
writing) to the other Party at the address and/or facsimile number first stated
above, or to such other address and/or facsimile number as such party may
designate in writing.

 

13.5.        Governing Law.  This Agreement will be
governed by and construed in accordance with, the laws of the State of
California, other than any choice of law rule that would cause the application
of the laws of any other jurisdiction, as such laws apply to contracts between
California residents performed entirely within California.  The United Nations
Convention on Contracts for the International Sale of Goods does not apply to
this Agreement.

 

13.6.        Venue. Any action or proceeding
arising from or relating to this Agreement must may be brought in a federal
court in the Northern District of California or in state court in Santa Clara
County, California, and each party irrevocably submits to the jurisdiction and
venue of any such court in any such action or proceeding.

 

13.7.        Severability.  If any part of this
Agreement shall be contrary to any law which either party might seek to apply
or enforce or should otherwise be defective, the other provisions hereof shall
not be affected thereby but shall continue in full force and effect, to which
end they are hereby declared severable.

 

13.8.        Headings.  The headings of the
sections of this Agreement are for convenience only and shall not be used to
interpret or construe this Agreement.

 

13.9.        Counterparts. This Agreement may be
executed in counterparts, each of which will be considered an original, but all
of which together will constitute the same instrument.

 

13.10.      Entirety; Amendments.  This Agreement,
together with the Exhibits, Riders, Schedules and addenda referred to herein,
constitute the entire agreement between Buyer and Omnicell as to the

 

22

 

subject matter contemplated herein, and supersedes all prior agreements
and understandings relating thereto.  No other agreements will be
effective to change, modify or terminate this Agreement in whole or in part unless
such agreement is in writing and duly executed by the party to be charged
except as expressly set forth herein.  In the event there is any conflict
between this Agreement and any ancillary agreements with respect to any
Transaction, the terms and conditions of the relevant Exhibit, Schedule, Rider
or addenda shall control.

 

23

 

EXHIBIT
A

 

REQUIRED
DOCUMENTS

 

A.            Application Documents.

 

1.     a complete description of the
Equipment;

2.     payment terms requested;

3.     estimated Equipment delivery date;

4.     a complete copy of the proposed
Customer’s most recent three fiscal year end audited financial statements
including all notes thereto;

5.     if more than six months have elapsed
since the end of the immediately prior fiscal year end, the most recent interim
financial statement and a comparable interim statement from the prior year; and

6.     a copy of any written lease proposal
presented to the potential Customer by Omnicell.

 

B.            Final Documents.

 

1.     Assignment Agreement (in the form
substantially as shown below);

2.     a copy of the Customer’s Master
Agreement;

3.     a copy of the Customer’s Master
Service Agreement (if different from Master Agreement);

4.     the original Lease Supplement(s)
representing the relevant Transaction and/or Supplement(s) to Service Agreement
being assigned to Buyer;

5.     a purchase order from Customer or a
mutually agreeable Customer billing reference number;

6.     an Assignment Letter (as shown on Exhibit B); and

7.     evidence of current insurance by
Customer as required pursuant to the terms of a Contract.

 

24

 

EXHIBIT
B

 

A.  Form of Assignment
Agreement.

 

AMENDMENT
AND ACKNOWLEDGEMENT OF ASSIGNMENT

 

This Amendment and Acknowledgement of Assignment (this “Amendment”) is made and entered into as of
the           day of  ,
20     by and between                                         (“Customer”) and Omnicell, Inc. (“Omnicell”).

 

Whereas, Customer and Omnicell are executing,
contemporaneously with this Amendment, that certain SCHEDULE A-2, PRICING
SUPPLEMENT NO.        FOR FINANCED PRODUCTS dated                                                     
(the “Pricing Supplement”) subject
to the terms of that certain Schedule B, FINANCING SCHEDULE dated               
(the “Financing Schedule”) entered
into subject to certain GENERAL TERMS AND CONDITIONS dated                between
Omnicell and the Customer (the “Master
Agreement”) (the Pricing Supplement, the Financing Schedule and the
Master Agreement shall be collectively referred to herein as the “Agreement”); and

 

Whereas, Customer and Omnicell wish to amend and
supplement the terms of the Agreement as hereinafter set forth;

 

NOW, THEREFORE, in exchange for the mutual promises
and agreements hereinafter set forth, and for other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged,
Customer and Omnicell hereby agree as follows:

 

1.             Definitions.  Except as otherwise
specifically defined herein, terms used herein shall have the same meanings as
set forth in the Agreement.

 

2.             Modification of Section 1.5 of the Financing Schedule. 
The Financing Schedule is hereby amended, solely as it pertains to the Pricing
Supplement, by adding the following as the last sentence of Section 1.5 thereof:

 

“Customer hereby acknowledges and agrees that Omnicell is assigning the
right to Monthly Lease Payments for the Financed Products described in that
certain Schedule A-2, Pricing Supplement For Financed Products dated                                           (the “Pricing
Supplement”) entered into hereunder to                               (the “Finance
Company”) but the Finance Company is only being assigned the rights
to such Monthly Lease Payments and is not undertaking any of Omnicell’s
obligations under the Agreement.  (Omnicell shall remain solely liable for
all performance obligations as the rentor under the Agreement, all warranties
as manufacturer and/or supplier, all claims under any service contract
(including, without limitation, any related Schedule D (Support Services
Schedule)) or any other matters concerning the Financed Products. 
CUSTOMER ACKNOWLEDGES AND AGREES THAT ANY CLAIMS AGAINST OMNICELL UNDER THE
AGREEMENT OR AS VENDOR OR SUPPLIER OF THE EQUIPMENT OR UNDER ANY SERVICE CONTRACT
SHALL BE MADE SOLELY AGAINST OMNICELL AND NOT THE FINANCE COMPANY AND THAT THE
OBLIGATION TO MAKE MONTHLY LEASE PAYMENTS TO THE FINANCE COMPANY OR ITS
SUCCESSORS OR ASSIGNS IS ABSOLUTE AND UNCONDITIONAL AND SHALL NOT BE SUBJECT TO
ANY DISPUTES, CLAIMS, DAMAGES, LIABILITIES, OR OFFSETS AGAINST ANY PAYMENTS DUE
UNDER ANY AGREEMENTS FOR ANY REASON WHATSOEVER (INCLUDING, WITHOUT LIMITATION,
REMEDIES ARISING FROM NON-PERFORMANCE BY OMNICELL OR FROM ANY FAILURE OF, OR
DAMAGE TO,

 

25

 

THE EQUIPMENT).  Monthly Lease Payments and Monthly Support Fees
under the Agreement on or after this date shall be remitted to Finance Company
(or its successors or assigns) to the address referenced on the invoices. 
Any assertion of remedies for non-performance (including, if applicable claims
requesting credits against monthly service payments under the Service
Supplements,) must be directed ONLY to Omnicell and shall not limit or
otherwise affect Finance Company’s unconditional right to collect full payments
under the Agreement.”

 

3.             Insurance Information.  Customer
represents and warrants that the insurance information set forth is true and
correct, and Omnicell acknowledges receipt of same:

 

	
  NAME OF INSURANCE COMPANY

  	
   

  
	
   

  	
   

  
	
  NAME OF AGENCY

  	
   

  
	
   

  	
   

  
	
  ADDRESS

  	
   

  
	
   

  	
   

  
	
  TELEPHONE #

  	
  POLICY #

  
	
   

  	
   

  
	
  POLICY EXPIRATION DATE

  	
  ; CONTACT PERSON AT
  AGENCY

  

 

4.             Miscellaneous.  This Amendment shall
inure to the benefit of, and be binding upon the parties and their respective
successors and permitted assigns.  This Amendment, together with those
provisions of the Agreement not deleted or modified hereby, represents the
entire agreement between the parties as to the subject matter hereof, and
supersedes all prior oral and written negotiations, agreements and understandings. 
To the extent any current provision of the Agreement conflicts with any
provision added to the Agreement or modified via this Amendment, the provision
added via this Amendment shall control.  As amended herein, the terms and
conditions of the Agreement shall remain in full force and effect.  No
modification or addition to this Amendment shall be effective unless such
modification or addition is in writing and signed by both parties.

 

IN WITNESS WHEREOF, the parties have executed this
Amendment as of the date and year first above written.

 

	
  Omnicell, Inc.

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  By:

  
	
  Print:

  	
  Print:

  
	
  Its:

  	
  Its:

  

 

26

 

EXHIBIT
C

 

OMNICELL
CUSTOMER FORMS

 

27

 

 

OMNICELL MASTER RENTAL AND
SERVICE AGREEMENT

 

 

	
  Dated

  	
   

  	
   

  	
  Master Rental and Service Agreement #

  

 

Dear Customer:  In this Omnicell
Master Rental and Service Agreement (the “Master Agreement”), we use the words “you”
and “your” to mean the Customer indicated below. The words “we”, “us”, and “our”
refer to Omnicell, Inc., a Delaware corporation (“Omnicell”).

 

	
  Omnicell Mailing Address

  	
   

  	
  Customer Billing Address

  	
   

  	
  Customer Delivery Address

  
	
   

  	
   

  	
  Customer Legal Name:

  	
   

  	
   

  
	
  Omnicell, Inc.

  	
   

  	
   

  	
   

  	
   

  
	
  1201 Charleston Rd

  	
   

  	
   

  	
   

  	
   

  
	
  Mountain View CA 94043

  	
   

  	
   

  	
   

  	
   

  
	
  Attn.: 
  Accounts Payable

  	
   

  	
   

  	
   

  	
   

  
	
  Tel: 
  1-800-850-6664

  	
   

  	
  State of Organization:

  	
   

  	
  Tax-Exempt Certificate Attached o

  
	
   

  	
   

  	
  Customer DEA:  

  	
   

  	
  *Tax may be charged if not attached.

  

 

A.            RENTAL PROVISIONS

 

1.               Rental Terms. We agree to rent to you and you agree to rent
from us certain Omnicell System or Sure-Med System equipment (together with all
replacement parts that you may receive under Section B. of this Master
Agreement, the “Equipment”), and we agree to license to you and you agree to
license from us the accompanying Software (as defined below), in each case, as
more fully described in the applicable supplement signed by the parties (the “Supplement”),
which will become a part of this Master Agreement. Each
Supplement will be subject to, and incorporate by reference, all the terms,
conditions, and agreements set forth in this Master Agreement. The terms and
conditions on your purchase order will be for reference purposes only. Any
terms and conditions included in your purchase order that contradict or are in
addition to the terms of the Master Agreement are invalid and will have no
force and effect. You agree that each Supplement will be signed by your
representative having the authority to bind the Customer. You
agree to pay the monthly rent for each unit of Equipment (the “Monthly Rental
Payment”) for the number of consecutive months set forth in the applicable
Supplement. All Equipment will be new unless otherwise noted as “used” or “reconditioned”
on the relevant Supplement.

 

2.               Additional Equipment. If you would like to add Equipment to
your system, we will send you a Supplement listing such additional Equipment (“Additional
Equipment”), and you will issue to Omnicell a purchase order for the Additional
Equipment, attaching a signed copy of the Supplement. The Monthly Rental
Payment per unit will be as set forth in the Supplement. Upon receipt of your
purchase order (with the signed Supplement attached), we will deliver the
Additional Equipment in accordance with the terms of this Master Agreement.

 

3.               Term and Rental Payments. The initial lease term for the
Equipment will commence upon your execution of the applicable Supplement and
shall continue as set forth on such Supplement (the “Initial Rental Term”). You
understand that time is of the essence as to your performance. You will be invoiced for the first Monthly Rental
Payment within ten (10) days after execution of the Supplement. You
agree to pay all subsequent Monthly Rental Payments in advance and no later
than the date designated on the invoice. Monthly Rental Payments due do not
include any applicable taxes. If any Taxes (as defined in Section C.1. below)
are due, we will invoice you for them and you agree to pay the Tax in a timely
manner, in addition to your Monthly Rental Payments. Monthly Rental Payments
will be made at such place as we may designate in writing. You authorize us to
insert for the purposes of the rental, the serial numbers of the Equipment, and
other information into each invoice.

 

4.               Insurance. You agree, at your own cost and expense, to (a)
keep the Equipment fully insured against loss until this Master Agreement is
paid in full and to have us (or our assignee) named as sole loss payee on all
such policies; (b) obtain a general public liability insurance policy in an
amount and from an insurance company, in each case, acceptable to us and to
include us as an additional insured on the policy; (c) provide us certificates
or other evidence of such insurance acceptable to us; and (d) have your
insurance company notify us of any significant changes in coverage during the
term of this Master Agreement. If you do not provide us with acceptable
evidence of insurance, we may, but will not be required to, buy such insurance
for you and add a charge to your Monthly Rental Payments which will include the
premium cost, costs associated with effecting the insurance and a carrying
charge of 1.5% per month on the

 

28

 

unpaid premium cost, or
the highest rate allowed by applicable law, whichever is lower. We are under no
obligation to obtain such insurance, and any loss resulting during a period in
which the Equipment is uninsured will be borne by you.

 

5.               Software. So long as your Monthly Service Payments (as
defined in Section B.1. below) remain current, we grant you the right to use
one copy only of any software we provide to you relating to the operation,
information storage and retrieval, record keeping, and communication of the
Equipment (the “Software”) only in the manner described in the written
materials accompanying the Software and solely as installed on the Equipment in
object code form. You agree not to use the Software in any other way. You agree
that (a) the structure and organization of the Software are valuable trade
secrets of ours; (b) you will protect the Software as you would other
confidential, copyrighted material; (c) we own the Software and any copies of
it; (d) the Software is licensed to you only for your use in connection with
the Equipment; and (e) you will not assign, sub-license or otherwise grant
rights in the Software. You agree not to modify, decompile, reverse engineer,
disassemble, or otherwise attempt to obtain the source code of, the Software
(or encourage any third party to do so).

 

Named User Licenses.
Certain Software options or products are subject to license keys that limit the
number of named users to the number paid for by Customer. You agree that your
users will not share user IDs or passwords as a means to use and pay for fewer
licenses than the actual number of users.

 

License Keys.
Certain Software options and products are subject to license keys that limit
the number of instances of an option or product to the number paid for by
Customer. Customer agrees not to reverse engineer the code for these license keys,
or in any other way attempt to invoke more instances of the Software options or
new products than the number paid for.

 

6.               Risk of Loss. All shipments are FOB Omnicell’s Dock. You
agree to assume and bear the entire risk of casualty or damage to the Equipment
from any cause whatsoever from the date of shipment of the Equipment to your
premises. No casualty or damage will relieve you from the obligation to make
payments or to comply with any other obligation under this Master Agreement. Your acceptance of delivery of any Equipment
hereunder will be deemed your acknowledgement that all of the Equipment listed
in the applicable Supplement (a) has been received, (b) shows no obvious signs
of physical damage, and (c) is accepted by you for all purposes under this
Master Agreement.

 

7.               Ownership of Equipment. We are the owner of the Equipment
and Software and will retain at all times title to the Equipment and the
Software delivered to you hereunder. No transfer of title to the Equipment or
the Software has occurred by virtue of the execution of this Master Agreement. This
Master Agreement is an operating lease, and no title will be transferred to you
upon expiration of the lease.

 

8.               Location of Equipment. You agree to keep and use the
Equipment only at your delivery address shown above. You agree that the
Equipment will not be removed from that address unless you get our written
permission in advance to move it.

 

9.               Return of Equipment. If you choose to return the Equipment
at the end of this Master Agreement, you agree to (a) return the Equipment to
us promptly in a condition as good as received, allowing for normal wear and
tear, to any place in the continental United States that we designate; (b)
prepay all expenses of crating and shipping by means we designate and (c)
insure the shipment properly. At our option, we will supply you with crating
and packing materials. You agree to pay Monthly Rental Payments for each month
(or part thereof) following the expiration of the Initial Rental Term until the
Equipment is returned.

 

1              SERVICE PROVISIONS

 

1.               Scope. Provided
you timely pay the monthly service payments (“Monthly Service Payments”)
designated on the applicable Supplement, we agree to provide master service on
the Equipment and the Software as described in Section B.4. below. Response
times and service plans for third party product offerings may differ slightly
from those offered by Omnicell. A summary of these terms and conditions is
available from your Omnicell sales representative. You agree to pay the Monthly
Service Payment for each item of Equipment with the Monthly Rental Payment for
that Equipment, unless it is designated on the applicable Supplement that a
Monthly Service Payment is not due. See also Section C.12. below with respect
to renewals.

 

2.               Terms and Payments. The term of the service portion of this Master Agreement for a unit of
Equipment will be from the date of the applicable invoice through the last day
of the month in which the final Monthly Rental Payment will be made. You will be invoiced for the first Monthly Service
Payment within ten (10) days after execution of the Supplement.

 

3.               Installation. We will install any Equipment for which you agree to pay a Monthly
Service Payment. You agree to execute an Omnicell Installation Worksheet prior
to any Equipment installation. We will make commercially reasonable efforts to
complete the installation of such Equipment in a timely manner upon receipt of
confirmation that

 

29

 

the Equipment has arrived at your location. Installations completed
within 240 days of shipment will be
performed at no charge. After the 240-day
period, Omnicell will charge Customer a flat fee per frame for installation. Prior
to arrival of the Equipment at your location, you agree to provide (a) adequate
space for the Equipment under conditions suitable to the proper functioning of
the Equipment; (b) clean commercial power including our specified Uninterrupted
Power Supply (“UPS”) and the necessary communication cable (telephone extension
cable and jack or Local Area Network (“LAN”) connection and jack) to each
location where the Equipment will be placed; and (c) a mutually agreeable means
of remote access for service (“RAS”) at the location of the server(s), with one
alternative being a dedicated direct inward dial (DID) communication line. If
this dedicated RAS line is not provided, service will be charged at twice the
quoted monthly fee amount until a dedicated RAS line is put in place. We will
provide all installation personnel, tools, equipment, and material necessary to
install the Equipment and will install it in a workmanlike manner.

 

4.               Master Service. We will perform service to keep the Equipment, the Software, and our
portion of any software or hardware interfaces in good working order based on
the specific needs of the item of Equipment or Software as determined by us. Master
service will include adjustments and replacements of parts as we deem necessary.
If we are unable to repair an item of Equipment, we will replace it. Replacement
parts will be furnished on an exchange basis. In the event any Equipment
becomes disabled for any reason, you agree to immediately advise us of the
disability, specifying where the Equipment is located, the nature of the
disability and any known cause. Any repairs or adjustments to the Equipment
must be performed by an individual specifically trained in the application and
use of the Omnicell System. During normal business hours, we will use our good
faith efforts to respond to emergency service requests. THIS MASTER
AGREEMENT DOES NOT ASSURE UNINTERRUPTED OR ERROR FREE SERVICE. We
will provide service whether or not the Equipment has been used properly in
applications for which it was intended, provided that service required due to
misapplication, abuse, misuse, alteration, or unauthorized repair or
installation will be charged as described in Section B.5. below.

 

5.               Additional Fees for Service. With respect to service required due to
misapplication, abuse, misuse, alteration, or unauthorized repair or
installation, Customer agrees to be charged for the service at our minimum
charge, plus our hourly rate after the first four (4) hours of service and the
list price for any replacement parts required. Additionally, in the event you
require any Additional Fee-Based Services as described in the Master Agreement
Plans, you agree to be charged according to the corresponding schedule of
charges. For any Software service performed without a functional RAS line in
place, Customer agrees to be charged twice the quoted Monthly Service Payment,
plus twice our hourly charge after the first four (4) hours of service. We will
charge at our rates and charges in effect at the time the service is performed.
You agree to provide us with entry and access to the location of the Equipment
for purposes of providing service and repair.

 

6.               Interfaces. You
agree to provide service for your side of any Software or Hardware interfaces.

 

(a)          Interface Software and
Service at No Charge.
Omnicell agrees to provide to you three initial interfaces within
the first twelve (12) months from the date of invoice for the affected
Equipment. The Omnicell side of the interface includes software
that will run on the Omnicell System and will receive messages or records from
the applicable Hospital Information System (“HIS”), such as ADT/Patient
Management, Patient Accounting, Pharmacy or Materials Management. The format of
the interface messages or records, and the communications mechanism will be
mutually agreed upon by Omnicell, the HIS vendor, and you. Software
installation, software set-up, and up to 20 hours of testing (30 hours for
Pharmacy or Supply Inventory Replenishment) are included as part of our side of
each interface. We are not responsible for (A) producing and transmitting
interface messages or records from the HIS; (B) receiving and processing
interface messages or records on the HIS; or (C) development, installation,
set-up, or testing of the HIS side of each interface. We are only responsible
for receiving HIS interface messages or records and processing them on the
Omnicell System.

 

(b)          Chargeable Interface
Software and Service.
We will charge you for the following Software and services:

 

(1)         Interface Modifications: 
We will charge you a fee for modifications to an interface after initial
installation, testing, and your acceptance of that interface. Modifications
include, but are not limited to: (A) change in record format; (B) change in
communications mechanism; (C) addition of new record types; and, (D) addition
of new processing functionality.

 

(2)         Additional Interfaces: 
Any interfaces in addition to the ADT Interface, Patient Charge
Interface, and Supply Inventory Replenishment Interface, including initial
interfaces not written within the first twelve (12) months described in
subsection (a) above will be charged to you at Omnicell’s then-current rate per
interface. The specifications for each interface will be mutually agreed upon
by us, the vendor responsible for the other side of the interface, and you.

 

30

 

(3)         Replacement of an Existing
Interface:  If an existing interface between the Omnicell
System and one of your Hospital Information System (“HIS”) systems must be
replaced by a new interface, the implementation of the replacement interface
will be charged to you at Omnicell’s then-current rate per interface. The
specifications for the replacement interface must be collectively agreed upon
by us, the vendor responsible for the other side of the interface, and you.

 

(4)         Services After the
Anniversary Date of Invoice:  After
the date which is 12 months from the date of invoice of the affected Equipment,
all interface services described in 6(a) above will be charged at Omnicell’s
standard rates then in effect.

 

7.               Training. We
will provide training in the system management and use of the Equipment at an
Omnicell location to one of your employees selected by you, who is qualified to
act as “System Administrator”. The System Administrator is responsible for (a)
administering and managing the performance of the Equipment, including
maintaining the files and monitoring the performance of the Equipment; (b)
reviewing and evaluating all end-user requests for service and (c) informing
Omnicell of any problems that the System Administrator cannot resolve. The
System Administrator Training course can be completed within two to three days
at an Omnicell facility, and tuition fees for your designated employee will be
waived provided the training is concluded within ninety (90) days from the
initial installation date of the Equipment at your location. Travel and other
related expenses for System Administrator Training will be your responsibility.
We will also provide reasonable end-user training for each location of
Equipment.

 

8.               Biomedical Services Agreement. At your option, you may enter into an
Omnicell Biomedical Services Agreement, whereby Omnicell will train your
Biomedical staff to provide first-tier support for first response to service
calls, as well as additional support to be mutually agreed by the parties. In
consideration for your staff taking first call and providing additional
support, Customer’s Monthly Service Payment will reflect a discount off of the
contract price for service, once the Biomedical Services training has been
completed. If your Biomedical staff does not take first call (ex. attempt a
hardware repair) and Omnicell on-site assistance is required, Omnicell will
charge for on-site service on a time and materials basis. Biomedical Services
training must be completed within ninety (90) days of execution of the relevant
Supplement for you to receive the discount from the outset of the Master
Service Agreement. The cost of the class per person, including tuition, books
and materials, is set forth in the price quote provided by your Omnicell sales
representative. Travel and other related expenses for Biomedical Services
training will be your responsibility.

 

9.               Upgrades.
So long as you remain current in your Monthly Service Payment, Omnicell will
issue the following technical and functional improvements to improve Software
operations at no additional charge: (a) workarounds: changes in the procedures
followed or data supplied to avoid an error without significantly impairing
performance of the Software; (b) updates: repairs or replacements of source,
object, or executable code versions of the Software to remedy an error; or (c)
upgrades: any published revisions to the documentation accompanying the
Software and one (1) copy of any new release of the Software meant primarily to
enhance existing features or functionality of the Software. Some Software
releases may also require an upgrade to hardware. The Monthly Service Payment
does not include hardware changes needed to accommodate new releases. Upgrades
do not include options or new products for which Omnicell charges customers
additional fees. Options and new products are technical or functional releases
that provide capabilities outside the original intent and/or scope of the
Software. A separate fee will be charged for each option or new product, and
for any hardware required in connection with each upgrade, option or new
product.

 

2              GENERAL PROVISIONS

 

1.               Taxes, Assessments, and Fees. You agree to pay any licensing
and registration fees required by the jurisdiction where the Equipment is
located, all personal property taxes assessed against the Equipment and the
Software, if any, and all other taxes, assessments, fees and penalties (local,
state, and federal) which may be levied or assessed on the ownership, leasing,
rental, sale, purchase, importation, possession, use, installation or servicing
of the Equipment and the Software (collectively, “Taxes”), excluding any Taxes
on or measured solely by our net income. Your Monthly Rental Payments and
Monthly Service Payments shown in the Supplement do not include any applicable
Tax. If any Taxes are due, we will forward the invoice or tax bill to you and
you agree to pay the Tax by the applicable due date. We may, but are not
obligated to, pay such Taxes and may file such returns on your behalf if you
fail to do so, and you agree to reimburse us upon demand for any amount
expended for such Taxes, including fees or penalties paid by us hereunder. Your
obligations to pay such Taxes which are due or assessed during the term of this
Master Agreement are in addition to your obligation for Monthly Rental Payments
or Monthly Service Payments, as applicable, and will survive the expiration or
termination of this Master Agreement.

 

31

 

Notwithstanding the foregoing
paragraph, if you are a tax-exempt entity, then no Taxes should be imposed on
this transaction, other than property taxes, which you agree to pay as set
forth above. If you fail to provide Omnicell a copy of the certificate evidencing
your tax-exempt status, Omnicell may invoice you for Taxes until such time as
we receive the certificate. Should your tax-exempt status change during the
term of this Master Agreement, then the previous paragraph will apply from the
date your change in tax status becomes effective.

 

2.               Late Charges. If any amount you owe under this Master
Agreement (including without limitation any part of a Monthly Rental Payment or
Monthly Service Payment) is more than ten (10) days late, you agree to pay (a)
interest on any overdue amount at the rate of ten percent (10%) per annum, or
the maximum rate allowed by law, whichever is less, and (b) a service charge of
five percent (5%) of the amount overdue.

 

3.               Default. You will be in default of this Master Agreement if:  (a) you fail to pay timely any amounts due
hereunder; (b) you materially breach any of the terms, conditions, warranties
or representations of this Master Agreement, or any other agreement between you
and us relating to the Equipment or the Software; (c) any execution or writ of
process is issued in any action or proceeding to seize or detain any item of
Equipment; (d) a proceeding in bankruptcy, receivership or insolvency is
instituted by or against you; (e) you enter into any agreement or compromise with
your creditors; or (f) you become insolvent or unable to pay your debts when
due.

 

4.               Remedies. At any time thirty (30) days after we provide you
with written notice of your default, we will have the right to: (a) take
immediate possession of the Equipment and the Software without any process of
law, enter upon any premises where the Equipment may be and remove it without
notice of our intention to do so, without being liable in any action or other
proceeding by you; (b) at our option, sell or re-rent the Equipment including
the Software at any public or private sales for cash or on credit and you will
be liable for the expenses incurred in the repossession, recovery, storage,
repair, sale, re-rent, re-licensing and court costs, in addition to any arrears
in payment and the balance of the payments provided for herein, together with
reasonable attorneys fees, less the net proceeds of disposition, if any, of the
Equipment; (c) accelerate all sums payable under this Master Agreement and any
other agreements with us and require you to immediately pay us all sums that
are already due and the discounted value, at the discount rate of six percent
(6%) as of the date of default, of all payments that will be due under this
Master Agreement, plus our estimate at the time this Master Agreement was
entered into of our residual interest in the Equipment and Software reduced to
present value at a discount rate of six percent (6%) as of the date of default,
less the net proceeds of disposition, if any, of the Equipment and Software;
and/or (d) exercise any other remedy available to us at law or equity, notice
thereof being expressly waived by you. Any sums accelerated under this Section
will be due and payable upon notice of acceleration and demand for payment and
if not so paid, we may institute legal proceedings against you with your being
responsible for said sums, court costs, and reasonable attorneys’ fees incurred.
Our rights hereunder will be cumulative. You agree that all sums due under the
calculations above will become immediately due and payable and are to be
construed as liquidated damages rather than a penalty provision. You agree that
any delay or failure to enforce our rights under this Master Agreement does not
prevent us from enforcing any rights at a later time.

 

5.               Further Assurances. You agree to provide such additional
documents, instruments, and Uniform Commercial Code financing statements to
assist us in completing the transactions contemplated by this Master Agreement
to protect our rights or our assignee’s rights to the Equipment. You hereby
agree to authorize us to file UCC financing statements, amendments, and
assignments relating to the Equipment in any location and execute the same as
your attorney-in-fact. If we assign this Master Agreement, you agree to execute
such documents as we may reasonably request confirming your obligations under
this Master Agreement and you agree to make all Monthly Rental Payments and
other amounts due under this Master Agreement directly to the assignee. If it
is determined that the Monthly Rental Payment includes interest, no such
interest will exceed the amount legally allowed.

 

6.               Liability and Limitation of Liability. WE ARE NOT
RESPONSIBLE FOR ANY LOSSES OR INJURIES ARISING FROM THE INSTALLATION,
OPERATION, CONDITION, POSSESSION OR USE OF THE EQUIPMENT OR THE SOFTWARE. OUR
TOTAL LIABILITY UNDER THIS MASTER AGREEMENT WILL NOT EXCEED THE AMOUNT PAID BY
YOU HEREUNDER. IN NO EVENT WILL WE BE LIABLE FOR ANY LOST PROFITS, COST OF
COVER, OR OTHER SPECIAL, CONSEQUENTIAL, OR INCIDENTAL DAMAGES ARISING OUT OF
THIS MASTER AGREEMENT. TO THE EXTENT PERMITTED BY LAW, YOU HEREBY WAIVE ANY
RIGHTS NOW OR HEREAFTER CONFERRED BY STATUTE OR OTHERWISE WHICH MAY REQUIRE US
TO SELL, LEASE, LICENSE OR OTHERWISE USE ANY EQUIPMENT OR SOFTWARE IN
MITIGATION OF OUR DAMAGES.

 

7.               Copyright Indemnity. WITH RESPECT TO THE SOFTWARE, WE AGREE
TO INDEMNIFY AND DEFEND YOU AGAINST ANY CLAIMS FOR INFRINGEMENT OF ANY U.S.
COPYRIGHT (WITH RESPECT TO THE SOFTWARE AS DEFINED IN SECTION A.5.), PROVIDED
THAT WE WILL CONTROL THE DEFENSE AND SETTLEMENT OF ALL SUCH CLAIMS. YOU AGREE
THAT SUCH INDEMNITY AND DEFENSE WILL BE

 

32

 

OUR SOLE LIABILITY TO YOU
AND YOUR SOLE RECOURSE IN THE EVENT A CLAIM OF U.S. COPYRIGHT INFRINGEMENT
BASED ON THE SOFTWARE IS BROUGHT AGAINST YOU.

 

8.               Indemnification. You hereby assume all liability for, and
agree to indemnify and defend us and our successors, assigns, agents and
employees against any and all liabilities, losses, damages, claims and expenses
(including reasonable attorney fees) in any way relating to or arising out of
this Master Agreement, the Equipment, the Software or the installation, use,
possession, control, return, condition or operation of the Equipment or the
Software, including without limitation, claims arising in contract or tort,
including negligence, strict liability, products liability or otherwise, except
for claims resulting from Omnicell’s gross negligence or intentional
misconduct, or claims for U.S. copyright infringement as described in Section
C.7. Your obligation to indemnify us will survive the expiration or termination
of this Master Agreement.

 

9.               Limited Warranties. We hereby warrant that, if the Equipment
is defective in workmanship or materials, or if the Software we provide is
defective during the term of this Master Agreement, we will repair or replace,
at our option, the defective part, parts, Software, or Equipment, and you agree
that such repair or replacement will be your sole remedy and recourse in the
event of such defect. THE WARRANTY GRANTED HEREIN DOES NOT COVER ANY PRODUCTS
THAT YOU MAY USE, CREATE, OR INSTALL THAT IS NOT PROVIDED BY US. THIS WARRANTY
IS IN LIEU OF ALL OTHER WARRANTIES, EXPRESSED OR IMPLIED, INCLUDING WARRANTIES
OF MERCHANTABILITY, NONINFRINGEMENT, USE AND FITNESS FOR A PARTICULAR PURPOSE. THIS
WARRANTY WILL BE VOID AND OF NO FORCE OR EFFECT IF WE DETERMINE THAT ANY
EQUIPMENT OR SOFTWARE DEFECT IS DUE TO YOUR MISUSE OR NEGLECT OR ANY
UNAUTHORIZED REPAIRS OR TAMPERING WITH THE EQUIPMENT OR SOFTWARE. YOU AGREE
THAT YOUR OBLIGATIONS TO MAKE MONTHLY RENTAL PAYMENTS ARE NOT SUBJECT TO ANY
CLAIMS OR DEFENSES WHICH YOU MAY HAVE DUE TO PERFORMANCE UNDER THE SERVICE
PORTION OF THIS MASTER AGREEMENT OR THE WARRANTIES CONTAINED IN THIS SECTION
C.9.

 

10.         HIPAA;
Compliance with Laws. The parties acknowledge and agree that
Omnicell may be considered a “business associate” under the privacy and
security regulations promulgated under the Health Insurance Portability and
Accountability Act (HIPAA) because Omnicell occasionally may access protected
individually identifiable health information (“PHI”) in the course of providing
service under this Master Agreement. In the limited circumstances where
Omnicell accesses PHI, we will appropriately safeguard PHI, and will comply
with applicable legal requirements relating to PHI to the same extent that our
customers would be required to comply with such requirements. Customer agrees
to operate the Equipment in accordance with applicable laws and regulations,
including HIPAA. Likewise, Omnicell agrees to perform its service obligations
in accordance with applicable laws and regulations, including HIPAA.

 

11.         No
Termination. This Master Agreement may not be terminated early.

 

12.         Automatic
Renewal. At the end of the term for each unit of Equipment, you may
choose to: (a) return the unit of Equipment and any accompanying Software to
us, or (b) request a Supplement from Omnicell and issue a purchase order, in
each case extending this Master Agreement for the applicable Equipment. If you do not notify us in writing of your
selection of one of the previous two options prior to the end of any term, this
Master Agreement will automatically convert to a month-to-month rental and
service agreement at the then-current month-to-month rental and service rates
for the affected Equipment. In case of such conversion to a
month-to-month rental and service agreement, all provisions of this Master
Agreement will remain in full force and effect.

 

13.         Assignment.
Without our prior written consent, you have no right to directly or indirectly
sell, transfer, assign, encumber, sublease, or sublicense (a) the Equipment,
(b) the Software, or (c) this Master Agreement. We may sell, assign, encumber,
or transfer this Master Agreement and any or all of our rights created by it
subject to your rights hereunder. Any such assignment will not relieve us of
our obligations to you and you agree not to hold any assignee liable for any of
these obligations. You agree that the rights of the new owner or assignee will
not be subject to any claims, counter-claims, defenses, or set-offs that you
may have against us, including warranty claims with respect to the Equipment or
claims with respect to service provided under Section B. We may subcontract any
part of our obligations under the service portion of this Master Agreement,
provided we will remain primarily liable to for the obligations and duties to
provide service hereunder.

 

14.         California
Law, Jurisdiction and Venue. This Master Agreement will be
construed, governed, interpreted, and enforced in accordance with the laws of
the State of California and will be deemed to be fully and solely executed,
performed, and/or observed in the State of California. All actions or
proceedings arising under this Master Agreement will be brought in the Federal
Courts of the Northern District of California or the State Courts located in
Santa Clara County, State of California, and the parties hereby consent to and
waive any objection to the jurisdiction of such court.

 

15.         Notices.
Any notices given under this Master Agreement will be deemed received five (5)
days after the date of mailing, one (1) day after dispatch by overnight courier
service, or upon receipt if by hand delivery.

 

33

 

16.         Severability.
If any provision of this Master Agreement is held to be invalid or otherwise
unlawful, void, or for any reason unenforceable, then that provision will be
enforced to the maximum extent permissible by law so as to effect the intent of
the parties, and the remainder of this Master Agreement shall continue in full
force and effect.

 

You agree to all the terms and conditions of this Master Agreement.
These terms and conditions are a complete and exclusive statement of our agreement
with respect to the subject matter hereof and may be modified only by a written
agreement signed by both of us and not by course of performance. Any terms and conditions on any purchase order you
submit in conjunction with this Master Agreement will be invalid and of no
force or effect to the extent such terms and conditions contradict or are in
addition to the terms of this Master Agreement. By signing this
Master Agreement, each of us represents that he/she has the authority to bind
our respective parties to this Master Agreement.

 

	
  Accepted:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  OMNICELL, INC.

  	
   

  	
  CUSTOMER

  
	
   

  	
   

  	
   

  
	
  Signature

  	
   

  	
   

  	
  Signature

  	
   

  
	
   

  	
   

  	
   

  
	
  Print Name:

  	
   

  	
   

  	
  Print Name:

  	
   

  
	
   

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
  Date:

  	
   

  	
   

  	
  Date:

  	
   

  
											

 

34

 

Omnicell
Service Plans(1)

 

	
   

  	
   

  	
  Disabled System

  (Delivered Products are unavailable

  for clinical use)

  	
   

  	
  Non-Critical Failure

  (All support states other than

  Disabled)

  
	
  Phone
  Support

  	
   

  	
  24 Hours/Day

  7 Days/Week

  
	
  Phone
  Engineer Live Coverage

  	
   

  	
  6AM to 10PM CST 7Days/Week

  
	
  Answering
  Service Coverage

  	
   

  	
  10PM to 6AM CST 7 Days/Week

  
	
  Maximum
  Response Time via Phone:

  	
   

  	
  30 Minutes

  (Monday-Friday 6AM – 6PM CST)

  2 Hours

  (Monday-Friday 6PM – 6AM CST & Saturday-Sunday)

  
	
  Response
  Time On-Site:

  	
   

  	
  Platinum:

  	
  3 Hours (where avail)

  	
   

  	
   

  
	
  (Maximum)

  	
   

  	
  Gold:

  	
  6 Hours

  	
   

  	
  24 Hours

  
	
   

  	
   

  	
  Shared Service:

  	
  6 Hours*

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  
  

  

  

  
	
   

  	
   

  	
  *First Response By
  Customer Mandatory

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  On-Site
  Availability (if necessary)

  	
   

  	
  24 Hours/Day

  7 Days/Week

  
	
  Uptime
  Commitment

  	
   

  	
  Platinum:

  	
  98%

  	
   

  	
   

  
	
   

  	
   

  	
  Gold:

  	
  96%

  	
   

  	
  N/A

  
	
   

  	
   

  	
  Shared Service:

  	
  N/A

  	
   

  	
   

  
	
  Repair/Replacement
  Parts

  	
   

  	
  Included

  
	
  Remote
  Software & Interface Diagnostics

  	
   

  	
  Included (Requires VPN)

  Proactive Remote Available via Secure Server

  

 

Rate
Schedule

 

	
  Service Category

  	
   

  	
  Rate

  
	
  Spare
  Parts On Site

  	
   

  	
  40% Discount

  
	
  Standard
  Time & Materials (Customer is not currently purchasing Support Services
  from Omnicell)

  	
   

  	
  $250 / Hour (4 hour minimum)(2)

  
	
  Time
  & Materials (Non Standard Support Services)

  	
   

  	
  $175 / Hour (4 hour minimum)(2)

  

 

35

 

 

Master Agreement #           

 

OMNICELL
MASTER AGREEMENT

 

This MASTER AGREEMENT, dated as of        , 200     (“Effective
Date”), is made and entered into by and between Omnicell, Inc., a
Delaware corporation (“Omnicell”)
and        ,
a       corporation (“Customer”)
(each individually, a “Party,” and collectively, the “Parties”) and
includes the General Terms and Conditions and all Schedules, Attachments and
Exhibits attached hereto as indicated by an ‘X’
marked in a box to the left of the appropriate Schedules, Attachments and/or
Exhibits as specified below (collectively, the “Agreement”).

 

General
Terms and Conditions

 

	
  ý

  	
  Schedule A

  	
  Pricing Supplement

  
	
   

  	
   

  	
   

  
	
  ý

  	
  Schedule B

  	
  Financing Schedule

  
	
   

  	
   

  	
   

  
	
   

  	
  ý

  	
  Attachment B-1 Assignment Letter

  
	
   

  	
   

  
	
   

  	
  ý

  	
  Attachment B-2 Non-Appropriations Rider

  
	
   

  	
   

  
	
  ý

  	
  Schedule C

  	
  Software License Schedule

  
	
   

  	
   

  
	
  ý

  	
  Schedule D

  	
  Support Services Schedule

  
	
   

  	
   

  
	
   

  	
  o

  	
  Attachment D-1 
  Shared Services Rider

  
	
   

  	
   

  
	
  o

  	
  Schedule E

  	
  OmniBuyer Schedule

  
	
   

  	
   

  
	
  ý

  	
  Schedule F

  	
  Tax Documentation

  
				

 

	
  Omnicell

  Mailing Address

  	
   

  	
  Customer

  Billing Address

  	
   

  	
  Customer

  Delivery Address

  
	
   

  	
   

  	
  Customer
  Legal Name:

  	
   

  	
   

  
	
  Omnicell,
  Inc.

  	
   

  	
   

  	
   

  	
   

  
	
  1201
  Charleston Rd

  	
   

  	
   

  	
   

  	
   

  
	
  Mountain
  View, CA 94043

  	
   

  	
   

  	
   

  	
   

  
	
  Attn.:  Accounts Payable

  	
   

  	
   

  	
   

  	
  Tax-Exempt Certificate Attached
  o

  
	
  Tel:
  1-800-251-6664

  	
   

  	
   

  	
   

  	
  *
  Tax may be charged if not attached.

  

 

Both Parties agree to all the terms and
conditions of this Omnicell Master Agreement. These terms and conditions are a
complete and exclusive statement of the Agreement with respect to the subject
matter hereof and may be modified only by a written agreement signed by both of
the Parties and not by course of performance. By signing this Agreement, each
Party represent that it has the authority to bind its respective Party to this
Agreement.

 

	
  Accepted:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  OMNICELL

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Signature

  	
   

  	
   

  	
  Signature

  	
   

  
	
   

  	
   

  	
   

  
	
  Print Name:

  	
   

  	
   

  	
  Print Name:

  	
   

  
	
   

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  	
  Title:

  	
   

  
									

 

36

 

* All defined terms are capitalized herein and defined in
Section 9.

 

1.             ORDERING
& PAYMENT

 

1.1          Initial Order. This Agreement sets
forth the terms and conditions applicable to various commercial transactions
between Customer and Omnicell (and its assigns, as applicable). Such
transactions may include (a) the purchase of Purchased Products and/or
Pass-Through Equipment, (b) the financing of Financed Products and/or Support Services, (c) the license of Licensed Software, and/or (d) the provision by Omnicell of Support Services, in each case as set forth on one or more Pricing
Supplements attached hereto as Schedule A and supplemented by the applicable terms and conditions of the
applicable portions of this Agreement. The terms and conditions
on Customer’s purchase order will be for reference purposes only. Any terms and
conditions included on Customer’s purchase order that contradict or are in
addition to the terms of the Agreement are invalid and will have no force and
effect. Customer agrees that each purchase order will be signed by a
representative having the authority to bind the Customer.

 

1.2          Follow-On Orders. In the event that
Customer desires to add
additional Delivered Products or additional Support Services, Omnicell will
send Customer an additional Pricing Supplement substantially in the form of the
initial Pricing Supplement set forth in Schedule A listing such
additional Delivered Products and/or Support Services (“Additional
Products”) such additional supplements will be identified
sequentially commencing with Schedule A-1, and Customer will issue to
Omnicell a purchase order for such Additional Products, attaching a copy of the
additional Pricing Supplement. The purchase price per unit will be as set forth
in such additional Pricing Supplement. Upon receipt of Customer’s purchase
order (with the additional Pricing Supplement attached), Omnicell will deliver
the Additional Products in accordance with the terms of this Agreement and any
applicable Pricing Supplement.

 

1.3          Payment Terms and Late Fees. Customer agrees to pay, when due, all
Scheduled Payments set forth on the applicable Pricing Supplement. Unless
otherwise expressly stated in an applicable Pricing Supplement, all amounts due
under this Agreement shall be due and payable by Customer thirty (30) days
after the date of an applicable invoice. Any amounts due under this Agreement
not received by Customer within fifteen (15) days of the due date shall be
subject to (a) a service charge of one and one half percent (1 1/2%) per month,
or the maximum charge permitted by law, whichever is less, and (b) a service
charge of five percent (5%) of the amounts overdue. Invoices that are not disputed in writing within thirty (30) days from
the date of invoice may not be contested nor offset by Customer for any reason.

 

1.4          Taxes. Customer
shall pay all taxes, duties, levies, tariffs or similar charges of any kind
(including withholding or value added taxes) imposed by any federal, state,
local, or other governmental entity for products or services provided under
this Agreement, excluding only taxes based solely on Omnicell’s net income. If
any taxes are due, Omnicell will invoice Customer and Customer agrees to pay all taxes in a timely manner. Omnicell
may, but is not obligated to pay such taxes and may file such returns on
Customer’s behalf if Customer fails to do so, and Customer agrees to reimburse
Omnicell upon demand for any amount expended for such taxes, including fees or
penalties. Customer shall hold Omnicell harmless from all claims
and liability arising from Customer’s failure to support or pay any such taxes,
including duties, levies, tariffs or similar charges. In addition, Customer
agrees to complete the Tax Document set forth in Schedule F.

 

Notwithstanding the foregoing paragraph, if Customer is a
tax-exempt entity, then no taxes should be imposed on this transaction, other
than property taxes, which Customer agrees to pay as set forth above. If
Customer fails to provide Omnicell a copy of the certificate evidencing
Customer’s tax-exempt status, Omnicell may invoice Customer for Taxes until
such time as Omnicell receives the certificate. Should Customer’s tax-exempt
status change during the Term, then the previous paragraph will apply from the
date Customer’s change in tax status becomes effective.

 

1.5          Insurance. Until the
Purchase Price or all Monthly Lease Payments, as applicable, for a unit of the
Delivered Products are paid in full, Customer agrees, at its own cost and
expense, (a) to keep such Delivered Product fully insured against loss; (b) to
name Omnicell as an additional insured on all applicable insurance policies;
(c) provide Omnicell, at Omnicell’s option, certificates or other evidence of
such insurance reasonably acceptable to Omnicell and (d) have Customer’s
insurance company notify Omnicell of any material changes in coverage during
the term of this Agreement.

 

2.             INTERFACES & TRAINING

 

2.1          Initial Interfaces.
Omnicell agrees to provide to Customer the Omnicell side of three initial
interfaces within the first twelve (12) months from the date of invoice for the
affected Delivered Products. Such interfaces will run on the Omnicell System
and will receive messages or records from the applicable Hospital Information
System (“HIS”), such as ADT/Patient Management, Patient Accounting, Pharmacy or
Materials Management. The format of the interface messages or records, and the
communications mechanism will be mutually agreed upon by Omnicell, the HIS
vendor, and the Customer. Interface installation, interface set-up, and up to
20 hours of testing (30 hours for Pharmacy or Supply Inventory

 

37

 

Replenishment)
are included as part of Omnicell’s side of each interface. Omnicell is not
responsible for (A) producing and transmitting interface messages or records
from the HIS; (B) receiving and processing interface messages or records on the
HIS; or (C) development, installation, set-up, or testing of the HIS side of
each interface. Omnicell is only responsible for receiving HIS interface
messages or records and processing them on the Delivered Products.

 

2.2          Additional, Modified or Replacement
Interfaces. For all additional, modified or replacement
interfaces not included in the original Pricing Supplement, Omnicell will charge
Customer its then-current rates for such interfaces. Modified interfaces
include, but are not limited to: (A) change in record format; (B) change in
communications mechanism; (C) addition of new record types; and, (D) addition
of new processing functionality. Additional interfaces include those interfaces
that are in addition to the ADT Interface, Patient Charge Interface, and Supply
Inventory Replenishment Interface. Replacement interfaces shall include any
replacement to an existing interface between the Omnicell system and one of
Customer’s HIS systems. The specifications for the additional modified or
replacement interfaces must be collectively agreed upon by Omnicell, the vendor
responsible for the other side of the interface, and the Customer.

 

2.3          Training. Omnicell
will provide training in the system management and use of the Delivered
Products at a location identified in an applicable Pricing Supplement to one of
Customer’s employees selected by Customer who is qualified to act as a system
administrator (“System Administrator”). Such
training shall be provided at the rates set forth in the Pricing Supplement. The
System Administrator is responsible for (a) administering and managing the
performance of the Delivered Products, including maintaining the files and
monitoring the performance of the Delivered Products; (b) reviewing and
evaluating all end-user requests for service and (c) informing Omnicell of any
problems that the System Administrator cannot resolve. Travel and other related
expenses for System Administrator Training will be the responsibility of the
Customer. Omnicell will also provide reasonable end-user training for each
location of Delivered Products at the rates set forth in the applicable Pricing
Supplement.

 

3.                                      DELIVERY, INSTALLATION,
ACCEPTANCE & PASS-THROUGH EQUIPMENT

 

3.1          Delivery. All
shipments are FOB Omnicell’s Dock. Customer agrees to assume and bear the
entire risk of casualty or damage to the Delivered Products from any cause
whatsoever from the date of shipment of a Delivered Product from Omnicell’s dock to Customer’s premises.
No casualty or damage will relieve Customer from the obligation to make
Scheduled Payments or to comply with any other obligation under this Agreement.
Customer’s acceptance of delivery
of any Delivered Product
hereunder will be deemed Customer’s acknowledgement that all of the Delivered
Products listed in the applicable
purchase order (a) has been received, and (b) shows no obvious signs of physical
damage.

 

3.2          Installation. Omnicell agrees to install any Delivered Products
order identified in a Pricing Supplement at the rates set forth in such Pricing
Supplement. Customer agrees to execute an Omnicell Installation Worksheet prior
to any Delivered Product installation. Omnicell will make commercially
reasonable efforts to complete the installation of such Delivered Products in a
timely manner upon receipt of confirmation that the Delivered Products have
arrived at Customer’s location. Delivered Products not installed within 240
days, due to Customer’s actions or inactions, will incur the additional charges
set forth in the applicable Pricing Supplement.

 

Prior to arrival of the Delivered Products at Customer’s
location, Customer agrees to provide (a) adequate space for the Delivered
Products under conditions suitable to the proper functioning of the Delivered
Products; (b) clean commercial power including our specified Uninterrupted
Power Supply (“UPS”) and the necessary
communication cable (telephone extension cable and jack or Local Area Network (“LAN”) connection and jack) to each location where the
Delivered Products will be placed; and (c) a mutually agreeable means of remote
access capability (ex. RAS or VPN; “RAC”) at the
location of the server(s), with one alternative being a dedicated direct inward
dial (DID) communication line. If this dedicated RAC line is not provided,
service will be charged at twice the quoted monthly fee amount until a
dedicated RAS line is put in place. Omnicell will provide all installation
personnel, tools, equipment, and material necessary to install the Delivered
Products and will install it in a workmanlike manner.

 

3.3          Acknowledgement Form.
When each Delivered
Product is installed and is, in all material respects, up and running in
accordance with its Functional Specifications, Customer hereby agrees to
promptly sign an acknowledgement form confirming the foregoing. In order to
facilitate Customer’s signature on an acknowledgement form, Omnicell agrees to
conduct a demonstration showing that the Delivered Products function as set
forth in the previous sentence. If the Customer has not signed the
acknowledgement form within ten (10) days of a successful demonstration, then
the Delivered Products shall be deemed accepted by Customer per the language of
the acknowledgement form.

 

3.4          Customer Supplied Equipment/Equipment Provided On a “Pass-Through”
Basis. Customer shall be solely responsible for procuring,
purchasing, installing, and maintaining all equipment, telephone lines,
communications interfaces, Customer operating systems or support software and
other hardware

 

38

 

necessary to
operate the Delivered Products. All such customer provided equipment and
software must meet Omnicell’s specifications in order to facilitate the
operation of Delivered Products.

 

At the
request of Customer and for sake of convenience, Omnicell may provide
Pass-Through Equipment as identified in an applicable Pricing Supplement. Notwithstanding
anything to the contrary set forth in this Agreement, in no event shall
Omnicell be responsible for installing and/or providing Support Services
relative to the Pass-Through Equipment. Although Omnicell will work in good
faith the Customer to pass through any warranties which may be provided by
original manufacturer, OMNICELL SPECIFICALLY DISCLAIMS ALL EXPRESS, IMPLIED, OR
STATUTORY WARRANTIES, INCLUDING ALL IMPLIED WARRANTIES OF MERCHANTABILITY, NON
INFRINGEMENT OR FITNESS FOR A PARTICULAR PURPOSE RELATED TO PASS-THROUGH
EQUIPMENT. ONCE CUSTOMER ACCEPTS PASS-THROUGH EQUIPMENT PURSUANT TO THE TERMS
OF SECTION 3.3 ABOVE, ITS OBLIGATION TO MAKE ALL SCHEDULED PAYMENTS WITH
RESPECT TO SUCH PASS-THROUGH EQUIPMENT SHALL BE UNCONDITIONAL. ANY AND ALL
CLAIMS RELATED TO SUCH PASS-THROUGH EQUIPMENT SHALL BE BROUGHT ONLY AGAINST THE
MANUFACTURER OF SUCH PASS THROUGH EQUIPMENT. CUSTOMER MAY NOT OFFSET ANY SUCH
CLAIMS AGAINST AMOUNTS OWING TO OMNICELL OR ITS ASSIGNS UNDER THIS AGREEMENT.

 

4.             CONFIDENTIALITY.

 

4.1          Protection of Confidential Information. Each Party shall retain the other Party’s
Confidential Information in the strictest confidence and shall not disclose
such Confidential Information to any person, third party, contractor, agent,
assign, company, machine, or other person or entity without the other Party’s
prior express written consent. Notwithstanding the foregoing, each Party may
disclose the other Party’s Confidential Information to: (i) any of its
directors, officers and employees, or (ii) to legal counsel, auditors and any
other consultants specified in a writing signed by both Parties; provided that
the recipient(s) (i) has a need to know the information, (ii) has been advised
of the confidential nature of the information, and (iii) is under an obligation
of confidentiality and an obligation to use the information solely to assist
the Party it represents in performing its obligations under or realizing the
benefits contemplated for such Party under this Agreement.

 

4.2.         Restricted Use. Each Party, including
any parent, subsidiary, affiliate, agent, consultant or otherwise agrees:

 

(i). to use the Confidential
Information only for the purposes of this Agreement and as expressly permitted
by this Agreement;

 

(ii) not to make copies of or
store Confidential Information or any part thereof except as expressly
permitted by this Agreement; and

 

(iii)  to reproduce and maintain on any copies of
any Confidential Information such proprietary legends or notices (whether of
disclosing Party or a third party) as are contained in or on the original or as
the disclosing Party may otherwise reasonably request.

 

4.3          Required Disclosure. Nothing in this Agreement shall prohibit
either Party from disclosing Confidential Information if legally required to do
so by judicial or governmental order, provided that the disclosing Party shall
give the other Party prompt notice of such requirement prior to disclosure and
cooperate with the other Party in the event that the other Party elects to
contest such disclosure or seek a protective order at the other Party’s sole
expense with respect thereto.

 

5.             TERM
& TERMINATION

 

5.1          Term. This Agreement shall become effective on the
Effective Date and shall continue in full force and effect unless otherwise
terminated as provided herein (the “Term”);
provided, however, that the term of any Pricing Supplement will be as set forth
in such Pricing Supplement. Except as stated otherwise in a Schedule,
Attachment and/or Exhibit to this Agreement, individual Schedules, Attachments
and/or Exhibits to this Agreement may be terminated in accordance with this
Section 5; provided, however, in no event will these General Terms and
Conditions ever terminate while a Schedule, Attachment and/or Exhibit to this
Agreement remains in effect.

 

5.2          Termination for Cause. Either Party (except for Customer with respect
to Section 5.2(i) below) may, by written notice to the other Party, terminate
this Agreement if any of the following events occur (“Termination Events”); provided, that no such termination will
entitle Customer to a refund of any portion of the Scheduled Payments pursuant
to this Agreement:

 

(i)  Customer fails to pay to Omnicell any
Scheduled Payments within fifteen (15) days after Omnicell provides Customer
written notice of such non-payment;

 

(ii)  A Party is in material breach of any
non-monetary term, condition or provision of this Agreement, which breach is
not cured within thirty (30) days after the non-breaching Party gives the
breaching Party written notice of such breach; or

 

(iii)  The other Party (a) terminates or suspends
substantially all of its business activities, (b) becomes

 

39

 

insolvent,
admits in writing its inability to pay its debts as they mature, makes an
assignment for the benefit of creditors, or becomes subject to direct control
of a trustee, receiver or similar authority, or (c) becomes subject to any
bankruptcy or insolvency proceeding under federal or state statutes which are
not rescinded within sixty (60) days.

 

5.3          Effect of Termination. Upon termination of this Agreement for any
reason, Customer shall immediately discontinue use of the Licensed
Software, Support Services,
Documentation and Omnicell Confidential Information and within ten (10) days
certify in writing to Omnicell that all copies, extracts or derivatives of the Licensed
Software, Documentation and
Omnicell Confidential Information, in whole or in part, in any form, have
either been returned to Omnicell or destroyed in accordance with Omnicell’s
specific instructions.

 

5.4          Survival. Notwithstanding any termination of this
Agreement, Sections 4 (CONFIDENTIALITY), 6.3 (DISCLAIMER OF WARRANTY), 7
(INDEMNIFICATION AND LIMITATION OF LIABILITY), 8 (GENERAL) and 9 (DEFINITIONS)
shall, to the fullest extent of the law, survive termination of this Agreement
indefinitely. All other rights and licenses granted hereunder will cease upon
termination.

 

6.             WARRANTY
& DISCLAIMER

 

6.1          Conformity with Specifications.
Omnicell warrants to
Customer that the Delivered Products, if used by Customer in accordance with the Documentation, shall
operate in substantial conformity with its Functional Specifications for a
period of thirty (30) days after the Effective Date. Omnicell does not warrant
to Customer that use of the Delivered Products will be uninterrupted, error free or will meet all of Customer’s
requirements. To the extent the Delivered Products fails to substantially conform to its Functional Specifications,
Omnicell’s sole and exclusive liability to Customer shall be, at Omnicell’s
sole election, to correct any material non-conformities discovered within the
warranty period or replace the non-conforming Delivered Products.

 

6.2          Warranty Exclusions. The above remedies in Sections 6.1 are
available only if: (i) Customer promptly notifies Omnicell in writing of
non-conformities within the warranty period set forth therein; (ii) Omnicell’s
examination of the Delivered Products discloses that such nonconformities exist; and (iii) the Delivered
Products have not been used or
modified other than in accordance with the Documentation or subjected to
negligence, or computer or electrical malfunctions.

 

6.3          Disclaimer of Warranty. OTHER THAN AS EXPRESSLY PROVIDED IN THIS
AGREEMENT, OMNICELL SPECIFICALLY DISCLAIMS ALL EXPRESS, IMPLIED, OR STATUTORY
WARRANTIES, INCLUDING ALL IMPLIED WARRANTIES OF MERCHANTABILITY,
NONINFRINGEMENT, FITNESS FOR A PARTICULAR PURPOSE OR TITLE. THIS WARRANTY
GRANTED HEREIN DOES NOT COVER ANY PRODUCT THAT CUSTOMER MAY USE, CREATE OR
INSTALL THAT IS NOT PROVIDED BY OMNICELL.

 

7.             INDEMNIFICATION & LIMITATION OF
LIABILITY

 

7.1          Indemnification By Omnicell for
Infringement. Omnicell
shall defend or, at its sole option, settle, any third party claim(s) brought
against Customer relating to infringement of any United States copyright, trade
secret or trademark by the Delivered Product as delivered, and to indemnify Customer against all damages and costs
assessed against Customer under any such claim or action; provided, that
Customer has taken all reasonable steps to mitigate any potential expenses and
provides Omnicell with (i) prompt written notice of any such claim or action,
or possibility thereof; (ii) sole control and authority over the defense or
settlement of such claim or action; and (iii) proper and full information and
assistance to settle and/or defend any such claim or action. Customer shall
have the right to employ separate counsel and participate in the defense at its
own expense; provided that Omnicell shall control the defense. Omnicell may, at
its sole option and expense, either: (a) procure for Customer the right to use
the infringing Delivered Product as provided herein; (b) replace the infringing Delivered Product with a non-infringing product; (c) modify the
infringing Delivered Product so that
it is not infringing; or (d) demand return of the infringing Delivered
Product, refund the remaining
value of fees associated with such Delivered Product to Customer (as amortized over a sixty (60) month life) and terminate
this Agreement. Upon exercise of option (d) in the previous sentence, Omnicell
shall have no further obligations or liability to Customer with respect to this
Section 7.1. Except as specified in this paragraph, Omnicell will not be liable
for any costs or expenses incurred without its prior written consent.

 

7.2          Exceptions. The foregoing indemnity obligations shall not
apply to the extent the infringement arises as a result of (i) modifications to
the Delivered Products made
by any party other than Omnicell or Omnicell’s authorized representative, (ii) use
of other than the most current version of the Delivered Products generally made available by Omnicell, (iii)
the combination or use of the Delivered Products with materials not furnished by Omnicell, or (iv) use of the Delivered
Products outside the scope of
this Agreement.

 

7.3          Indemnification By Customer. Customer
hereby agrees to indemnify, defend and hold harmless Omnicell and its
successors, assigns, agents and employees against any and all liabilities,
losses, damages, claims and expenses (including reasonable attorney fees)
arising out of the use, possession or control of the Delivered Products,
including without limitation, claims arising in contract or tort, except for
claims resulting from Omnicell’s intentional misconduct, or claims for infringement
as described in Section 7.1. Customer’s obligation to indemnify Omnicell will
survive

 

40

 

the expiration or termination of this Agreement.

 

7.4          Limitation on Liabilities. IN NO EVENT SHALL OMNICELL BE LIABLE FOR ANY
INDIRECT, SPECIAL, INCIDENTAL, PUNITIVE, EXEMPLARY OR CONSEQUENTIAL DAMAGES
INCLUDING WITHOUT LIMITATION LOSS OF PROFITS, LOSS OF USE, BUSINESS
INTERRUPTION, OR LOSS OF DATA IN CONNECTION WITH OR ARISING OUT OF THIS
AGREEMENT OR ITS TERMINATION REGARDLESS WHETHER ALLEGED AS A BREACH OF
CONTRACT, TORT, OR NEGLIGENCE, EVEN IF THE CUSTOMER HAS BEEN ADVISED OF THE
POSSIBILITY OF SUCH DAMAGES. IN NO EVENT WILL OMNICELL’S CUMULATIVE LIABILITY
TO CUSTOMER FOR DAMAGES UNDER THIS AGREEMENT EXCEED THE AMOUNT OF PAYMENTS
ACTUALLY PAID BY CUSTOMER TO OMNICELL HEREUNDER.

 

IN ADDITION, OMNICELL MAKES NO REPRESENTATIONS
AND WARRANTIES ABOUT THE IMPACT OF CUSTOMER’S USE OF THE DELIVERED PRODUCTS OR
CUSTOMER’S USE OF OTHER MEDICAL DEVICES OR EQUIPMENT. THE CLINICAL INFORMATION
CONTAINED IN CERTAIN OF THE DELIVERED PRODUCTS IS INTENDED AS A SUPPLEMENT TO,
AND NOT A SUBSTITUTE FOR THE KNOWLEDGE, EXPERTISE, SKILL, AND JUDGMENT OF
PHYSICIANS, PHARMACISTS, OR OTHER HEALTHCARE PROFESSIONALS IN PATIENT CARE. THE
ABSENCE OF A WARNING FOR A GIVEN DRUG OR DRUG COMBINATION SHOULD NOT BE
CONSTRUED TO INDICATE THAT THE DRUG OR DRUG COMBINATION IS SAFE, APPROPRIATE OR
EFFECTIVE IN ANY GIVEN PATIENT. AS SUCH AND EXCEPT AS EXPLICITLY STATED
OTHERWISE IN THIS AGREEMENT, IN NO EVENT WILL OMNICELL BE LIABLE FOR ANY
DAMAGES ASSOCIATED WITH CUSTOMER’S USE OF THE DELIVERED PRODUCTS OR CUSTOMER’S
USE OF OTHER MEDICAL DEVICES OR EQUIPMENT.

 

8.             GENERAL

 

8.1          Notices. Any notice required or permitted under the
terms of this Agreement or required by law must be in writing to the address
set forth in the Preamble of this Agreement and must be: (i) delivered in
person; or (ii) sent by first-class registered mail, or air mail, as
appropriate; or (iii) sent by overnight air courier, in each case delivery
costs prepaid and properly posted to the address indicated on the first page of
this Agreement. Notices shall be considered to have been given at the time of
actual delivery in person, three (3) business days after deposit in the mail as
set forth above, or one (1) business day after delivery to an overnight air
courier service.

 

8.2          Assignment. Customer shall not effect, or attempt to
effect, any assignment, sale, transfer, sublease or sublicense of this
Agreement or the Delivered Products, without the prior written consent of
Omnicell, which consent will not be unreasonably withheld; provided, however,
that Omnicell may withhold its consent to a proposed assignment, in its sole
discretion, if such assignment is to an Omnicell competitor or involves
Delivered Products which are financed pursuant to the Financing Schedule
attached hereto as Schedule B.

 

Omnicell
may sell, assign, encumber or transfer this Agreement and any or all of our
rights created by it, provided the assignment will not relieve Omnicell of its
obligations to Customer, and Customer agrees not to hold any assignee liable
for any of these obligations. Customer agrees that the rights of the new owner
or assignee will not be subject to any claims, counter-claims, defenses, or
set-offs that Customer may have against the manufacturer of Pass-Through
Equipment or Omnicell, including claims with respect to Support Services
provided under Schedule D. Omnicell may subcontract any part of our
obligations under the service portion of this Agreement, provided Omnicell will
remain primarily liable to for the obligations and duties to provide service
hereunder.

 

8.3          Governing Law. This Agreement shall be governed in accordance
with the laws of the State of California, without reference to conflict of laws
principles. The United Nations Convention on Contracts for the International
Sale of Goods will not apply to this Agreement. To the extent permissible by
law, the Uniform Computer Information Transaction Act will not apply to this
Agreement.

 

8.4          Dispute Resolution. Except as provided below, all disputes
arising from or relating to this Agreement shall be resolved as follows: the
senior management of both parties shall promptly meet to attempt to resolve
such disputes. If such senior management cannot resolve the dispute within two
(2) business days (or other mutually acceptable time frame), either party may
make a written demand for formal dispute resolution and specify therein the
scope of the dispute. Within ten (10) business days after such written
notification, the parties agree to meet for one (1) day with an impartial
mediator (mutually and reasonably agreeable by the parties) and consider
dispute resolution alternatives other than litigation. If an alternative method
of dispute resolution is not agreed upon within ten (10) business days after
the one-day mediation, either party may begin litigation proceedings. This
provision shall not preclude either Party from seeking equitable relief to
protect its interests, including but not limited to seeking preliminary and
permanent injunctive relief, as well as money damages, in any dispute involving
its Confidential Information or Intellectual Property Rights.

 

8.5          Independent Contractors. The relationship of Omnicell and Customer
established in this Agreement is that of independent contractors, and nothing
contained in this Agreement shall be construed or implied to the contrary.

 

41

 

8.6          Severability. In the event that any provision of this
Agreement conflicts with governing law, or if any provision is held to be null,
void or otherwise ineffective or invalid by a court of competent jurisdiction,
the remaining terms, provisions, covenants and restrictions of this Agreement
shall remain in full force and effect.

 

8.7          No Waiver. The failure of either Party to enforce at any
time any of the provisions of this Agreement shall not be deemed to be a waiver
of the right of either Party thereafter to enforce any such provisions. No
waiver, amendment or variation to this Agreement shall be valid unless in
writing and signed by both Parties.

 

8.8          Force Majeure. Except for the obligation to make payments,
non-performance of either Party shall be excused to the extent that performance
is rendered impossible by strike, fire, war, flood, governmental acts or orders
or restrictions, failure of suppliers, or act of God, or any other reason where
failure to perform is beyond the control of the non-performing Party.

 

8.9          Publicity. Customer acknowledges that Omnicell may desire
to use its name in press releases, product brochures and financial reports
indicating that Customer is a customer of Omnicell, and Customer agrees that
Omnicell may use its name in such a manner.

 

8.10        Entire Agreement. This is an integrated Agreement and all
attachments hereto and incorporated herein constitute the entire, final,
complete and exclusive agreement between the Parties and supersede all previous
agreements, intentions, or representations, oral or written, relating to this
Agreement. This Agreement may not be modified or amended except in a writing
signed by a duly authorized representative of each Party. Both Parties
acknowledge having read the terms and conditions set forth in this Agreement
and all attachments hereto, understand all terms and conditions, and agree to
be bound thereby.

 

DEFINITIONS

 

9.1          “Confidential Information” means any information, technical data, or
know-how, including, but not limited to, development, inventions, processes,
designs, drawings, formulas, engineering, marketing, finances, financial
models, and business plans, pricing and the terms of this Agreement which is
designated in writing to be confidential or proprietary, or if given orally, is
confirmed promptly in writing as having been disclosed as confidential or
proprietary. Confidential Information does not include information, technical
data or know-how which (i) is in the possession of the receiving party at the
time of disclosure as shown by the receiving party’s files and records
immediately prior to the time of disclosure; or (ii) prior to or after the time
of disclosure becomes part of the public knowledge or literature, not as a
result of any inaction or action of the receiving party; or (iii) is approved
for release by the disclosing party.

 

9.2          “Delivered Products” shall mean the
Financed Products, Purchased Products and/or the Licensed Software and all
associated Documentation (together,
with all replacement parts which may be provided pursuant to Support Services) which is/are provided to Customer by Omnicell
pursuant to a Pricing Supplement.

 

9.3          “Documentation” shall mean help files or instruction manuals
regarding the use of the Delivered Products and/or Support Services generally made available by Omnicell to its
customers.

 

9.4          “Financed Products” shall mean the Licensed Software, Pass-Through Equipment and/or Omnicell Equipment which
is/are provided to Customer by Omnicell pursuant to this Agreement, as more
specifically set forth in a Pricing Supplement for Financed Products.

 

9.5          “Functional Specifications” shall mean the functional specifications of
the Delivered Products
contained in the Documentation.

 

9.6          “Intellectual Property Rights” shall mean any patent rights, copyrights,
trade secrets, trade names, trademarks, service marks, moral rights, and any
other similar rights recognized under the laws of any jurisdiction whatsoever
or any international conventions or treaties.

 

9.7          “Licensed Software” shall mean: (i) the computer programs
licensed to Customer in machine executable object code form pursuant to this
Agreement, including interfaces, if any, as specifically identified in a
Pricing Supplement, and (ii) Updates and Upgrades to such software as provided
as part of Support Services set forth in Schedule D. 

 

9.8          “Monthly Lease Payment” shall mean the monthly lease payment for each
item of Financed Products and Installation as set forth on an applicable
Pricing Supplement for Financed Products for the number of consecutive months
set forth in such Financed Products Pricing Supplement

 

9.9          “Monthly Support Fee”
means the monthly Support Services fee applicable for the components,
elements and units of the Delivered Products (including, without limitation,
Licensed Software) as set forth on the applicable Pricing Supplement.

 

9.10        “Omnicell Equipment” means equipment
manufactured by Omnicell and provided to Customer pursuant to this Agreement, as more specifically set forth in a Pricing
Supplement.

 

9.11        “Pass-Through Equipment” means the equipment
manufactured by someone other than Omnicell which is provided to Customer by
Omnicell on a pass through basis, as identified on an applicable Pricing
Supplement.

 

9.12        “Purchased Products” means Omnicell
Equipment and/or Pass-Through Equipment purchased

 

42

 

by Customer, as more specifically set forth in a Pricing
Supplement.

 

9.13        “Purchase Price” means a payment set
forth on the applicable Pricing Supplement for the purchase of the Purchased
Products.

 

9.14        “Scheduled Payments” means all payments set forth on the applicable
Pricing Supplement, including, without limitation, Monthly Lease Payments,
Monthly Support Fees and Purchase Price.

 

9.15        “Support Services” shall mean any Support Services as
specifically agreed to by the Parties as identified in a Pricing Supplement and
as more fully described in Schedule D.

 

Additional
Definitions. The
following terms are defined in the Section or Schedule set forth opposite such
term:

 

	
  Additional Products

  	
   

  	
  1.2

  
	
  Agreement

  	
   

  	
  Preamble

  
	
  Customer

  	
   

  	
  Preamble

  
	
  Effective Date

  	
   

  	
  Preamble

  
	
  HIS

  	
   

  	
  2.1

  
	
  LAN

  	
   

  	
  3.2

  
	
  Omnicell

  	
   

  	
  Preamble

  
	
  Party/Parties

  	
   

  	
  Preamble

  
	
  Pricing Supplement

  	
   

  	
  Schedule A

  
	
  RAC

  	
   

  	
  3.2

  
	
  Scheduled Payments

  	
   

  	
  1.3

  
	
  System Administrator

  	
   

  	
  2.3

  
	
  Term

  	
   

  	
  4.1

  
	
  Termination Event

  	
   

  	
  4.2

  
	
  UPS

  	
   

  	
  3.2

  

 

43

 

SCHEDULE A-1

 

PRICING
SUPPLEMENT FOR PURCHASED PRODUCTS

 

 

The undersigned Customer acknowledges and agrees that its obligation to
make the Scheduled Payments with respect to Purchased Products and/or Support
Services as set forth on this Pricing Supplement for Purchased Products is governed by
the terms and subject to the conditions of the Omnicell Master Agreement (“Master
Agreement”), including Schedules C and D, between Customer and Omnicell,
Inc. (“Omnicell”).

 

 

	
  By:

  	
   

  	
   

  
	
   

  	
   

  
	
  Name:

  	
   

  	
   

  
	
   

  	
   

  
	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
  Date:

  	
   

  	
   

  

 

 

SCHEDULE A-2

 

PRICING
SUPPLEMENT FOR FINANCED PRODUCTS

 

 

The undersigned Customer acknowledges and agrees that its obligation to
make the Scheduled Payments with respect to Financed Products and/or Support
Services as set forth on this Pricing Supplement for Financed Products is governed by
the terms and subject to the conditions of the Omnicell Master Agreement (“Master
Agreement”), including Schedules B, C and D, between Customer and Omnicell,
Inc. (“Omnicell”).

 

 

	
  By:

  	
   

  	
   

  
	
   

  	
   

  
	
  Name:

  	
   

  	
   

  
	
   

  	
   

  
	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
  Date:

  	
   

  	
   

  

 

 

SCHEDULE B

 

FINANCING SCHEDULE

 

The
terms contained in this Schedule
B, together with the terms
contained in the General Terms and Conditions, shall govern the financing of
the Financed Products and/or Support Services by Omnicell to Customer. In the
event of a conflict between this Schedule
B and the General Terms and
Conditions, the terms in Schedule B shall take precedence.

 

1.             FINANCING

 

1.1          Lease Initiation. With respect to the Financed Products and/or
financed Support Services, the initial lease term will commence upon Customer’s
execution of the applicable Financed Products Pricing Supplement and shall
continue as set forth on such Pricing Supplement (the “Initial Lease
Term”). Customer understands
that time is of the essence as to its performance. Customer will be invoiced
for the first Monthly Lease Payment and Monthly Support Fee within ten (10)
days after execution of the Financed Products Pricing Supplement. Customer
agrees to pay all subsequent Monthly Lease Payments and Monthly Support Fees in
advance and no later than the date designated on the invoice. Monthly Lease
Payments and Monthly Support Fees will be made at such place as Omnicell may designate
in writing. Customer hereby authorizes Omnicell to insert for the purposes of
the lease, the serial numbers of the Financed Products, and other information
into each invoice.

 

1.2          Ownership of Financed Products. Omnicell
(or its assignee) is the owner of the Financed Products and will retain at all
times title to such Leased Delivered Products. No transfer of title to the
Financed Products has occurred by virtue of the execution of this Finance
Schedule and the applicable Financed Products Pricing Supplement. This
Agreement is an operating lease, and no title will be transferred to Customer
upon expiration of such lease.

 

1.3          Location of Financed Products. Customer agrees to keep and use the Financed
Products only at the delivery address set forth in the Agreement and agrees
that such Financed Products will not be removed from that address unless
Customer obtains prior written consent from Omnicell to move it.

 

1.4          No Early Termination. Notwithstanding
any provision to the contrary in this Agreement, including without limitation,
the termination for cause provisions set forth in Section 5.2 of the General
Terms and Conditions, in no event may Customer terminate this Financing
Schedule or any applicable Financed Products Pricing Supplement prior to the
expiration of the Initial Lease Term.

 

1.5          Unconditional Payment Obligation For Monthly Lease
Payments. THE OBLIGATION
TO MAKE MONTHLY LEASE PAYMENTS FOR THE FINANCED PRODUCTS IS ABSOLUTE AND
UNCONDITIONAL AND SHALL NOT BE SUBJECT TO ANY DISPUTES, CLAIMS, DAMAGES,
LIABILITIES, OR OFFSETS AGAINST ANY PAYMENTS DUE UNDER ANY AGREEMENTS FOR ANY
REASON WHATSOEVER (INCLUDING WITHOUT LIMITATION REMEDIES ARISING FROM
NON-PERFORMANCE BY OMNICELL OR FROM ANY FAILURE OF, OR DAMAGE TO, THE FINANCED
PRODUCTS).

 

1.6          End of Lease Term Options. At the end of the Initial Lease Term for
each unit of Financed Products, Customer may choose to: (a) return a given
Leased Delivered Product to Omnicell, or (b) request a Pricing Supplement for
Financed Products from Omnicell and issue a new purchase order, in each case
extending all provisions of this Agreement related to the financing of the
Financed Products.

 

If Customer fails to notify
Omnicell in writing of its selection of one of the previous two options prior
to the end of any Initial Lease Term, the applicable Pricing Supplement for
Financed Products will automatically convert to a month-to-month finance
agreement at the then-current month-to-month finance rates for the affected
Financed Products. In
case of such conversion to a month-to-month finance agreement, all provisions
of this Agreement related to the financing of the Financed Products will remain
in full force and effect.

 

1.7          Return of Equipment. If Customer decides to return the Financed
Products at the end of the lease term, Customer agrees to (a) return the
Financed Products to Omnicell promptly and in a condition as good as received,
allowing for normal wear and tear, to any place in the continental United
States that Omnicell designates; (b) prepay all expenses of crating and
shipping by means Omnicell designates and (c) insure the shipment properly. At
Omnicell’s option, Omnicell agrees to supply Customer with crating and packing
materials. Customer agrees to pay Monthly Lease Payments for a given piece of
Financed Products for each month (or part thereof) following the expiration of
the applicable lease term until such Leased Delivered Product is returned.

 

 

1.8          Further Assurances. Customer agrees
to provide such additional documents, instruments, and Uniform Commercial Code
financing statements as are reasonably requested by Omnicell to assist Omnicell
in completing the transactions contemplated by this Financing Schedule,
including without limitation, the applicable Pricing Supplement for Financed
Products to protect Omnicell’s rights or its assignee’s rights to the Financed
Products. Customer hereby agrees to authorize Omnicell to file UCC financing
statements, amendments, and assignments relating to the Financed Products in
any location and execute the same as Customer’s attorney-in-fact. If Omnicell
assigns the Financed Products, Customer agrees to execute such documents as
Omnicell may reasonably request confirming Customer’s obligations under this
Agreement and Customer agrees to make all Monthly Lease Payments and other
amounts due under this Agreement directly to the assignee. If it is determined
that the Monthly Lease Payments include interest, no such interest will exceed
the amount legally allowed.

 

1.9          Remedies. Notwithstanding and in addition to any provisions set forth in Section
5.3 of the General Terms and Conditions, at any time thirty (30) days after
Omnicell provides Customer with written notice of its default, Omnicell will
have the right to: (a) take immediate possession of the Financed Products
without any process of law, enter upon any premises where the Financed Products
may be and remove it without notice of our intention to do so, without being
liable in any action or other proceeding by Customer; (b) at Omnicell’s option,
sell or re-rent the Financed Products including the Licensed Software at any
public or private sales for cash or on credit and Customer will be liable for
the expenses incurred in the repossession, recovery, storage, repair, sale,
re-rent, re-licensing and court costs, in addition to any arrears in payment
and the balance of the Monthly Lease Payments provided for herein, together
with reasonable attorneys fees, less the net proceeds of disposition, if any,
of the Financed Products; (c) accelerate all sums payable under this Agreement
and any other agreements with Omnicell and require Customer to immediately pay
Omnicell all sums that are already due and the discounted value, at the
discount rate of six percent (6%) as of the date of default, of all Scheduled
Payments that will be due under this Agreement, plus our estimate at the time
this Agreement was entered into of our residual interest in the Financed
Products reduced to present value at a discount rate of six percent (6%) as of
the date of default, less the net proceeds of disposition, if any, of the
Financed Products; and/or (d) exercise any other remedy available to Omnicell
at law or equity, notice thereof being expressly waived by Customer. Any sums
accelerated under this Section will be due and payable upon notice of
acceleration and demand for payment and if not so paid, Omnicell may institute
legal proceedings against Customer with Customer being responsible for said
sums, court costs, and reasonable attorneys’ fees incurred. Omnicell’s rights
hereunder will be cumulative. Customer agrees that all sums due under the
calculations above will become immediately due and payable and are to be
construed as liquidated damages rather than a penalty provision. Customer
agrees that any delay or failure to enforce our rights under this Agreement
does not prevent Omnicell from enforcing any rights at a later time.

 

2

 

ATTACHMENT B-1

ASSIGNMENT
LETTER

 

MASTER
ASSIGNMENT LETTER - INSURANCE CERTIFICATE

 

Re:  Master Agreement No.

 

Dear Customer,

 

Omnicell is assigning the
right to payments for Monthly Lease Payments and Monthly Support Fees for the
Financed Products and financed Support Services (as such terms are defined
under the Omnicell Master Agreement) under your Omnicell Master Agreement to                                                      
(“Finance Company”). This assignment includes all present Pricing Supplements
for Financed Products and financed Support Services between us and any future
Pricing Supplements for Financed Products and financed Support Services you may
enter into (collectively “Agreements”). Please be advised that Finance Company
is only being assigned the rights to payments under your Agreements and is not
undertaking any of our obligations thereunder. We remain solely liable for all
performance obligations as the renter under the Agreements, all warranties as
manufacturer and/or supplier, all claims under any service contract or any
other matters concerning the Financed Products. YOU ACKNOWLEDGE AND AGREE THAT ANY CLAIMS AGAINST US UNDER THE AGREEMENTS
OR AS VENDOR OR SUPPLIER OF THE EQUIPMENT OR UNDER ANY SERVICE CONTRACT SHALL
BE MADE SOLELY AGAINST US AND NOT FINANCE COMPANY AND THAT THE OBLIGATION TO
MAKE MONTHLY LEASE PAYMENTS TO FINANCE COMPANY OR ITS SUCCESSORS OR ASSIGNS IS
ABSOLUTE AND UNCONDITIONAL AND SHALL NOT BE SUBJECT TO ANY DISPUTES, CLAIMS,
DAMAGES, LIABILITIES, OR OFFSETS AGAINST ANY PAYMENTS DUE UNDER ANY AGREEMENTS
FOR ANY REASON WHATSOEVER (INCLUDING WITHOUT LIMITATION REMEDIES ARISING FROM
NON-PERFORMANCE BY OMNICELL OR FROM ANY FAILURE OF, OR DAMAGE TO, THE
EQUIPMENT). Monthly Lease Payments and Monthly Support Fee Payments
under all Agreements on or after this date should be remitted to Finance
Company (or its successors or assigns) to the address referenced on the
invoices. Any assertion of remedies for non-performance (including, if
applicable claims requesting credits against monthly service payments under the
Service Supplements,) must be directed to Omnicell and shall not limit or
otherwise affect Finance Company’s right to collect full payments under the
Agreements.

 

Additionally, please complete
form below, entering the information of the insurance company that will be
insuring the equipment you are renting.

 

	
  NAME OF INSURANCE COMPANY

  	
   

  	
   

  
	
   

  	
   

  
	
  NAME OF AGENCY

  	
   

  	
   

  
	
   

  	
   

  
	
  ADDRESS

  	
   

  	
   

  
	
   

  	
   

  
	
  TELEPHONE #

  	
   

  	
   

  	
  POLICY #

  	
   

  	
   

  
	
   

  	
   

  
	
  POLICY EXPIRATION DATE

  	
   

  	
  ; CONTACT PERSON AT AGENCY

  
													

 

Please notify your insurance
company that Omnicell will be contacting them for an Insurance Certificate and
that it should be made available to us upon request.

 

Thank you for your attention
in this regard. Please acknowledge this assignment and provide us with the
requested insurance information by completing the form above, and sign and
return a signed copy of this letter to us.

 

	
   

  	
  Very truly yours,

  
	
   

  	
   

  
	
   

  	
  OMNICELL

  
	
   

  	
  Mountain View, California

  
	
  ACKNOWLEDGED AND AGREED:

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
   

  
	
  Name:

  	
   

  	
   

  
	
   

  	
   

  
	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
					

 

3

 

ATTACHMENT B-2

 

NON-APPROPRIATIONS RIDER

 

This Non-Appropriations Rider (the “Rider”) is
an addition to and hereby made part of the Omnicell Master Agreement                
(the “Agreement “) between Omnicell, Inc.
(“Owner”) and
                                                     . (“User”) to be executed simultaneously herewith and to
which this Rider is attached. Undefined terms used herein shall have the
meaning provided for in the Agreement.

 

1. User acknowledges and affirms its non-cancelable Minimum Monthly
Payment obligations (the “Obligations”) and its intent to satisfy the
Obligations in accordance with the Agreement.

 

2. User agrees to take all necessary and
timely action during the Agreement term to obtain and maintain funds
appropriations sufficient to satisfy the Obligations, including without
limitation, providing for the Obligations in each required budget submitted to
obtain applicable appropriations, causing approval of such budget, and
exhausting all available reviews and appeals if an appropriation sufficient to
satisfy the Obligations is not made.

 

3. Notwithstanding anything to the contrary
provided in the Agreement, Owner and User agree that upon the occurrence of all
of the events described in subparagraphs (a) through (c) below (the “Non-Appropriation
Occurrence”) and so long as User is not then in default under the Agreement,
Owner’s sole remedy upon the occurrence of an event of default under the
Agreement shall be to take possession of the Equipment:

 

(a)          An authorized governmental action shall have resulted in the lack of an
appropriation of funds sufficient to satisfy the Obligations (or obligations
similar in nature with respect to the use or acquisition of equipment providing
essentially similar services and functions as the Equipment) and User shall
have provided Owner a true, correct and complete copy of a document describing
such action;

 

(b)         User shall have fully performed its agreement described in paragraph 2
above.

 

(c)          User shall have provided written notice to Owner of the governmental
action resulting in the lack of appropriation of funds (as described in
subparagraph (a)) within twenty (20) days of User’s knowledge thereof;

 

Except as provided in paragraphs 4 and 5
below, the Non-Appropriation Occurrence shall result in termination of the
Monthly Payment and User’s liability for the Obligations.

 

4. Owner and User agree that immediately
following the Non-Appropriation Occurrence, User shall return the Equipment (at
User’s sole cost and expense) to Owner pursuant to the applicable Agreement
provisions. User acknowledges that the Non-Appropriation Occurrence shall in no
way affect User’s continuing obligations for those representations, warranties
and covenants which, by their terms, expressly survive termination or
expiration of the Agreement.

 

5. If the Agreement is terminated following a
Non-Appropriation Occurrence, User and Owner agree that for the duration of the
Term, unless otherwise prohibited by law, (a) User shall not purchase, rent,
engage the services of an agent or independent contractor, or otherwise pay for
the use of equipment performing functions or services similar to those
performed by the Equipment and (b) if User receives an appropriation of funds
which permits User to purchase, rent, engage the services of an agent or
independent contractor, or otherwise pay for the use of equipment performing
functions or services similar to those performed by the Equipment, upon receipt
of any funds from such appropriation, the termination of User’s liability for
the Obligations shall immediately be rescinded and either the Agreement shall be
reinstated for the remainder of the Term or User shall satisfy the Obligations
then owed to Owner prior to User’s payment of such funds to any other payee.

 

6.
User shall deliver in a form acceptable to Owner a resolution enacted by User’s
governing body, authorizing the Agreement and the appropriation of funds for
the Agreement during the User’s current fiscal year.

 

1

 

7. User represents and warrants to Owner that
as of the date of, and throughout the Term of, the Agreement:  (a) User is a political subdivision of the
state in which it is located. User is organized and existing under the
constitution and laws of said state, and is authorized to enter into and to
carry out its obligations under the Agreement and any other documents required
to be delivered in connection with the Agreement (collectively, the “Documents”). (b) The Documents have been authorized,
executed and delivered by User in accordance with all applicable laws, rules,
ordinances, and regulations, including any laws that limit the ability of the
user to incur indebtedness. The Documents are valid, legal, binding agreements,
and are enforceable in accordance with their terms. The person(s) signing the
Documents have the authority to do so, are acting with the full authorization
of User’s governing body, and hold the offices indicated below their
signatures, each of which are genuine. (c) The Equipment is essential to the
immediate performance of a governmental or proprietary function by User within
the scope of its authority and will be used during the Term of the Agreement
only by User and only to perform such function. User intends to use the
Equipment for the entire Term of the Agreement. (d) User has complied fully
with all applicable law governing open meetings, public bidding and
appropriations required in connection with the Agreement and the acquisition of
the Equipment.

 

8. All references to the term “Owner” herein
shall be deemed made to any and all assignees of Owner, and all rights and
remedies of Owner provided for herein shall be enforceable by such assignees.

 

 

	
  Owner:

  	
   

  	
  User:

  	
   

  
	
   

  	
  .1  OMNICELL, INC.

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
  X

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  	
  Name:

  	
  X

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  	
  Title:

  	
  X

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Date:

  	
   

  	
   

  	
  Date:

  	
  X

  

 

2

 

SCHEDULE C

 

SOFTWARE LICENSE SCHEDULE

 

The terms contained in this Schedule C, together with the terms
contained in the General Terms and Conditions, shall govern the provision of
Maintenance and Support services by Omnicell to Customer. In the event of a
conflict between this Schedule C
and the General Terms and Conditions, the terms in Schedule C shall take precedence.

 

1.             PROPRIETARY RIGHTS

 

1.1          License Grant. Subject to the terms and conditions of this
Agreement, Omnicell grants to Customer, during the Term, a terminable,
non-exclusive, non-transferable license, in object code only, to (i) install
the Licensed Software at the Designated Sites (ii) use the number of copies of
the Licensed Software as identified on the applicable Pricing Supplement at the
Designated Site; (iii) use the Documentation in connection with such use of the
Licensed Software; and (iv) make one machine-readable copy of the Licensed
Software for internal non-production purposes.

 

1.2          ..Title. Title and ownership to the Licensed Software,
Documentation and Omnicell Confidential Information and all Intellectual
Property Rights thereto, including any and all adaptations, modifications or
derivative works thereto shall at all times remain with and vest with Omnicell
and its licensors.

 

1.3          Restrictions. Customer agrees that it shall not:

 

(i)            sell, lease, license or sublicense any or all of the
Licensed Software, Documentation, Deliverables, or Omnicell Confidential
Information;

 

(ii)           decompile, disassemble, re-program, analyze,
reverse-engineer or attempt to write or develop any derivative work or any
other software based upon the Licensed Software, Documentation or related
Omnicell Confidential Information in whole or part (except as otherwise
expressly provided in this Agreement); or

 

(iii)          provide, copy, transmit, disclose, divulge, or make
available to, or permit use of the Licensed Software, Documentation or Omnicell
Confidential Information by any third party or entity or machine (other than as
expressly provided for herein) without Omnicell’s prior written consent.

 

1.4          Ownership
of Developments. Customer
irrevocably assigns to Omnicell all of its worldwide right, title and interest
in and to any and all derivative works of the Licensed Software, Documentation,
or Omnicell Confidential Information; any inventions or other subject matter
developed relating to the Licensed Software; and all Intellectual Property
Rights relating to any of the foregoing. Customer agrees to perform all acts
reasonably necessary to perfect the foregoing assignment and to enforce and
defend the assigned Intellectual Property Rights. If any or all of the
foregoing subject matter is not assignable for any reason, then Customer hereby
grants to Omnicell a worldwide, perpetual, unrestricted, royalty-free, fully
paid up, exclusive license, including the right to grant sublicenses, under all
Intellectual Property Rights to the non-assignable subject matter.

 

1.5          Audit. For a period of the Term and three (3) years
thereafter, Customer shall keep accurate books, records and accounts as are
reasonably necessary to verify Customer’s compliance with this Agreement, and
shall, upon reasonable notice, permit Omnicell or its representatives to
inspect all such books, records and accounts and to make copies of or extracts
from such books. Any audit conducted pursuant to this Agreement shall be
performed during normal business hours and at Omnicell’s expense; provided,
that the total cost of such audit shall be promptly paid by Customer if such
audit reveals an underpayment by Customer of greater than five (5%) percent of
the amount payable by Customer to Omnicell. Any unpaid amounts that are
discovered shall be promptly paid by Customer, together with interest as
specified in Section 1.3 of the General Terms and Conditions. Omnicell will
minimize the disruption of Customer’s normal business activities to the extent
reasonably practicable.

 

1.6          Software
Media Warranty. In
the event that the media on which any Licensed Software is embodied contains
material defects, Omnicell’s sole and exclusive liability will be to replace
the media on which such Licensed Software was delivered.

 

1.7          U.S. Government Licenses. If Customer is acquiring the Licensed Software
on behalf of any part of the United States Government, the Government
acknowledges that the Licensed Software and accompanying Documentation were
developed at private expense and are deemed to be ‘commercial computer software’
and ‘commercial computer software documentation,’ respectively, pursuant to
DFAR Section 227.7202 and FAR 12.212(b), as applicable. Any use, modification,
reproduction, release, performance, display or disclosure of the Licensed
Software and/or the

 

3

 

accompanying Documentation by the United
States Government or any of its agencies is subject to the restrictions set
forth in this Agreement and as provided in DFARS provisions: 227.7202-1(a);
227.7202-3(a); 252.227-7013(c)(1)(ii) and FAR provisions: 12.212(a); 52.227-19;
52.227-14, as applicable and shall be prohibited except to the extent expressly
permitted herein.

 

1.8          Export Restrictions. Customer shall comply fully with United States
export laws and applicable export laws of foreign countries, including laws
regulating the import of Software and any amendments thereof (“Export Laws”) to assure that the Licensed
Software is not exported, directly or indirectly, in violation of Export Laws
or intended to be used for any purposes prohibited by the Export Laws. Customer
shall be responsible for all obligations concerning or costs associated with
the import or export of the Licensed Software, including but not limited to
import duties and taxes, customs clearance, and transportation.

 

 

SCHEDULE D

 

SUPPORT SERVICES SCHEDULE

 

The terms contained in this Schedule D, together with the terms
contained in the General Terms and Conditions, shall govern the provision of
Maintenance and Support services by Omnicell to Customer. In the event of a
conflict between this Schedule D
and the General Terms and Conditions, the terms in Schedule D shall take precedence.

 

1.             MAINTENANCE DEFINITIONS

 

1.1          “Non Standard Support” shall have the meaning set forth in Section
2.8.

 

1.2          “Omnicell’s Support Web-site” means the World Wide Web site found at
www.omnicell.com.

 

1.3          “Response Time” means the elapsed time between the receipt of
a Support Call and the target time within which Omnicell will respond to the Customer.

 

1.4          “Standard Support Hours” means Omnicell’s standard hours of support
as are identified in the applicable Support Services Matrix for the applicable
level of Support Services purchased by Customer on an applicable Pricing
Supplement .

 

1.5          “Support Call” shall mean a Support Call by Customer seeking
Support Services pursuant to this Schedule D.

 

1.6          “Support Services” means the provision by Omnicell of the
services set forth in this Schedule D.

 

1.7          “Support Services Matrix” means the table set
forth at the end of this Support Services Schedule.

 

1.8          “Update” shall mean a version of the Licensed Software
containing error corrections or bug fixes, but do not generally include
functional enhancements.

 

1.9          “Upgrade” shall mean a version of the Licensed Software
containing functional enhancements, modifications or extensions. An Upgrade
does not include hardware changes needed to accommodate new releases, nor does
it include options or new products for which Omnicell charges customers
additional fees.

 

2.             MAINTENANCE AND SUPPORT

 

2.1          Scope. It is Omnicell’s goal to provide Support Services that
will keep the Delivered Products in good working order such that the Delivered
Products materially conform to the applicable Functional Specifications. As
such and for so long as Customer
is current in the payment of all Fees and remains in compliance with the
requirements in this Schedule D,
Omnicell shall provide to Customer:  (a)
Updates and Upgrades, to the extent made generally available, (b) access to Omnicell’s telephone hotline that allows
Customer to report system problems and to seek telephonic assistance with
regard to use of the Delivered Products during its Standard Support Hours; (c)
correction of verifiable and reproducible errors with respect to the Delivered
Products; (d) adjustment repair and replacement of defective parts of the
Delivered Products as set forth in Section 2.2 below; and (e) such other
support services as are identified on the Support Services Matrix for the
applicable level of Support Services purchased by Customer on an applicable
Pricing Supplement. Omnicell will publish any changes to Support Services on
Omnicell’s Support Web-site and such changes will take effect after the
then-current Term.

 

2.2          Replacement Parts. Omnicell will make adjustments to and
replace component parts of the Equipment, as it reasonably deems necessary. If
Omnicell is unable to repair an item of Equipment, Omnicell may replace it at
its discretion. Replacement parts will be furnished to Customer on an exchange
basis. In the event any Equipment becomes disabled for any reason, Customer
agrees to immediately advise Omnicell of the disability, specifying type and
location of Equipment, the nature of the disability and any known cause. Any
repairs or adjustments to the Equipment must be performed by an individual
specifically trained in the application and repair of the Omnicell system.

 

2.3          Response Times. Upon receipt of a Support Call, Omnicell will
provide the Response Times set forth in the Support Services Matrix for the
applicable level of Support Services purchased by Customer on an applicable
Pricing Supplement. All Response Times are during Standard Support Hours only. If
Customer is not available, Omnicell will not be liable for adhering to the
above Response Times. At no time does Omnicell guarantee a “fix” during a
Response Time.

 

2.4          Uptime. Omnicell will commit to a cumulative up-time percentage for the
Delivered Products as identified on the Support Services Matrix for the
applicable level of Support Services purchased by Customer on an applicable
Pricing Supplement. Such cumulative up-time percentage will be measured by
Omnicell’s Technical Support Desk. An uptime report will be provided from the
Technical Support Administrator upon Customer’s request. Example:  If Customer has 9 units and 1 server
installed, Customer would have 7,200 hours of total operation time in a
thirty-day month. Based on the 96% up-time criteria, more than 288 hours of
downtime would

 

 

constitute a failure to meet this commitment.

 

2.5          Subcontracting. Omnicell may engage the services of
sub-contractors to perform any of its duties of Support Services. However,
unless otherwise agreed in writing, no sub-contracting of such duties shall
relieve Omnicell of its responsibilities hereunder.
Customer shall be notified of any subcontracting arrangements between Omnicell
and its vendor.

 

2.6          Supported Delivered Products. Support Services will only be provided for the
Delivered Products which are covered under a then-valid Support Services
Schedule.

 

2.7          Level of Effort. Omnicell will use commercially reasonable
efforts commensurate with the then applicable industry standards to provide the Support Services in a professional
and workmanlike manner, but Omnicell does not guarantee that every
question or problem raised by Customer will be resolved. When, at Omnicell’s
reasonable discretion, on-site Support is required, Customer will reimburse
Omnicell for all related traveling expenses and costs for board and lodging
with all Support Services to be rendered at the rates set forth in the Pricing
Supplement.

 

2.8          Non Standard Support. With
respect to support services required due to misapplication, abuse, misuse,
alteration, or unauthorized repair or installation of the Delivered Products (“Non Standard Support”), Omnicell shall charge Customer for
such Non Standard Support at Omnicell’s minimum charge, plus its hourly rate
for Non Standard Service in accordance with the Support Services Matrix plus
the list price for any replacement parts, if any. Omnicell may, in its sole
discretion, decide to provide Non Standard Support for equipment for which
Customer has failed to provide Omnicell with remote access. Such service will
be provided at Omnicell’s then-current rates and charges for such type of
service. Customer agrees to provide Omnicell with entry and access to the
location of the Delivered Products for purposes of providing such service and
repair.

 

2.9          Customer Supplied Hardware.
Omnicell recommends that Customer install Omnicell supplied integrated hardware
and software platforms for optimum performance, reliability and serviceability.
Should Customer decide to install its own computing platforms, Omnicell may
provide a special “customer supplied server” option which covers software
maintenance and support under this Support Services Schedule. Pass-Through
Equipment and hardware platforms purchased independently by the Customer are
not the responsibility of Omnicell and will not be covered under this Support
Services Schedule. Any computing hardware provided by Customer must meet the
hardware specifications set forth by Omnicell, and Customer must be capable of
supporting such hardware.

 

2.10        The OmniEvolve Program. To the
extent that Customer has enrolled in Omnicell’s OmniEvolve program (as
identified on an applicable Pricing Supplement) and for so long as Customer is current in the payment of all
Fees related to such OmniEvolve program and Support Services hereunder, Omnicell agrees that every three (3) years
it will deliver, configure and install its then-current server platform
offering (as identified in an applicable Pricing Supplement) pursuant to this
Support Services Schedule. The OmniEvolve program is intended for primary
server platforms, including the OmniCenter and Omnigate servers. The OmniEvolve
program is server-specific and only covers the individual server for which it
was purchased. Customer agrees that old, deinstalled servers will become the
property of Omnicell at the time of new server installation. Customer agrees to
return such old servers in good working condition. Enrollment in the OmniEvolve
program requires that Customer maintain its Support Services commitment with
Omnicell for a period of at least three (3) years. In the event that Customer
terminates Support Services prior to the expiration of such three (3) year
period, Customer agrees that Omnicell’s obligations to provide the OmniEvolve
program to Customer will terminate and Customer will immediately pay to
Omnicell the remaining unpaid OmniEvolve program fees for the complete three
(3) year period.

 

3.             Exclusions. Fees for the Support Services do not include
services requested as a result of causes or errors that are not attributable to
Omnicell or cannot be reproduced by Omnicell on unmodified Licensed Software. In
the event that Customer requests Omnicell to provide, and Omnicell does so
provide, any services in connection with causes or errors which are not
attributable to Omnicell, Customer shall pay Omnicell for such additional
services on a time and materials basis at the labor rates set forth in the
Pricing Addendum. Causes or errors that are not attributable to Omnicell
include, but are not limited to the following:

 

(i) Negligent use, hardware
malfunction, Force Majeure, or causes other than through ordinary use;

 

(ii) Use of the Delivered
Products on or with hardware, software or other equipment that deviates from
Omnicell or manufacturer operating specifications;

 

(iii) Modification or
addition, or attempted modification or addition to the Delivered Products
undertaken by Customer or other under Customer’s direct or indirect control;

 

(iv) Customer software or
third party software

 

2

 

not licensed through Omnicell;

 

(v) Customer’s failure to
implement a supported version of the Licensed Software that is issued under
this Schedule D; and

 

(vi) Failure by Customer to
respond to any action plans provided by Omnicell pursuant to a Customer support
call.

 

4.             TERM AND RENEWAL. Support Services shall be provided for the
period set forth in the applicable Pricing Supplement. At the expiration of the
Support Services term, Support Services will automatically renew for additional
one (1) year terms unless either Party provides the other Party ninety (90) days advanced written notice of its
intention not to renew prior to the expiration of the then-current term. In case of
renewal, all provisions of this Agreement will remain in full force and effect.

 

5.             CUSTOMER RESPONSIBILITIES

 

5.1          Procedures. Customer shall properly train its personnel in
the proper use of the Delivered Products. Customer shall maintain a current
back-up copy of the Licensed Software and a list of all programs, data, and
licenses required for the performance of
Support, including implementing back-up procedures in the event of an error or
malfunction in the Licensed Software or equipment upon which the Licensed Software is loaded or operating.

 

5.2          Reporting. Customer shall document and promptly report all errors or malfunctions
of the Delivered Products to Omnicell. Omnicell will provide Customer with a
trouble ticket number that Customer will use to track the status of each issue.
Customer shall take all steps necessary to carry out any procedures Omnicell
may give for the rectification of errors or malfunctions within a reasonable
time after such procedures have been provided. Omnicell reserves the right to close the trouble ticket without
further responsibility or liability if Customer does not provide appropriate
feedback to Omnicell within thirty (30) days of receiving new Delivered
Products, a workaround for a problem, or fails to respond to a request for additional
information.

 

5.3          Access. Customer shall provide Omnicell with access to Customer’s personnel and
equipment during Standard Support Hours to facilitate Support Services requests.
Customer acknowledges that dial-in and/or
remote access will speed up resolution of support issues.

 

5.4          Third Party Agents. If Customer utilizes third party support
services or products to support the Delivered Products, Customer shall ensure
such third party support is at a similar or higher level of support as Customer
has secured with Omnicell. Customer acknowledges and agrees that Omnicell shall
not be held responsible for delayed Response Times and Support Services should
information from third party support be unavailable or delayed.

 

5.5          Customer Contacts. Customer shall appoint
one (1) System Administrator who is knowledgeable in the operation of the
Delivered Products to serve as primary Customer contacts with Omnicell for
Support Calls. All Support Calls shall be initiated through this contact.

 

3

 

Omnicell
Service Plans(1)

 

	
   

  	
   

  	
  Disabled System

  (Delivered Products are unavailable

  for clinical use)

  	
   

  	
  Non-Critical Failure

  (All support states other than

  Disabled)

  
	
  Phone
  Support

  	
   

  	
  24 Hours/Day

  7 Days/Week

  
	
  Phone
  Engineer Live Coverage

  	
   

  	
  6AM to 10PM CST 7Days/Week

  
	
  Answering
  Service Coverage

  	
   

  	
  10PM to 6AM CST 7 Days/Week

  
	
  Maximum
  Response Time via Phone:

  	
   

  	
  30 Minutes

  

  (Monday-Friday 6AM –
  6PM CST)

  2 Hours

  (Monday-Friday 6PM – 6AM CST & Saturday-Sunday)

  
	
  Response
  Time On-Site:

  	
   

  	
  Platinum:

  	
  3 Hours (where avail)

  	
   

  	
   

  
	
  (Maximum)

  	
   

  	
  Gold:

  	
  6 Hours

  	
   

  	
  24 Hours

  
	
   

  	
   

  	
  Shared Service:

  	
  6 Hours*

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  
  

  

  

  
	
   

  	
   

  	
  *First Response By Customer
  Mandatory

  
	
   

  	
   

  	
   

  
	
  On-Site
  Availability (if necessary)

  	
   

  	
  24 Hours/Day

  7 Days/Week

  
	
  Uptime
  Commitment

  	
   

  	
  Platinum:

  	
  98%

  	
   

  	
   

  
	
   

  	
   

  	
  Gold:

  	
  96%

  	
   

  	
  N/A

  
	
   

  	
   

  	
  Shared Service:

  	
  N/A

  	
   

  	
   

  
	
  Repair/Replacement
  Parts

  	
   

  	
  Included

  
	
  Remote
  Software & Interface Diagnostics

  	
   

  	
  Included (Requires VPN)

  Proactive Remote Available via Secure Server

  

 

Rate Schedule

 

	
  Service Category

  	
   

  	
  Rate

  
	
  Spare
  Parts On Site

  	
   

  	
  40% Discount

  
	
  Standard
  Time & Materials (Customer is not currently purchasing Support Services
  from Omnicell)

  	
   

  	
  $250 / Hour (4 hour minimum)(2)

  
	
  Time
  & Materials (Non Standard Support Services)

  	
   

  	
  $175 / Hour (4 hour minimum)(2)

  

 

(1)           All Support Services listed are applicable for all levels
of Support Services, except where noted.

 

(2)           Rates
are effective as of the Effective Date. Actual rates are the then-current
Omnicell rates for such service.

 

 

SCHEDULE F

TAX
SCHEDULE

 

	
  Customer Name

  
	
   

  
	
  Federal Employer Identification
  Number

  
	
   

  
	
  City

  	
  County

  	
  State

  	
   

  

 

•                  Exemption Status:

 

Indicate the Company’s sales/use tax status by placing
a mark next to the applicable statement:

 

	
  Subject to vendor collection of sales taxes on
  purchases of medical equipment

  	
   

  	
   

  
	
  Exempt from vendor collection of sales taxes on
  purchases of medical equipment

  	
   

  	
   

  

 

•                  Exemption Type, State Exemption
Number and Expiration Date:

 

If exempt, indicate the exemption type by placing a
mark next to the applicable exemption, and, if applicable, enter the state issued
exemption number and expiration date.

 

	
  Federal Hospital

  	
   

  	
   

  
	
  State, County, City or
  District Hospital

  	
   

  	
   

  
	
  University Hospital

  	
   

  	
   

  
	
  Non-Profit Hospital
  (Charitable)

  	
   

  	
   

  
	
  Non-Profit Hospital
  (Non-Charitable)

  	
   

  	
   

  
	
  Other Hospital Type

  	
   

  	
   

  
	
  Direct Pay Permit

  	
   

  	
   

  
	
  Other (                                                                                            )

  	
   

  	
   

  

 

	
  State Exemption Number

  	
  Expiration Date

  
	
   

  	
   

  
	
  Direct Pay Permit Number

  	
  Expiration Date

  

 

•                  Signature and Contact Information:

 

	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Signature

  	
  Date

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Name and Title

  	
  Phone Number

  

 

•                  Submission Information:

 

Fax this form to Omnicell
Sales Support/Tax Department at 650-251-6240.

 

If exempt, include a copy of
state required exemption documentation.

 

 

EXHIBIT
D

 

FORMULAS

 

 

MASTER LEASE/LOAN PURCHASE PROGRAM
AGREEMENT

 

EXHIBT D

 

FORMULAS

 

A.                                   Penalty for Early Termination.

 

The positive value difference (if any) between ***

 

B.                                     Purchase Price (include formula for determining Standard Rate).

 

The Purchase Price for each Transaction will be
determined by using a buy rate equal to ***

 

C.                                     Discount Rate for Remarketing Proceeds under Section 1.28

 

The Discount Rate for Remarketing Proceeds under
Section 1.28 shall be a rate equal to ***

 

D.                                    Interest Rate for Repurchases under Section 3.7

 

The interest rate on repurchases made pursuant to
Section 3.7 shall be the ***

 

 

RIDER A

 

[FOR FUTURE ADDITION]

 

29

 

RIDER B

 

[FOR FUTURE ADDITION]Exhibit 10.1

 

UNITS OF LIMITED PARTNERSHIP INTEREST IN THE PARTNERSHIP HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES OR
BLUE SKY LAWS OF ANY STATE OR OTHER JURISDICTION. WITHOUT SUCH REGISTRATION,
SUCH UNITS MAY NOT BE SOLD, PLEDGED, HYPOTHECATED OR OTHERWISE
TRANSFERRED, EXCEPT UPON DELIVERY TO THE GENERAL PARTNER OF AN OPINION OF
COUNSEL SATISFACTORY TO THE GENERAL PARTNER OF THE PARTNERSHIP THAT
REGISTRATION IS NOT REQUIRED FOR SUCH TRANSFER OR THE SUBMISSION TO THE GENERAL
PARTNER OF THE PARTNERSHIP OF SUCH OTHER EVIDENCE AS MAY BE SATISFACTORY
TO THE GENERAL PARTNER TO THE EFFECT THAT ANY SUCH TRANSFER SHALL NOT BE IN
VIOLATION OF THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE
SECURITIES OR BLUE SKY LAWS OF ANY STATE OR OTHER JURISDICTION. IN ADDITION,
ANY TRANSFER OF UNITS REQUIRES THE PRIOR WRITTEN CONSENT OF THE GENERAL PARTNER
AND IS SUBJECT TO OTHER RESTRICTIONS PURSUANT TO THIS AGREEMENT.

 

 

AGREEMENT
OF LIMITED PARTNERSHIP

 

OF

 

FLOYD PROSPECT II, L.P.

 

 

TABLE OF
CONTENTS

 

	
   

  	
  Page

  
	
   

  	
   

  
	
  ARTICLE I

  	
   

  
	
  DEFINITIONS

  	
   

  
	
   

  	
   

  	
   

  
	
  1.01

  	
  Certain Definitions

  	
  1

  
	
  1.02

  	
  Construction

  	
  4

  
	
   

  	
   

  	
   

  
	
  ARTICLE II

  	
   

  
	
  ORGANIZATION

  	
   

  
	
   

  	
   

  	
   

  
	
  2.01

  	
  Formation

  	
  4

  
	
  2.02

  	
  Name

  	
  4

  
	
  2.03

  	
  Registered Office;
  Registered Agent; Other Offices

  	
  5

  
	
  2.04

  	
  Purposes

  	
  5

  
	
  2.05

  	
  Certificate; Foreign
  Qualification

  	
  5

  
	
  2.06

  	
  Term

  	
  5

  
	
   

  	
   

  	
   

  
	
  ARTICLE III

  	
   

  
	
  GENERAL
  PARTNER; MANAGEMENT

  	
   

  
	
   

  	
   

  	
   

  
	
  3.01

  	
  Authority of General
  Partner

  	
  5

  
	
  3.02

  	
  Certain Restrictions on
  General Partner’s Power and Authority

  	
  7

  
	
  3.03

  	
  Duties and Services of
  General Partner

  	
  7

  
	
  3.04

  	
  Operating Agreements

  	
  8

  
	
  3.05

  	
  Admission of Additional
  General Partners

  	
  8

  
	
  3.06

  	
  Withdrawal of General
  Partner

  	
  8

  
	
  3.07

  	
  General Partner as
  Limited Partner

  	
  8

  
	
  3.08

  	
  General Partner as Limited Partner

  	
  8

  
	
   

  	
   

  	
   

  
	
  ARTICLE IV

  	
   

  
	
  LIMITED
  PARTNERS

  	
   

  
	
   

  	
   

  	
   

  
	
  4.01

  	
  Restrictions on Limited
  Partners

  	
  9

  
	
  4.02

  	
  Access to Information

  	
  9

  
	
  4.03

  	
  Admission of Additional
  Limited Partners

  	
  10

  
	
  4.04

  	
  Investment
  Representations of the Limited Partners

  	
  10

  
	
  4.05

  	
  Transfer Restrictions

  	
  10

  
	
  4.06

  	
  Permitted Transfers;
  Status as Assignee

  	
  10

  
	
  4.07

  	
  General Partner’s Right
  of Purchase

  	
  11

  
	
  4.08

  	
  Specific Performance

  	
  11

  
	
   

  	
   

  	
   

  
	
  ARTICLE V

  	
   

  
	
  CAPITAL
  CONTRIBUTIONS

  	
   

  
	
   

  	
   

  	
   

  
	
  5.01

  	
  Capital Contributions
  of General Partner

  	
  11

  
	
  5.02

  	
  Initial Capital
  Contributions of Limited Partners

  	
  11

  
	
  5.03

  	
  Additional Capital Contributions
  of Limited Partners

  	
  11

  
	
  5.04

  	
  Capital Accounts

  	
  12

  
	
  5.05

  	
  Return of Capital
  Contribution

  	
  12

  

 

i

 

	
  ARTICLE VI

  	
   

  
	
  SHARING,
  ALLOCATIONS AND DISTRIBUTIONS

  	
   

  
	
   

  	
   

  	
   

  
	
  6.01

  	
  Sharing and Allocation
  of Costs and Expenses

  	
  12

  
	
  6.02

  	
  Sharing and Allocation
  of Revenues

  	
  13

  
	
  6.03

  	
  Allocations for Capital
  Account and Tax Purposes

  	
  13

  
	
  6.04

  	
  Distributions

  	
  13

  
	
  6.05

  	
  Withholding Taxes

  	
  13

  
	
   

  	
   

  	
   

  
	
  ARTICLE VII

  	
   

  
	
  BOOKS,
  RECORDS AND BANK ACCOUNTS

  	
   

  
	
   

  	
   

  	
   

  
	
  7.01

  	
  Maintenance of Books

  	
  14

  
	
  7.02

  	
  Accounts

  	
  14

  
	
   

  	
   

  	
   

  
	
  ARTICLE VIII

  	
   

  
	
  DISSOLUTION,
  LIQUIDATION AND TERMINATION

  	
   

  
	
   

  	
   

  	
   

  
	
  8.01

  	
  Dissolution

  	
  14

  
	
  8.02

  	
  Liquidation and
  Termination

  	
  15

  
	
  8.03

  	
  Termination

  	
  16

  
	
   

  	
   

  	
   

  
	
  ARTICLE IX

  	
   

  
	
  GENERAL
  PROVISIONS

  	
   

  
	
   

  	
   

  	
   

  
	
  9.01

  	
  Offset

  	
  17

  
	
  9.02

  	
  Notices

  	
  17

  
	
  9.03

  	
  Entire Agreement

  	
  17

  
	
  9.04

  	
  Effect of Waiver or
  Consent

  	
  17

  
	
  9.05

  	
  Amendment or
  Modification

  	
  17

  
	
  9.06

  	
  Binding Effect

  	
  18

  
	
  9.07

  	
  Governing Law;
  Severability

  	
  18

  
	
  9.08

  	
  Further Assurances

  	
  18

  
	
  9.09

  	
  Waiver of Certain
  Rights

  	
  18

  
	
  9.10

  	
  Insurance

  	
  18

  
	
  9.11

  	
  Indemnification

  	
  18

  
	
  9.12

  	
  Counsel to the
  Partnership

  	
  19

  
	
  9.13

  	
  Power of Attorney

  	
  19

  
	
  9.14

  	
  Counterparts

  	
  20

  
	
  9.15

  	
  No Employment Contract

  	
  20

  

 

 

	
  Exhibit A
  – Schedule of Limited Partners

  	
   

  
	
  Exhibit B
  – Area of Interest

  	
   

  
	
  Exhibit C
  – Wells

  	
   

  
	
  Exhibit D
  – Allocations of Profits and Losses and Other Tax Matters

  	
   

  

 

ii

 

AGREEMENT
OF LIMITED PARTNERSHIP

 

OF

 

FLOYD PROSPECT II, L.P.

 

This AGREEMENT OF LIMITED PARTNERSHIP OF FLOYD PROSPECT II, L.P. (this “Agreement”) is
made and entered into as of March 6, 2006
(the “Effective Date”),
by and among the Partners (as defined below).

 

FOR AND IN CONSIDERATION OF the mutual
covenants, rights, and obligations set forth in this Agreement, the benefits to
be derived from them, and other good and valuable consideration, the receipt
and the sufficiency of which is hereby acknowledged, the Partners agree as
follows:

 

ARTICLE I

DEFINITIONS

 

1.01                           Certain
Definitions. As used in this Agreement, the
following terms have the following meanings:

 

“Acquisition Costs” means (i) the costs
of acquiring a leasehold interest, including, without limitation, direct costs
of seismic data and interpretation, lease broker services, title examinations,
filing fees, and recording costs, and (ii) the fair value of Partnership
Properties contributed to the Partnership by the General Partner.

 

“Act” means the
Texas Revised Limited Partnership Act and any successor statute, as amended.

 

“Affiliate”
means, when used with reference to a specified Person, (a) any Person
directly or indirectly owning, controlling or holding power to vote 50% or more
of the outstanding voting securities of the specified Person, (b) any
Person 50% or more of whose outstanding voting securities are directly or
indirectly owned, controlled or held with power to vote by the specified
Person, (c) any Person directly or indirectly controlling, controlled by
or under common control with the specified Person, (d) if the specified
Person is a corporation, any officer or director of the specified Person or of
any corporation directly or indirectly controlling that specified Person, (e) if
the specified Person is a partnership, any general partner or if the general
partner is a partnership, the general partners of that partnership, and (f) if
the specified Person is an individual, such individual’s spouse and natural and
adoptive lineal descendants and trusts for the benefit of any such Persons. For
purposes of this definition, the ability through share ownership or contractual
arrangement to elect or cause the election of a majority of the board of
directors of a corporation shall constitute “control.”

 

“Agreed Rate” means 4.74% per annum.

 

“Agreement”
means this Agreement of Limited Partnership, as amended or restated from time
to time.

 

 

“Area of Interest”
means the area described in Exhibit B.

 

“Capital Account” has the meaning set forth in
Section 5.04.

 

“Capital Contribution”
means, for any Partner, the dollar amount of any cash contributed to the
capital of the Partnership and the fair value of any property contributed to
the Partnership by such Partner.

 

“Certificate”
means the certificate of limited partnership of the Partnership filed with the
Secretary of State of Texas, as amended or restated from time to time.

 

“Change in Control” has the meaning set
forth in Section 8.01(d).

 

“Code” means the
Internal Revenue Code of 1986, as amended.

 

“Contribution Date” has the meaning set forth
in Section 5.03(a).

 

“Contribution Notice” has the meaning set
forth in Section 5.03(a).

 

“CWEI” means
Clayton Williams Energy, Inc., a Delaware corporation.

 

“Event of Forfeiture” has the meaning set
forth in Section 4.07.

 

“Event of Withdrawal” means the withdrawal of
the General Partner as provided in Section 3.06. The events
described in subdivisions (4), (5) and (8) of Section 4.02(a) of
the Act shall not be Events of Withdrawal, and a General Partner shall not
cease to be a General Partner upon the occurrence of any of such events.

 

“Exchange  Act” means the
Securities Exchange Act of 1934, as amended.

 

“General Partner” means CWEI and each other Person admitted as an
additional or successor General Partner pursuant to Section 3.05.

 

“Indemnified Person”
has the meaning set forth in Section 9.11.

 

“Lease” means a lease, mineral interest,
royalty or overriding royalty, fee right, mineral servitude, license,
concession or other right covering oil, gas and related hydrocarbons (or a
contractual right to acquire such an interest) or an undivided interest therein
or portion thereof, together with all appurtenances, easements, permits,
licenses, servitudes and rights-of-way situated upon or used or held for future
use in connection with such an interest or the exploration, development or
production thereof. A “Lease” shall also mean and include all rights and
interests in all lands and interests unitized or pooled therewith pursuant to
any law, rule, regulation or agreement.

 

“Limited Partner”
means each Person listed as a limited partner on Exhibit A
and each other Person admitted as an additional or successor Limited Partner
pursuant to Section 4.03.

 

“Majority in Interest” has the meaning set forth in Section 3.02.

 

2

 

“Non-Contributing
Limited Partner” has the meaning set forth in Section 5.03(b).

 

“Operating Agreement” means an agreement between the operator and
non-operating interest owners in a Lease for the testing, development and
operation of a tract of land or Lease for the exploration and development of
oil, gas, minerals or hydrocarbons.

 

“Partner” means
any General Partner or any Limited Partner.

 

“Partnership” means the limited partnership
formed by the Partners pursuant to this Agreement.

 

“Partnership Counsel” has the meaning set
forth in Section 9.12.

 

“Partnership Property” means Leases and Wells
in which the Partnership owns an undivided interest.

 

“Payout” means the earliest calendar month
during which the General Partner shall have received distributions pursuant to Section 6.04 in an aggregate amount equal
to the sum of (i) the cumulative Capital Contributions made by the General
Partner pursuant to Section 5.01, plus (ii) an annual rate of
return on such Capital Contributions equal to the Agreed Rate. For this
purpose, each distribution and Capital Contribution shall be deemed to have
been made on the last day of the month during which it was made or received.

 

“Person” means
an individual, corporation, partnership, limited partnership, limited liability
company, business trust or other legal entity.

 

“Regulations” mean the regulations
promulgated by the United States Department of Treasury pursuant to the Code. All
references herein to sections of the Treasury Regulations shall include
corresponding provision or provisions of succeeding, similar, substitute,
temporary or final Treasury Regulations.

 

“Securities Act”
means the Securities Act of 1933, as amended.

 

“Transfer” means
any sale, transfer, assignment, pledge, encumbrance, hypothecation, gift or
disposition of a Unit in whole or in part, or any rights or benefits to which a
holder of a Unit may be entitled as provided in this Agreement or the Act,
including, without limitation, the right to receive distributions in cash or in
kind.

 

“Unit” means a Limited Partnership interest,
or fraction thereof, in the Partnership. The number of Units owned by each
Limited Partner and the total number of Units of the Partnership are set forth
on Exhibit A, as amended from time to time.

 

“Well” means a well in which the
Partnership holds a Working
Interest derived from its ownership of one or more Leases. The name and
location of each “Well” is shown on Exhibit C,
as amended from time to time.

 

3

 

“Well Costs”
means the Partnership’s share of costs pursuant to any Operating Agreement for
the drilling, completing, equipping, deepening or sidetracking a Well,
including, without limitation:  (i) the
costs of surveying and staking the Well, the costs of any surface damages and
the costs of clearing, coring, testing, logging and evaluating the Well; (ii) the
costs of casing, cement and cement services for the Well; (iii) the cost
of plugging and abandoning the Well (including standard and customary
remediation activities associated therewith), if it is determined that the Well
would not produce in commercial quantities and should be abandoned; (iv) all
direct charges and overhead chargeable to the Partnership with respect to the
Well under any applicable Operating Agreement until such time as all operations
are carried out as required by applicable regulations and sound engineering
practices to make such Well ready for production, including the installation
and testing of wellhead equipment, or to plug and abandon a dry hole; (v) all
costs incurred by the Partnership in recompleting or plugging back any Well; (vi) all
costs incurred by the Partnership in reworking any Well if the rework is
covered by an authority for expenditure under the applicable Operating
Agreement; (vii) all costs incurred by the Partnership in locating,
drilling, completing, equipping, deepening or sidetracking any enhanced
recovery producer or injector Well (including the costs of all necessary
surface equipment such as steam generators, compressors, water treating
facilities, injection pumps, flow lines and steam lines); and (viii) the
costs of constructing production facilities, pipelines and other facilities
necessary to develop Partnership property acquired pursuant to the terms hereof
and produce, collect, store, treat, deliver, market, sell or otherwise dispose
of oil, gas and other hydrocarbons and minerals therefrom; provided,
that Well Costs shall not include any Acquisition Costs.

 

“Working Interest” means a fractional
operating interest in a Lease that permits the Partnership to explore, develop
and produce one or more properties in the Area of Interest and bear its
percentage of the costs and expenses relating to the maintenance and
development of and operations relating to such properties in return for a share
of the mineral production from the property.

 

1.02                           Construction.
Whenever the context requires, the gender of all words used in this Agreement
includes the masculine, feminine and neuter. All references to Articles and
Sections refer to articles and sections of this Agreement, and all references
to exhibits are to Exhibits attached to this Agreement, each of which is made a
part of this Agreement for all purposes.

 

ARTICLE II

ORGANIZATION

 

2.01                           Formation. The Persons executing
this Agreement agree to form the Partnership as a limited partnership
under the Act for the purposes and upon the terms and subject to the conditions
set forth in this Agreement.

 

2.02                           Name. The name of the Partnership is
“FLOYD PROSPECT II, L.P.”, and all
Partnership business shall be conducted in that name or such other names that
comply with applicable law as the General Partner may select from time to
time.

 

4

 

2.03                           Registered
Office; Registered Agent; Other Offices. The registered office
of the Partnership in the State of Texas shall be at such place as the General
Partner may designate from time to time. The registered agent for service
of process on the Partnership in the State of Texas or in any other
jurisdiction shall be such Person or Persons as the General Partner may designate
from time to time. The Partnership may have such other offices as the
General Partner may designate from time to time.

 

2.04                           Purposes. The purposes for which the
Partnership is formed are to (i) acquire, explore, hold, develop, produce,
dispose of and otherwise deal with Partnership Property, (ii) collect
proceeds, payments and other distributions from Partnership Property, (iii) make
distributions to the Partners in accordance with the terms hereof and (iv) engage
in any other business or activity that now or in the future may be
necessary, incidental, proper, advisable or convenient to accomplish the
foregoing purposes (including, without limitation, obtaining appropriate
financing) and that is not prohibited by the law of the jurisdiction in which
the Partnership engages in that business.

 

2.05                           Certificate;
Foreign Qualification. The General Partner shall execute and
cause the Certificate to be filed with the Secretary of State of Texas on or as
soon as practicable after the Effective Date. Prior to the Partnership’s
conducting business in any jurisdiction other than Texas, the General Partner
shall cause the Partnership to comply, to the extent those matters are
reasonably within the control of the General Partner, with all requirements
necessary to qualify the Partnership as a foreign limited partnership (or a
partnership in which the Limited Partners have limited liability) in that
jurisdiction. At the request of the General Partner, each Limited Partner shall
execute, acknowledge, swear to and deliver all certificates and other
instruments conforming with this Agreement that are necessary or appropriate to
form, qualify, continue, dissolve and terminate the Partnership as a limited
partnership under the law of the State of Texas and to qualify, continue,
dissolve and terminate the Partnership as a foreign limited partnership (or a
partnership in which the Limited Partners have limited liability) in all other
jurisdictions in which the Partnership may conduct business, and to this
end the General Partner may use the power of attorney set forth in Section 9.13.

 

2.06                           Term. The term of Partnership shall
commence on the date of filing of the Certificate and shall continue until the
close of business on December 31, 2017, unless the Partnership is
dissolved and liquidated before such time in accordance with this Agreement.

 

ARTICLE III

GENERAL PARTNER; MANAGEMENT

 

3.01                           Authority
of General Partner. In addition to the powers now or hereafter
granted to a general partner of a limited partnership under applicable law or
which are granted to the General Partner under other provisions of this
Agreement, subject only to any express limitations set forth in this Agreement,
the General Partner shall have the full and exclusive power and authority to do
any and all things necessary, incidental, proper, advisable or convenient for
the furtherance of the purposes of the Partnership and for the protection and
benefit of the Partnership, including without limitation:

 

5

 

(a)                                  to
determine whether to acquire, hold, develop or produce Partnership Property and
other assets of the Partnership and whether, when and on what terms to
farm-out, sell, promote or otherwise transfer any particular prospect, or any
interest therein;

 

(b)                                 to
make all decisions concerning the desirability of payment, and the payment or
supervision of payment, of all delay rentals, shut-in royalty payments, minimum
royalty payments and any other similar or related payments;

 

(c)                                  to
drill, complete, control, rework, side-track, redrill, recomplete, produce,
plug and/or abandon any or all of the Wells;

 

(d)                                 to
form and participate in tax partnerships, joint ventures or other
relationships that it deems desirable with regard to Partnership prospects;

 

(e)                                  to
make any expenditures and incur any obligations it deems appropriate for the conduct
of the activities of the Partnership;

 

(f)                                    to
acquire (including, without limitation, to purchase at premium prices when
deemed appropriate by the General Partner), exchange, sell, lease, dispose of
or exchange any or all Partnership Property;

 

(g)                                 to
use Partnership Property or credit of the Partnership (including without
limitation, cash on hand), for any purpose not inconsistent with this Agreement
and on any terms it deems appropriate, including, without limitation, the
financing of Partnership operations and activities, the repayment of
obligations of the Partnership and the contribution obligations of others under
third-party joint operating agreements or similar agreements;

 

(h)                                 to
negotiate, execute, deliver and perform, in the name and on behalf of the
Partnership, any contracts, conveyances or other instruments which it considers
appropriate for the conduct of Partnership operations or the implementation of
its powers under this Agreement, including, without limitation, Operating
Agreements, unit Operating Agreements and joint development agreements, and the
right to make any and all elections that are required or necessary under the
terms of any agreements;

 

(i)                                     to
distribute cash, Partnership Property or other assets of the Partnership to the
Partners in accordance with this Agreement;

 

(j)                                     to
select and dismiss attorneys, accountants, consultants and contractors of the
Partnership and to determine their compensation and other terms of engagement;

 

(k)                                  to
acquire and maintain such insurance, if any, for the benefit of the Partnership
and the Partners as it deems appropriate;

 

(l)                                     to
establish operating and other offices and facilities;

 

(m)                               to
borrow money, incur indebtedness or make guaranties in the name or on behalf of
the Partnership and to secure the same by mortgages, deeds of trust, security
interests, pledges or other liens or encumbrances on all or any part of
the Partnership Property;

 

6

 

(n)                                 to
construct pipelines, drilling and production platforms and facilities, gas
plants, processing plants and other facilities incidental to the development of
Partnership Property and the production and marketing of oil and gas therefrom;

 

(o)                                 to
execute and deliver division orders and transfer orders upon such terms and
conditions and containing such provisions as the General Partner may consider
appropriate;

 

(p)                                 to
dissolve the Partnership if there is not Payout within a reasonable period of
time; and

 

(q)                                 to
control any matters affecting the rights and obligations of the Partnership
including the conduct of litigation and other incurring of legal expenses and
the settlement of claims in litigation; provided, that, the General
Partner shall not be authorized to settle any claims for which any Limited Partner
has, or may have, any individual liability without the Limited Partner’s
prior written consent.

 

Any person dealing with the Partnership shall be entitled to rely, and
shall be fully protected in relying, on the authority of the General Partner to
act for the Partnership.

 

3.02                           Certain
Restrictions on General Partner’s Power and Authority. The
General Partner shall not have the power or authority to, and shall not, do, form or
authorize any of the following without the prior written consent of Limited
Partners holding a majority of the Units held by all Limited Partners (a “Majority in Interest”):

 

(a)                                  do
any act in contravention of this Agreement;

 

(b)                                 do
any act which would make it impossible to carry on the ordinary business of the
Partnership;

 

(c)                                  possess
Partnership Property or other assets of the Partnership or assign any rights in
specific Partnership Property or assets for other than a Partnership purpose;

 

(d)                                 change
or reorganize the Partnership into any other legal form; or

 

(e)                                  commingle
the funds of the Partnership with the funds of any other person or entity.

 

3.03                           Duties
and Services of General Partner. The General Partner shall
comply in all respects with the terms of this Agreement and shall use its
reasonable efforts to cause the Partnership to: (i) comply in all material
respects with the terms and provisions of all agreements to which the
Partnership is a party or to which its properties are subject; (ii) comply
in all material respects with all applicable laws, ordinances or governmental rules and
regulations to which the Partnership is subject; and (iii) obtain all
licenses, permits, franchises and other governmental authorizations material
and necessary with respect to the ownership of Partnership properties and the
conduct of Partnership business and operations. During the existence of the
Partnership, the General Partner shall devote such time and effort to the
Partnership business and operations as shall be necessary for the furtherance
of the purposes of the Partnership; provided,
however, that the Partners acknowledge
and agree that neither the General Partner nor any 

 

7

 

Affiliate thereof nor any of their respective officers, directors,
employees or agents shall be required to devote full time to Partnership
business and may from time to time engage in and possess interests in
other business ventures of any and every type and description, independently or
with others, including without limitation, the ownership, acquisition, exploration,
development, operation and management of oil and gas properties, oil and gas
drilling programs and other partnerships similar to this Partnership, and that
neither the Partnership nor any Limited Partner shall by virtue of this
Agreement have any right, title, interest or expectancy in or to such
activities or ventures. The Partners
acknowledge and agree that the General Partner engages in the same business as
the Partnership, and that that General Partner has no duty to any Limited
Partner with regard to the operation of the General Partner’s business affairs
or prospects outside of the Partnership. The Partners also agree and
acknowledge that the General Partner may operate the General Partner’s
business affairs or prospects outside of the Partnership without offering the
Partnership or any Limited Partner the right to participate in such other
affairs or prospects.

 

3.04                           Operating
Agreements.  The
General Partner shall use its reasonable efforts to cause the Partnership to
become a party to all applicable Operating Agreements for any Partnership
Property. To the extent the General Partner is not able to cause the
Partnership to become a party to an applicable Operating Agreement, the General
Partner agrees to use its reasonable efforts to act in accordance with the
provisions of such Operating Agreement as if the Partnership were a party to
such Operating Agreement. In addition, following dissolution and liquidation of
the Partnership, each Partner agrees to become a party to all Operating
Agreements in which the General Partner serves as operator, and further agrees
to use its reasonable efforts to become a party to all other applicable
Operating Agreements. To the extent any Partner is not able to become a party
to an applicable Operating Agreement, such Partner agrees to use its reasonable
efforts to act in accordance with the provisions of such Operating Agreement as
if it were a party to such Operating Agreement.

 

3.05                           Admission
of Additional General Partners. After the date of this
Agreement, the General Partner may admit one or more additional General
Partners at such times and upon such terms and conditions as may be
determined by the General Partner, in its sole discretion. Each such additional
General Partner, as a condition to its admission to the Partnership, shall
adopt and agree to be bound by the terms and provisions of this Agreement and
will assume all obligations and liabilities of the Partnership arising before
its admission as though it had been a General Partner when such obligations and
liabilities were incurred.

 

3.06                           Withdrawal
of General Partner. A General Partner shall cease to be a
General Partner and shall be deemed to have withdrawn from the Partnership upon
the General Partner’s written notice of its withdrawal to the other Partners. A
General Partner may not be removed as a General Partner.

 

3.07                           General
Partner as Limited Partner. The General Partner shall also be
treated as a Limited Partner to the extent that it acquires, holds or becomes
an assignee of Units of a Limited Partner, whether pursuant to Section 5.03(b) or
otherwise.

 

3.08                           Excluded
Properties. Notwithstanding any provision of this Agreement to
the contrary, the General Partner may at any time and from time to time
and in its sole discretion

 

8

 

determine that Leases acquired by the General Partner in the Area of
Interest, Wells in the Area of Interest or Working Interests derived from the
General Partner’s ownership of Leases in the Area of Interest shall not be Partnership
property and may designate such Leases, Wells or Working Interests or any
portion of the General Partner’s interest therein as “Excluded
Property” for purposes of this Agreement. The Limited Partners
acknowledge and agree that the General Partner (i) shall not have any
obligation to contribute Excluded Property to the Partnership, (ii) may acquire,
own, hold and develop Excluded Property for itself, its Affiliates or any other
Person and (iii) may transfer, assign or contribute any or all of its
interests in Excluded Property to any other Person, including, without
limitation, to a partnership or other entity formed by the General Partner or
an Affiliate of the General Partner and one or more Limited Partners or other
officers, employees, agents or contractors of the General Partner or an
Affiliate of the General Partner, in which one or more Limited Partners do not
participate or participate on a basis that differs from their ownership of
Units in the Partnership.

 

ARTICLE IV

LIMITED PARTNERS

 

4.01                           Restrictions
on Limited Partners. Notwithstanding any other provision of this
Agreement, a Limited Partner, in his or her capacity as such, shall not:

 

(a)                                  be
allowed to manage or control or take part in the management or control of
the Partnership business or to act for or bind the Partnership, such power
being vested solely and exclusively in the General Partner;

 

(b)                                 be
entitled to be paid any fee, salary or other compensation by the Partnership or
General Partner or to have a Partnership drawing account;

 

(c)                                  be
entitled to receive any interest or a return of Capital Contributions except as
expressly provided for herein;

 

(d)                                 be
entitled to a partition of Partnership Property or other assets of the
Partnership;

 

(e)                                  be
bound by, nor be personally liable for, the expenses, liabilities or
obligations of the Partnership; provided, however, that the
foregoing shall not limit or expand any obligation or liability of any Limited
Partner to the Partnership set forth in this Agreement or to the extent such
obligation or liability is required by law; or

 

(f)                                    be
entitled to withdraw from the Partnership.

 

4.02                           Access
to Information. A Limited Partner or a permitted assignee of
Units, on written request to the General Partner stating the purpose, may examine
and copy, at any reasonable time, for any proper purpose, and at the expense of
the Limited Partner or assignee, records required to be kept by the Partnership
under Section 1.07 of the Act and other information regarding the business
affairs and financial condition of the Partnership as is just and reasonable
for the Person to examine and copy. On the written request by any Limited
Partner or an assignee of Units made to the General Partner at the principal
place of business of the Partnership, the Partnership shall provide to the
requesting Limited Partner or assignee, without charge, true copies of:

 

9

 

(a)                                  this
Agreement and the Certificate and all amendments and restatements; and

 

(b)                                 any
of the tax returns described in Subdivision (2) of Subsection (a) of
Section 1.07 of the Act.

 

Information provided to or obtained by a Limited Partner or an assignee
of Units relating to the Partnership or Partnership Property shall be used by
such Limited Partner or assignee solely in furtherance of his or her interests
as a Limited Partner and shall not be used for any other purpose. Limited
Partners and assignees of Units shall maintain the confidentiality of all such
information and shall not disclose such information to any other Person. If a
Limited Partner or assignee of a Unit receives a request to disclose
information relating to the Partnership or Partnership Property under the terms
of a subpoena, investigative demand or order issued by a court or governmental
agency, the Limited Partner or assignee shall promptly notify the General
Partner of the existence, terms and circumstances surrounding such request, so
that the General Partner may seek a protective order or confidential
treatment of such information.

 

4.03                           Admission
of Additional Limited Partners. The General Partner may admit
an assignee of Units who has acquired Units in a Transfer permitted under Sections 4.05, 4.06
or 5.03(b) as an additional or
successor Limited Partner to the Partnership at such times and upon such terms
and conditions as may be determined by the General Partner, in its sole
discretion.

 

4.04                           Investment
Representations of the Limited Partners.

 

(a)                                  Each
Limited Partner is admitted to the Partnership in reliance upon such Limited
Partner’s representation to the General Partner and the Partnership, which by
executing this Agreement each Limited Partner hereby confirms, that such
Limited Partner is acquiring his or her Units for his or her own account, for
investment purposes only and not with a view to the resale or distribution
thereof, in whole or in part. Each Limited Partner understands that the Units
have not been registered under the Securities Act and that any Transfer of the
Units may not be made without registration under the Securities Act or
pursuant to an applicable exemption therefrom. The Limited Partners understand
that no market exists for any Units and that it is unlikely that a market will
ever exist for any Units.

 

(b)                                 Each
Limited Partner represents that he or she has such knowledge and experience in
financial and business matters as to be capable of evaluating the merits and
risks of an investment in the Units.

 

4.05                           Transfer
Restrictions. Except as provided in Sections
4.06 and 5.03(b), no Limited Partner shall Transfer
any Units or any interest therein without the prior written consent of the
General Partner. Any attempted Transfer in violation of this Section 4.05 shall be null and void, and
the Partnership shall refuse to recognize any such Transfer and shall not
reflect on its records any change in ownership of such Units pursuant to any
such Transfer.

 

4.06                           Permitted
Transfers; Status as Assignee. A Limited Partner may Transfer
all or any portion of his or her Units (i) to the Partnership, (ii) to
his or her spouse, parents or natural or adoptive lineal descendants, or to one
or more trusts or partnerships established exclusively for the benefit of his
or her spouse, parents or natural or adoptive lineal descendants, or (iii) pursuant

 

10

 

to Section 4.07; provided,
that any such permitted assignee shall receive and hold such rights subject to
the provisions of this Agreement, including, without limitation, the provisions
of this Article IV. A Limited
Partner intending to Transfer Units pursuant to this Section 4.06
shall provide at least 10 days prior written notice of such proposed transfer
to the General Partner. An assignee of Units shall have only the rights of an
assignee under the Act and, except as expressly provided under the Act, shall
not be considered a Partner for any purpose under this Agreement or otherwise
unless and until such assignee is admitted to the Partnership as a Limited
Partner with the approval of the General Partner pursuant to Section 4.03.

 

4.07                           General
Partner’s Right of Purchase. The General Partner shall have the
right and option to purchase any and/or all Units held by a Limited Partner
following such Limited Partner’s admission to or conviction of a felony or
misdemeanor offense against CWEI or any of its Affiliates (“Event of Forfeiture”). The General Partner
may exercise such right and option of purchase within 60 days of an Event
of Forfeiture. The purchase price to be paid for the Units held by the Limited
Partner shall be equal to such Limited Partner’s Capital Contribution as set
forth on Exhibit A. To the extent the General Partner exercises its
option to purchase a Limited Partner’s Units under this provision, such Units
shall then be held by the General Partner in accordance with Section 3.07 hereof.

 

4.08                           Specific
Performance. The parties
agree that the Partnership and each Partner would be irreparably damaged if any
of the provisions of this Article IV are not performed in accordance with their specific
terms and that monetary damages would not provide an adequate remedy in such
event. Accordingly, it is agreed that, in addition to any other remedy to which
they may be entitled, at law or in equity, the Partnership, the General
Partner and any nondefaulting Limited Partner shall be entitled to injunctive
relief to prevent breaches of the provisions of this Article IV and specifically to enforce the terms and
provisions hereof in any action instituted in any court of competent
jurisdiction.

 

ARTICLE V

CAPITAL CONTRIBUTIONS

 

5.01                           Capital
Contributions of General Partner. The General Partner shall
contribute to the Partnership (i) cash in such amounts as shall be
necessary to pay timely the costs and expenses allocated and charged to the
General Partner pursuant to Section 6.01 and elsewhere herein, and (ii) an
undivided 6% of the General Partner’s interest in Partnership Property. In the
event any Partnership Property contributed to the Partnership are subject to
any liens or similar encumbrances, the General Partner shall use reasonable
efforts to cause such liens or similar encumbrances to be released prior to any
dissolution of the Partnership.

 

5.02                           Initial
Capital Contributions of Limited Partners. On the Effective
Date, each Limited Partner shall initially contribute to the Partnership cash
in the amount of $10.00 per Unit, as set forth on Exhibit A.

 

5.03                           Additional
Capital Contributions of Limited Partners.

 

(a)                                  After
Payout, if the General Partner determines, in its sole discretion, that
additional Capital Contributions from the Limited Partners are required to fund
the payment of

 

11

 

costs and expenses allocated and charged to
the Limited Partners pursuant to Section 6.01 and elsewhere in this
Agreement, the General Partner shall send written notice to the Limited
Partners (a “Contribution Notice”) setting forth the date on which such
additional Capital Contributions shall be payable (the “Contribution Date”),
which date shall be not less than 10 days after the date of the Contribution
Notice, the total amount of the additional Capital Contributions required and
the amount of the additional Capital Contribution to be made by each Limited
Partner pursuant to this Section 5.03(a). Each Limited Partner’s
additional Capital Contribution shall be in proportion to the number of Units
held by such Limited Partner.

 

(b)                                 If
a Limited Partner does not make an additional Capital Contribution to the
Partnership in the amount, at the time or in the manner provided in Section 5.03(a) (a
“Non-Contributing Limited Partner”),
the General Partner, in its sole discretion, may make the additional
Capital Contribution that the Non-Contributing Limited Partner failed to make
within 20 days after the Contribution Date, in which case the Non-Contributing
Limited Partner, without further action on his or her part, shall be deemed to
have assigned to the General Partner on the Contribution Date the economic
rights to the Units held by the Non-Contributing Limited Partner, and the
General Partner, as the assignee of the Non-Contributing Limited Partner and
the holder of such Units, shall be entitled to receive all allocations of
income, gain, loss, deduction, credit or similar items, and all distributions,
to which the Non-Contributing Limited Partner would otherwise be entitled from
and after the Contribution Date. The General Partner shall hold such economic
rights to the Units attributable to the Non-Contributing Limited Partner until
such time as the General Partner, as the holder of such Units, shall have
received distributions pursuant to Section 6.04 in an aggregate
amount equal to the sum of (i) the additional Capital Contributions made
by the General Partner pursuant to this Section 5.03(b), plus (ii) an
annual rate of return on such additional Capital Contributions from the
Contribution Date equal to the prime rate as established from time to time by
Bank One NA, or its successors, plus 2%, whereupon the General Partner, without
further action on its part, shall be deemed to have re-assigned the economic
rights to such Units to the Non-Contributing Limited Partner. The General
Partner may use the power of attorney set forth in Section 9.13
to reflect any assignment pursuant to this Section 5.03(b).

 

5.04                           Capital
Accounts. An individual capital account (a “Capital Account”)
shall be established and maintained for each Partner as provided in Exhibit D.

 

5.05                           Return
of Capital Contribution                    No
interest shall accrue on any Capital Contributions, and no Partner shall have
the right to withdraw or be repaid any Capital Contributions by such Partner
except as expressly provided for herein.

 

ARTICLE VI

SHARING, ALLOCATIONS AND DISTRIBUTIONS

 

6.01                           Sharing
and Allocation of Costs and Expenses. All costs and expenses of
the Partnership shall be allocated and charged to the Partners as follows:

 

(a)                                  Acquisition Costs shall be allocated (i) 100%
to the General Partner before Payout and (ii) 1% to the General Partner
and 99% to the Limited Partners as a class after Payout;

 

12

 

(b)                                 Well Costs shall be
allocated (i) 100% to the General Partner before Payout and (ii) 100%
to the Limited Partners as a class after Payout;

 

(c)                                  All other costs and
expenses of the Partnership not specifically allocated above shall be allocated
(i) 100% to the General Partner before Payout and (ii) 100% to the
Limited Partners as a class after Payout.

 

All allocations made to Limited Partners “as a class” pursuant to this
Agreement shall be apportioned among the Limited Partners in proportion to the
number of Units held by such Limited Partners.

 

6.02                           Sharing
and Allocation of Revenues. All revenues of the Partnership
(which shall not include Capital Contributions and proceeds of loans to the
Partnership) shall be allocated (i) 100% to the General Partner before
Payout and (ii) 100% to the Limited Partners as a class after Payout.

 

6.03                           Allocations
for Capital Account and Tax Purposes. Subject to Section 8.02(c),
all items of income, gain, deduction, loss, credit and amount realized shall be
allocated to the Partners in accordance with the provisions of Exhibit D.

 

6.04                           Distributions.
At least monthly (commencing with the first full calendar month after the
receipt by the Partnership of its first revenues other than Capital
Contributions and proceeds of loans to the Partnership), all cash funds of the
Partnership (exclusive of Capital Contributions or proceeds of loans) which the
General Partner reasonably determines are not needed for the payment of any
existing or reasonably foreseeable Partnership obligations and expenditures
shall be distributed to the Partners. All such cash funds of the Partnership
shall be distributed to the Partners in the same respective percentages as the
revenues to which such cash funds are attributable were allocated to the Partners
pursuant to Section 6.02 (after deducting therefrom the costs and
expenses charged to the Partners pursuant to Section 6.01 and
elsewhere herein); provided, however, that if Payout would occur
as a result of a distribution of cash funds to the General Partner, such
distribution shall be deemed to constitute two distributions:  (i) the first distribution shall consist
of the amount of cash funds necessary to cause Payout to occur, and (ii) the
second distribution shall consist of the balance of the funds then distributed.

 

6.05                           Withholding
Taxes. The Partnership shall at all times be entitled (but not
obligated) to make payments required to discharge any obligation of the
Partnership or the General Partner to withhold or make payments to any
governmental authority with respect to any federal, state or local tax
liability of any Limited Partner for such taxes arising out of such Limited
Partner’s interest in the Partnership. The amount of each such payment made by
the Partnership with respect to any Limited Partner shall be deducted from any
distributions otherwise payable to such Limited Partner pursuant to this
Agreement. Notwithstanding anything contained in this Agreement to the
contrary, in the event the Partnership fails to withhold any federal, state or
local taxes in respect of any Limited Partner when required to do so (including
as a result of any change in law or interpretation thereof or otherwise) any
liability incurred by the Partnership (including any interest and penalties) as
a result of such failure shall be borne by such Limited Partner (and charged to
such Limited Partner’s Capital Account), and such Limited Partner shall
indemnify and hold harmless the Partnership and the General Partner

 

13

 

from and against any and all claims, demands, liabilities, costs,
damages and causes of action of any nature whatsoever related to such
withholding obligation.

 

ARTICLE VII

BOOKS, RECORDS AND BANK ACCOUNTS

 

7.01                           Maintenance
of Books. The books of account for the Partnership shall be
maintained on an accrual basis in accordance with the terms of this Agreement,
except that the Capital Accounts of the Partners shall be maintained in
accordance with Exhibit D. The
accounting year of the Partnership shall be the calendar year.

 

7.02                           Accounts.
The General Partner shall establish and maintain one or more separate bank and
investment accounts and arrangements for Partnership funds in the Partnership
name with financial institutions and firms that the General Partner determines.

 

ARTICLE VIII

DISSOLUTION, LIQUIDATION AND TERMINATION

 

8.01                           Dissolution.
The Partnership shall dissolve and its business and affairs shall be wound up
on the first to occur of the following:

 

(a)                                  the expiration of the
term of the Partnership set forth in Section 2.06;

 

(b)                                 the election of the General Partner, in its
sole discretion, to dissolve and liquidate the Partnership;

 

(c)                                  an Event of Withdrawal; provided, that upon
the occurrence of an Event of Withdrawal if there is at least one remaining
General Partner, the business of the Partnership shall be carried on by the
remaining General Partner, and the Partnership shall not be dissolved and its
affairs shall not be wound up by reason of such Event of Withdrawal; or

 

(d)                                 a Change of Control
(as hereinafter defined); provided, that if a Change in Control occurs
prior to Payout, dissolution of the Partnership shall be postponed until Payout
occurs. For purposes of this Section 8.01(d), “Change in Control” shall be deemed to have
occurred if:

 

(i)                                     Any
Person, including a “group” as determined in accordance with Section 13(d)(3) of
the Exchange Act and the rules and regulations promulgated thereunder, is
or becomes, through one or a series of related transactions or through one
or more intermediaries, the beneficial owners, directly or indirectly, of
securities of CWEI representing 25% or more of the combined voting power of
CWEI’s then outstanding securities, other than a Person who is such a
beneficial owner on the Effective Date and any Affiliate of such Person;

 

(ii)                                  As
a result of, or in connection with, any tender offer or exchange offer, merger
or other business combination, sale of assets or contested election, or any
combination of the foregoing transactions (a “Transaction”),
the Persons who were

 

14

 

directors of the Company before the
Transaction shall cease to constitute a majority of the Board of Directors of
CWEI or any successor to CWEI;

 

(iii)                               Following
the Effective Date, CWEI is merged or consolidated with another corporation and
as a result of such merger or consolidation less than 40% of the outstanding
voting securities of the surviving or resulting corporation shall then be owned
in the aggregate by the former stockholders of CWEI, other than any party to
such merger or consolidation or any Affiliates of such party;

 

(iv)                              A
tender offer or exchange offer is made and consummated for the ownership of
securities of CWEI representing 25% or more of the combined voting power of CWEI’s
then outstanding voting securities; or

 

(v)                                 CWEI
or a subsidiary of CWEI transfers more than 50% of its assets, or the last of a
series of transfers results in the transfer of more than 50% of the assets
of CWEI, to another corporation the capital stock of which is not wholly-owned
by CWEI. For this purpose, the determination of what constitutes 50% of the
assets of CWEI shall be determined based on the sum of the values attributed to
(A) the oil and gas reserves of CWEI as reflected by the most recent
reserve report prepared or audited by CWEI’s independent petroleum engineers, (B) CWEI’s
undeveloped oil and gas properties as determined by an independent appraisal
thereof, and (C) the net book value of all other assets of CWEI, each
taken as of the date of the related transfer of assets.

 

8.02                           Liquidation
and Termination. Upon dissolution of the Partnership, the
General Partner shall act as liquidator or may appoint one or more other
Persons to act as liquidator. The liquidator shall proceed to wind up the
affairs of the Partnership and make final distributions as provided in this
Agreement. The costs of liquidation shall be borne as a Partnership expense.
Until final distribution, the liquidator shall continue to operate the
Partnership properties with all of the power and authority of the General
Partner. The steps to be accomplished by the liquidator are as follows:

 

(a)                                  As
promptly as practicable after dissolution and again after final liquidation,
the liquidator shall cause a proper accounting to be made of the Partnership’s
assets, liabilities and operations through the last day of the calendar month
in which the dissolution occurs or the final liquidation is completed, as
applicable;

 

(b)                                 From
Partnership funds, the liquidator shall pay all of the debts and liabilities of
the Partnership (including, without limitation, all expenses incurred in
liquidation) or otherwise make adequate provision for such debts and
liabilities, including, without limitation, by establishing a cash escrow fund
for contingent liabilities in such amount and for such term as the liquidator may reasonably
determine; and

 

(c)                                  All
remaining assets of the Partnership shall be distributed to the Partners as
follows:

 

15

 

(i)                                     The liquidator may sell
any or all Partnership Property and other assets, including to Partners, and
any resulting gain or loss from each sale shall be computed and allocated to
the Capital Accounts of the Partners in accordance with Section 8.02(c)(iii);

 

(ii)                                  With respect to all
Partnership Property and other assets that have not been sold, the fair market
value of that Partnership Property and other assets shall be determined and any
unrealized income, gain, loss, and deduction inherent in property that has not been
reflected in the Capital Accounts of the Partners previously shall be allocated
among the Partners in accordance with Section 8.02(c)(iii);

 

(iii)                               All items of income,
gain, loss and deduction referred to in Sections 8.02(c)(i) and (ii) shall
be allocated among the Partners in such a manner as to cause, to the maximum
extent possible, the positive Capital Account balance of each Partner to equal
the distribution such Partner would receive if the distributions upon
liquidation were made in accordance with Section 6.04 of this
Agreement;

 

(iv)                              Partnership
Property and other assets shall then be distributed among the Partners in
accordance with the positive Capital Account balances of the Partners, as
determined after taking into account all Capital Account adjustments for the
taxable year of the Partnership during which the liquidation of the Partnership
occurs (other than those made by reason of distributions pursuant to this
clause (iv)), and those distributions shall be made by the end of the taxable year
of the Partnership during which the liquidation of the Partnership occurs (or,
if later, 90 days after the date of the liquidation);

 

(v)                                 It is intended that
the distributions made to each Partner pursuant to this Section 8.02(c) be equal to the
distributions to which such Partner would be entitled if liquidating
distributions were made in accordance with Section 6.04
of this Agreement. To the extent the Partners’ positive Capital Account
balances after application of Section 8.02(c)(iii) do not correspond
to the amounts of such intended distributions, the allocations provided for in Exhibit D for the fiscal year in which the
liquidation occurs shall be adjusted, to the maximum extent possible, to
produce Capital Account balances which correspond to the amount of such
intended distributions.

 

All distributions in kind to the Partners shall be made subject to the
liability of each distributee for his, her or its allocable share of costs,
expenses and liabilities previously incurred or for which the Partnership has
committed prior to the date of termination and those costs, expenses and
liabilities shall be allocated to the distributee under this Section 8.02.
The distribution of cash or property to a Partner in accordance with the
provisions of this Section 8.02
constitutes a complete return to the Partner of his, her or its Capital
Contributions and a complete distribution to the Partner of his, her or its
Units and all the Partnership Property and other assets and constitutes a
compromise to which all Partners have consented within the meaning of Section 5.02(d) of
the Act. To the extent that a Partner returns funds to the Partnership, it has
no claim against any other Partner for those funds.

 

8.03                           Termination.
On completion of the distribution of Partnership assets as provided in this
Agreement, the Partnership is terminated, and the General Partner (or such
other Person or Persons as the Act may require or permit) shall cause the
cancellation of the Certificate and any

 

16

 

filings made as provided in Section 2.05 and shall take
such other actions as may be necessary to terminate the Partnership.

 

ARTICLE IX

GENERAL PROVISIONS

 

9.01                           Offset. Whenever the Partnership or
the General Partner is to pay any sum to any Partner, including pursuant to Section 4.07, any amounts that Partner
owes the Partnership or the General Partner or its Affiliates may be
deducted from that sum before payment.

 

9.02                           Notices. All notices, requests or
consents required or permitted to be given under this Agreement must be in
writing and shall be considered as properly given if mailed by first class United
States mail, postage paid, and registered or certified with return receipt
requested, or if delivered to the recipient in person, by courier or by
facsimile transmission. Notices, requests and consents shall be sent to a
Limited Partner at the address shown on its Signature Page for Limited
Partners. A Limited Partner may change its address by giving written
notice to the General Partner. Any notice, request or consent to the
Partnership or to the General Partner shall be sent to the General Partner at
its principal place of business, to the attention of the Executive Vice
President and Chief Operating Officer.

 

9.03                           Entire
Agreement. This Agreement constitutes the entire agreement of
the Partners relating to the Partnership and supersedes all prior contracts or
agreements with respect to the Partnership, whether oral or written.

 

9.04                           Effect
of Waiver or Consent. A waiver or consent, express or implied,
to or of any breach or default by any Person in the performance by that Person
of its obligations with respect to the Partnership is not a consent or waiver
to or of any other breach or default in the performance by that Person of the
same or any other obligations of that Person with respect to the Partnership. Failure
on the part of a Person to complain of any act of any Person or to declare
any Person in default with respect to the Partnership, irrespective of how long
that failure continues, does not constitute a waiver by that Person of its
rights with respect to that default until the applicable statute of limitations
period has run.

 

9.05                           Amendment
or Modification.

 

(a)                                  Except
as otherwise provided in this Section 9.05, any amendment to this
Agreement must be proposed by the General Partner and approved in writing by
the General Partner and at least a Majority in Interest of the Limited Partners
within 90 days of its proposal to be effective.

 

(b)                                 The
General Partner may amend this Agreement without the consent of any
Limited Partner (i) to remove or correct any inconsistency, ambiguity or
error contained herein, provided that such amendment does not materially and
adversely affect the Limited Partners, (ii) to admit additional Partners pursuant
to Sections 3.04 or 4.03 or (iii) to reflect any assignment
of Units pursuant to Section 5.03(b), or (iv) to amend Exhibit C
to designate leases, wells or Working Interests or any interest therein as
Excluded Properties.

 

17

 

9.06                           Binding
Effect. Subject to the restrictions on Transfers set forth in
this Agreement, this Agreement is binding on and inures to the benefit of the
Partners and their respective successors and assigns.

 

9.07                           Governing
Law; Severability. THIS AGREEMENT IS GOVERNED BY AND SHALL BE
CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF TEXAS, EXCLUDING ANY
CONFLICT OF LAWS RULE OR PRINCIPLE THAT MIGHT REFER THE GOVERNANCE OR THE
CONSTRUCTION OF THIS AGREEMENT TO THE LAW OF ANOTHER JURISDICTION. If any
provision of this Agreement or its application to any Person or circumstance is
held invalid or unenforceable to any extent, the remainder of this Agreement
and the application of that provision to other Persons or circumstances is not
affected and that provision shall be enforced to the fullest extent permitted
by law.

 

9.08                           Further
Assurances. In connection with this Agreement and the
transactions contemplated by it, each Partner shall execute and deliver any
additional documents and instruments and perform any additional acts that may be
necessary or appropriate to effectuate and perform the provisions of this
Agreement and those transactions.

 

9.09                           Waiver
of Certain Rights. Except for the General Partner, each Partner
irrevocably waives any right it may have to maintain any action for
dissolution of the Partnership or for partition of the property of the
Partnership.

 

9.10                           Insurance.
The Partnership may purchase and maintain insurance or enter into other
arrangements on behalf of the Partnership, the General Partner or any other
Person who is or was a “general partner,” as defined in Section 11.01 of
the Act, or a Limited Partner, who is or was serving at the request of the
Partnership or the General Partner as a “representative,” as defined in Section 11.01
of the Act, of any other enterprise, against any liability asserted against the
Person and incurred by the Person in that capacity or arising out of the Person’s
status in that capacity, regardless of whether the Partnership would have the
power to indemnify the Person against that liability under this Agreement or
the Act. In the absence of actual fraud, the judgment of the General Partner as
to the terms and conditions of the insurance or other arrangement and the
identity of the insurer or other Person participating in an arrangement shall
be conclusive, and the insurance or other arrangement shall not be voidable and
shall not subject the General Partner approving the insurance or other
arrangement to liability, on any ground, regardless of whether the General
Partner will be a beneficiary.

 

9.11                           Indemnification.

 

(a)                                  The
Partnership agrees to indemnify and hold harmless the General Partner, its
Affiliates, and their respective officers, directors, partners, members,
managers, employees and agents (each, an “Indemnified Person”) to the
fullest extent permitted by law, from and against all losses, costs,
liabilities, damages, and expenses (including, without limitation, costs of
suit and attorneys’ fees) paid or incurred in connection with or resulting from
any and all claims, actions or demands against such Indemnified Person that
arise out of or in any way relate to or are incidental to the Partnership, the
Partnership Property or the business or affairs of the Partnership; provided,
however, that this indemnity shall not extend to any bad faith, willful
misconduct, gross negligence or deliberate or intentional breach of any
material provision of this

 

18

 

Agreement by such Indemnified Person. THE
PARTIES INTEND THAT THE INDEMNIFIED PERSONS BE INDEMNIFIED PURSUANT TO THIS
AGREEMENT FROM LIABILITY FOR THEIR OWN SOLE, PARTIAL OR CONCURRENT NEGLIGENCE.

 

(b)                                 The
indemnification rights contained in this Section 9.11
shall be cumulative of and in addition to any and all other rights, remedies
and recourses to which any Indemnified Person or their respective heirs,
personal representatives, successors and assigns shall be entitled, whether
pursuant to some other provisions of this Agreement, at law or in equity.

 

(c)                                  The
Partnership shall advance to any Indemnified Person all reasonable fees, costs
and expenses (including attorneys’ fees and related costs), of defending any
claim, action or demand that arises out of or in any way relates to or is
incidental to the Partnership, the Partnership Property, business or affairs; provided,
that such Indemnified Person agrees in writing to repay to the Partnership all
such advances in the event that it is finally determined that such Indemnified
Person is not entitled to indemnification hereunder with respect to such claim,
action or demand.

 

(d)                                 All
damages awarded by any court or paid in settlement in connection with any
action in the nature of a derivative action shall be paid to the Partnership by
the Person bringing such action. As used herein, derivative action shall mean
an action brought by a Limited Partner on behalf of the Partnership.

 

9.12                           Counsel
to the Partnership. The General Partner may select and
retain legal counsel to the Partnership and may execute and deliver on
behalf of the Partnership any consent to the representation of the Partnership
that counsel may request pursuant to the rules of professional
conduct or similar rules in any jurisdiction. Counsel to the Partnership may also
be counsel to the General Partner. The Partnership has initially selected
Vinson & Elkins L.L.P. (“Partnership Counsel”) as legal counsel to the Partnership.
Each Limited Partner acknowledges that Partnership Counsel does not represent
such Limited Partner as a Limited Partner, and that Partnership Counsel shall
owe no duties directly to such Limited Partner. Each Limited Partner further
acknowledges that, whether or not Partnership Counsel has in the past
represented or is currently representing such Limited Partner with respect to
other matters, Partnership Counsel has not advised or represented the interests
of any Limited Partner in the negotiation, preparation, execution, delivery and
performance of this Agreement.

 

9.13                           Power
of Attorney. By the execution of this Agreement, each Limited
Partner does irrevocably constitute and appoint the General Partner, with full
power of substitution, as true and lawful attorney-in-fact and agent with full
power and authority to act in such Limited Partner’s name, place and stead and
to execute, file and record the Certificate as required under the Act and to
execute all other documents which such attorney-in-fact deems necessary or
reasonably appropriate:

 

(a)                                  to
qualify or continue the Partnership as a limited partnership in the State of
Texas and in all jurisdictions in which the Partnership may or intends to
conduct business or own property;

 

19

 

(b)                                 to
reflect a change in the identity of any Limited Partner, the admission of
additional Partners pursuant to this Agreement;

 

(c)                                  to
reflect any modification or amendment of this Agreement;

 

(d)                                 to
reflect the transfer or assignment of Units by a Limited Partner from time to
time in accordance with Section 4.08 or pursuant to Section 5.03(b),
including without limitation, a transfer or assignment of Units to the General
Partner;

 

(e)                                  to
reflect the dissolution and termination of the Partnership; or

 

(f)                                    to
comply with applicable assumed name laws.

 

9.14                           Counterparts. This Agreement may be
executed in any number of counterparts (including by facsimile transmission)
with the same effect as if all signing parties had signed the same document. All
counterparts shall be construed together and constitute the same instrument.

 

9.15                           No Employment
Contract. Nothing contained in this Agreement shall be construed
as conferring upon any Limited Partner who is or may become an employee of
CWEI or any Affiliate of CWEI any right to continue in the employment of CWEI
or any Affiliate of CWEI for any period of time or interfere with or restrict
in any way the rights of CWEI or any Affiliate of CWEI or such Limited Partner
to terminate the employment of such Limited Partner at any time for any reason
(or without any reason) whatsoever, with or without cause.

 

[Signature Pages Follow]

 

20

 

IN WITNESS WHEREOF, the parties have executed this Partnership
Agreement as of the Effective Date.

 

	
   

  	
  GENERAL PARTNER:

  
	
   

  	
   

  
	
   

  	
  CLAYTON WILLIAMS ENERGY, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ L.
  Paul Latham

  	
   

  
	
   

  	
   

  	
  L. Paul
  Latham

  
	
   

  	
   

  	
  Executive
  Vice President

  
					

 

Signature Page for Agreement of Limited
Partnership

 

 

SIGNATURE PAGE FOR LIMITED PARTNER

 

The undersigned, desiring to become a limited partner in Floyd Prospect II, L.P., a Texas limited
partnership (“Partnership”),
does hereby agree to all the terms and provisions of the Agreement of Limited
Partnership of the Partnership, including, without limitation, the power of
attorney set forth in Section 9.13
thereof.

 

	
  Date:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Signature

  
	
   

  	
   

  
	
   

  	
  Address:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Fax:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Taxpayer I.D. No.

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Number of Units:

  	
   

  	
   

  
											

 

 

EXHIBIT A

 

to Partnership Agreement of

 

FLOYD PROSPECT II,
L.P.

 

 

Schedule of Limited Partners

 

	
  Name

  	
   

  	
  No. of

  Units

  	
   

  	
  Initial

  Capital

  Contributions

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Pat Reesby

  	
   

  	
  25.00

  	
   

  	
  $

  	
  250.00

  	
   

  
	
  Kelly
  Beckham

  	
   

  	
  22.36

  	
   

  	
  $

  	
  223.60

  	
   

  
	
  Richard
  Wettaw

  	
   

  	
  4.75

  	
   

  	
  $

  	
  47.50

  	
   

  
	
  Kenneth
  Lipstreuer

  	
   

  	
  4.17

  	
   

  	
  $

  	
  41.70

  	
   

  
	
  Phil Amy

  	
   

  	
  2.00

  	
   

  	
  $

  	
  20.00

  	
   

  
	
  Martha
  Reesby

  	
   

  	
  1.67

  	
   

  	
  $

  	
  16.70

  	
   

  
	
  George
  Matthews

  	
   

  	
  1.50

  	
   

  	
  $

  	
  15.00

  	
   

  
	
  Dave Roberts

  	
   

  	
  0.89

  	
   

  	
  $

  	
  8.90

  	
   

  
	
  Jana Craig

  	
   

  	
  0.83

  	
   

  	
  $

  	
  8.30

  	
   

  
	
  Barbara Wynn

  	
   

  	
  0.83

  	
   

  	
  $

  	
  8.30

  	
   

  
	
  Terry
  Lengfeld

  	
   

  	
  0.83

  	
   

  	
  $

  	
  8.30

  	
   

  
	
  Tom Vinyard

  	
   

  	
  0.83

  	
   

  	
  $

  	
  8.30

  	
   

  
	
  Chris Hanson

  	
   

  	
  1.50

  	
   

  	
  $

  	
  15.00

  	
   

  
	
  Jean
  Gathmann

  	
   

  	
  0.25

  	
   

  	
  $

  	
  2.50

  	
   

  
	
  Paul Latham

  	
   

  	
  4.50

  	
   

  	
  $

  	
  45.00

  	
   

  
	
  Mel Riggs

  	
   

  	
  4.50

  	
   

  	
  $

  	
  45.00

  	
   

  
	
  Mark Tisdale

  	
   

  	
  1.71

  	
   

  	
  $

  	
  17.10

  	
   

  
	
  Sam Lyssy

  	
   

  	
  1.67

  	
   

  	
  $

  	
  16.70

  	
   

  
	
  Greg
  Wellborn

  	
   

  	
  1.75

  	
   

  	
  $

  	
  17.50

  	
   

  
	
  Margarita
  Sykes

  	
   

  	
  0.25

  	
   

  	
  $

  	
  2.50

  	
   

  
	
  Ron Gasser

  	
   

  	
  3.50

  	
   

  	
  $

  	
  35.00

  	
   

  
	
  Clarence
  Wolfshohl

  	
   

  	
  2.00

  	
   

  	
  $

  	
  20.00

  	
   

  
	
  John Kennedy

  	
   

  	
  2.25

  	
   

  	
  $

  	
  22.50

  	
   

  
	
  Ron Reutzel

  	
   

  	
  0.49

  	
   

  	
  $

  	
  4.90

  	
   

  
	
  Mike Pollard

  	
   

  	
  2.00

  	
   

  	
  $

  	
  20.00

  	
   

  
	
  Robert
  Thomas

  	
   

  	
  1.00

  	
   

  	
  $

  	
  10.00

  	
   

  
	
  Kim Jones

  	
   

  	
  1.00

  	
   

  	
  $

  	
  10.00

  	
   

  
	
  Bob Langford

  	
   

  	
  1.00

  	
   

  	
  $

  	
  10.00

  	
   

  
	
  Danny Alford

  	
   

  	
  1.00

  	
   

  	
  $

  	
  10.00

  	
   

  
	
  Janet
  Hamilton

  	
   

  	
  0.62

  	
   

  	
  $

  	
  6.20

  	
   

  
	
  Kathy
  Schwope

  	
   

  	
  0.25

  	
   

  	
  $

  	
  2.50

  	
   

  
	
  Mark Smith

  	
   

  	
  0.25

  	
   

  	
  $

  	
  2.50

  	
   

  
	
  Dennis Polson

  	
   

  	
  1.00

  	
   

  	
  $

  	
  10.00

  	
   

  
	
  Donnie
  Pruitt

  	
   

  	
  0.85

  	
   

  	
  $

  	
  8.50

  	
   

  
	
  Denise Kelly

  	
   

  	
  0.75

  	
   

  	
  $

  	
  7.50

  	
   

  
	
  Betsy Luna

  	
   

  	
  0.25

  	
   

  	
  $

  	
  2.50

  	
   

  
	
   

  	
   

  	
  100.00

  	
   

  	
  $

  	
  1000.00

  	
   

  

 

A-1

 

EXHIBIT B

 

to Partnership Agreement of

 

FLOYD PROSPECT II,
L.P.

 

 

Area of Interest

 

The areas in                             
Counties covered by the leases described in the attachment hereto.

 

 

B-1

 

EXHIBIT C

 

to Partnership Agreement of

 

FLOYD PROSPECT II,
L.P.

 

 

Wells

 

C-1

 

EXHIBIT D

 

Allocations
of Profits and Losses and Other Tax Matters

 

 

ARTICLE I

 

TAX
DEFINITIONS

 

Section 1.01                                Definitions. All capitalized terms used herein shall
have the meanings assigned to them in the Agreement of Limited Partnership of Floyd Prospect II, L.P., dated March 6, 2006 (the “Agreement”), or as
follows:

 

“Adjusted Capital Account”
means the Capital Account maintained for each Partner, (a) increased by
any amounts that such Partner is obligated to restore or is treated as
obligated to restore under Regulation Sections 1.704-1(b)(2)(ii)(c), 1.704-2(g)(1) and
1.704-2(i)(5)), and (b) decreased by any amounts described in Regulation Section 1.704-1(b)(2)(ii)(d)(4),
(5) and (6) with respect to such Partner.

 

“Minimum Gain”
has the meaning assigned to that term in Regulation Section 1.704-2(d).

 

“Partnership
Nonrecourse Liability” has the meaning assigned to
that term in Regulation Section 1.752-1(a)(2).

 

“Partner Nonrecourse
Debt” has the meaning assigned to that term in
Regulation Section 1.704-2(b)(4).

 

“Partner Nonrecourse
Deductions” has the meaning assigned to that term in
Regulation Section 1.704-2(i)(1).

 

“Simulated Basis”
has the meaning set forth in Section 4.01(b) of this Exhibit.

 

“Simulated Depletion”
has the meaning set forth in Section 4.01(b) of this Exhibit.

 

“Simulated Gain”
has the meaning set forth in Section 4.01(b) of this Exhibit.

 

“Simulated Loss”
has the meaning set forth in Section 4.01(b) of this Exhibit.

 

ARTICLE II

 

ALLOCATIONS OF PROFIT AND LOSS

 

Section 2.01                                Allocations for Capital Account and Tax Purposes.      Subject to Section 8.02
of the Agreement and except as otherwise provided herein, for purposes of any
applicable federal, state or local income tax law, rule or regulation
items of income, gain, deduction, loss, credit and amount realized shall be
allocated to the Partners as follows:

 

D-1

 

(a)                                  Income from the sale
of oil or gas production and any credits allowed by Section 29 of the Code
relating thereto shall be allocated in the same manner as revenue therefrom is
allocated and credited pursuant to Section 6.02 of the Agreement.

 

(b)                                 Cost and percentage
depletion deductions and the gain or loss on the sale or other disposition of
property the production from which is subject to depletion (herein sometimes
called “Depletable
Property”) shall be computed separately by the Partners rather than
the Partnership. For purposes of Section 613A(c)(7)(D) of the Code,
the Partnership’s adjusted basis in each Depletable Property shall be allocated
to the Partners in proportion to each Partner’s respective share of the costs
and expenses which entered into the Partnership’s adjusted basis for each
Depletable Property, and the amount realized on the sale or other disposition
of each Depletable Property shall be allocated to the Partners in proportion to
each Partner’s respective share of the revenue from the sale or other
disposition of such property provided for in Section 6.02 of the
Agreement. For purposes of allocating amounts realized upon any such sale or
disposition which are deemed to be received for federal income tax purposes and
are attributable to Partnership indebtedness or indebtedness to which the
Depletable Property is subject at the time of such sale or disposition, such
amounts shall be allocated in the same manner as Partnership revenues used for
the repayment of such indebtedness would have been allocated under Section 6.02
of the Agreement.

 

(c)                                  Items of deduction,
loss and credit not specifically provided for above (other than loss from the
sale or other disposition of Partnership property), including depreciation,
cost recovery and amortization deductions, shall be allocated to the Partners
in the same manner that the costs and expenses of the Partnership that gave
rise to such items of deduction, loss and credit were allocated pursuant to Section 6.01
of the Agreement.

 

(d)                                 Gain from the sale or
other disposition of Partnership property that is not specifically provided for
above shall be allocated to the Partners in a manner which reflects each
Partner’s allocable share of the revenue from the sale of the Partnership
property provided for in Section 6.02 of the Agreement, and loss
from the sale or other disposition of Partnership property that is not
specifically provided for above shall be allocated to the Partners in a manner
which reflects each Partner’s allocable share of the costs and expenses of the
Partnership property provided for in Section 6.01 of the Agreement.

 

(e)                                  All recapture of
income tax deduction resulting from the sale or other disposition of
Partnership property shall be allocated to the Partner to whom the deduction
that gave rise to such recapture was allocated hereunder to the extent that
such Partner is allocated any gain from the sale or other disposition of such
property.

 

(f)                                    Any other items of
Partnership income or gain not specifically provided for above shall be
allocated in the same manner as the revenue that resulted in such income or
gain is allocated and credited pursuant to Section 6.02 of the
Agreement.

 

(g)                                 Notwithstanding any of
the foregoing provisions of this Section 2.01 to the contrary:

 

D-2

 

(i)                                     If
during any fiscal year of the Partnership there is a net increase in Minimum
Gain attributable to a Partner Nonrecourse Debt that gives rise to Partner
Nonrecourse Deductions, each Partner bearing the economic risk of loss for such
Partner Nonrecourse Debt shall be allocated items of Partnership deductions and
losses for such year (consisting first of cost recovery or depreciation
deductions with respect to property that is subject to such Partner Nonrecourse
Debt and then, if necessary, a pro rata portion of the Partnership’s other
items of deductions and losses, with any remainder being treated as an increase
in Minimum Gain attributable to Partner Nonrecourse Debt in the subsequent
year) equal to such Partner’s share of Partner Nonrecourse Deductions, as
determined in accordance with applicable Regulations.

 

(ii)                                  If
for any fiscal year of the Partnership there is a net decrease in Minimum Gain
attributable to Partnership Nonrecourse Liabilities, each Partner shall be
allocated items of Partnership income and gain for such year (consisting first
of gain recognized, including Simulated Gain, from the disposition of
Partnership property subject to one or more Partnership Nonrecourse Liabilities
and then, if necessary, a pro rata portion of the Partnership’s other items of
income and gain, and if necessary, for subsequent years) equal to such Partner’s
share of such net decrease (except to the extent such Partner’s share of such
net decrease is caused by a change in debt structure with such Partner
commencing to bear the economic risk of loss as to all or part of any
Partnership Nonrecourse Liability or by such Partner contributing capital to
the Partnership that the Partnership uses to repay a Partnership Nonrecourse
Liability), as determined in accordance with applicable Regulations.

 

(iii)                               If
for any fiscal year of the Partnership there is a net decrease in Minimum Gain
attributable to a Partner Nonrecourse Debt, each Partner shall be allocated
items of Partnership income and gain for such year (consisting first of gain
recognized, including Simulated Gain, from the disposition of Partnership
property subject to Partner Nonrecourse Debt, and then, if necessary, a pro
rata portion of the Partnership’s other items of income and gain, and if
necessary, for subsequent years) equal to such Partner’s share of such net
decrease (except to the extent such Partner’s share of such net decrease is
caused by a change in debt structure or by the Partnership’s use of capital
contributed by such Partner to repay Partner Nonrecourse Debt) as determined in
accordance with applicable Regulations.

 

(h)                                 The General Partner
shall use all reasonable efforts to prevent any allocation or distribution from
causing a negative balance in a Limited Partner’s Adjusted Capital Account. Consistent
therewith, and notwithstanding any of the foregoing provisions of this Section 2.01
of this Exhibit to the contrary, if for any fiscal year of the Partnership
the allocation of any loss or deduction (net of any income or gain) to any
Limited Partner would cause or increase a negative balance in such Partner’s
Adjusted Capital Account as of the end of such fiscal year (the “Deficit Partner”)
after taking into account the provisions of Section 2.01(g) of
this Exhibit, only the amount of such loss or deduction that reduces the balance
to zero shall be allocated to such Deficit Partner and the remaining loss or
deduction shall be allocated to the Partners whose Adjusted Capital Accounts
have a positive balance remaining at such time (each, a “Positive Partner”). After any
such allocation, any Partnership income or gain (including Simulated Gain)

 

D-3

 

that would otherwise be allocated to the Deficit Partner shall be
allocated instead to the Positive Partners up to an amount equal to the
Partnership loss or deduction allocated to each Positive Partner under the
preceding sentence; provided, however, that no allocation of income or gain
realized shall be made under this sentence if the effect of such allocation
would be to cause the Adjusted Capital Account of the Deficit Partner to be
less than zero. If, after taking into account the allocation in the first
sentence of this Section 2.01(h), the Adjusted Capital Account
balance of the Deficit Partner remains less than zero at the end of a fiscal
year, a pro rata portion of each item of Partnership income or gain (including
Simulated Gain) otherwise allocable to the Positive Partners for such fiscal
year (or if there is no such income or gain allocable to the Positive Partners
for such fiscal year, all such income or gain (including Simulated Gain) so
allocable in the succeeding fiscal year or years) shall be allocated to the
Deficit Partner in an amount necessary to cause its Adjusted Capital Account
balance to equal zero; provided, that no allocation under this sentence shall
have the effect of causing the Positive Partner’s Adjusted Capital Account to
be less than zero. After any such allocation, any Partnership gain (including
Simulated Gain) resulting from the sale or other disposition of Partnership
property that would otherwise be allocated to the Deficit partner for any
fiscal year under this Section 2.01 shall be allocated instead to
the Positive Partners until the amount of gain so allocated equals the amount
of gain (including Simulated Gain) previously allocated to such Deficit Partner
under the preceding sentence of this Section 2.01(h); provided,
however, that no allocation of gain (including Simulated Gain) shall be made
under this sentence if the effect of such allocation would be to cause the
Adjusted Capital Account of a Deficit Partner to be less than zero.

 

ARTICLE III

 

OTHER TAX MATTERS

 

Section 3.01                                Tax Elections.

 

(a)                                  For tax purposes, the
Partnership shall elect to use the calendar as its taxable year, and to report
income and loss under the accrual method of accounting.

 

(b)                                 For tax purposes, the
Partnership shall elect to deduct expenses incurred in organizing the
Partnership ratably over a 60-month period as provided in section 709 of
the Code.

 

(c)                                  For tax purposes, the
Partnership shall elect to treat all start-up expenditures as deferred expenses
and to deduct such expenses over a 60-month period as provided in section 195
of the Code.

 

(d)                                 In connection with any
Transfer or other assignment of an interest in the Partnership permitted by the
terms and provisions of this Agreement, the General Partner shall, at the
written request of the transferor, transferee or other successor, cause the
Partnership to make an election to adjust the basis of the Partnership’s
property in the manner provided in sections 734(b) and 743(b) of the
Code (or any like statute or regulation then in effect), and such transferor,
transferee or other successor shall pay all costs incurred by the Partnership
in connection therewith, including, without limitation, reasonable attorneys’
and accountants’ fees.

 

D-4

 

(e)                                  Unless approved by
the Partners, the Partnership shall not file any election pursuant to sections
761 or 7701 of the Code, section 301.7701-3 of the Regulations or
otherwise, the effect of which would cause the Partnership not to be treated as
a partnership for Federal income tax purposes.

 

(f)                                    Except as otherwise
specifically provided herein, the General Partner shall have the sole and absolute
discretion to make any other available election under the Code on behalf of the
Partnership without the prior approval by the Partners.

 

Section 3.02                                Tax Matters Partner. The General Partner is hereby
designated the “tax matters partner” of the Partnership pursuant to Section 6231(a)(7) of
the Code.

 

ARTICLE IV

 

CAPITAL ACCOUNT MAINTENANCE

 

Section 4.01                                Maintenance of Capital Accounts. An individual Capital
Account (a “Capital
Account”) shall be maintained by the Partnership for each Partner as
provided below:

 

(a)                                  The Capital Account
of each Partner shall, except as otherwise provided herein, be (A) credited
by such Partner’s Capital Contributions when made (net of liabilities secured
by contributed property that the Partnership is considered to assume or take
subject to under Section 752 of the Code), (B) credited with the
amount of any item of taxable income or gain and the amount of any item of
income or gain exempt from tax allocated to such Partner, (C) credited
with the Partner’s share of Simulated Gain as provided in Section 4.01(b) of
this Exhibit, (D) debited by the amount of any item of tax deduction or
loss allocated to such Partner, (E) debited with the Partner’s share of
Simulated Loss and Simulated Depletion as provided in Section 4.01(b) of
this Exhibit, (F) debited by such Partner’s allocable share of
expenditures of the Partnership not deductible in computing the Partnership’s
taxable income and not properly chargeable as capital expenditures, including
any non-deductible book amortizations of capitalized costs, and (G) debited
by the amount of cash or the fair market value of any property distributed to
such Partner (net of liabilities secured by such distributed property that such
Partner is considered to assume or take subject to under Section 752 of
the Code). Immediately prior to any distribution of assets by the Partnership
that is not pursuant to a liquidation of the Partnership or all or any portion
of a Partner’s interest therein, the Partners’ Capital Accounts shall be
adjusted by (X) assuming that the distributed assets were sold by the
Partnership for cash at their respective fair market values as of the date of
distribution by the Partnership and (Y) crediting or debiting each Partner’s
Capital Account with its respective share of the hypothetical gains or losses,
including Simulated Gains and Simulated Losses, resulting from such assumed
sales in the same manner as each such Capital Account would be debited or
credited for gains or losses on actual sales of such assets.

 

(b)                                 The allocation of
basis prescribed by Section 613A(c)(7)(D) of the Code and provided
for in Section 2.01(b) of this Exhibit and each Partner’s
separately computed depletion deductions shall not reduce such Partner’s
Capital Account, but such Partner’s Capital Account shall be decreased by an
amount equal to the product of the depletion deductions that would otherwise be
allocable to the Partnership in the absence of Section 613A(c)(7)(D) of
the Code

 

D-5

 

(computed without regard to any limitations which theoretically could
apply to any Partner) times such Partner’s percentage share of the adjusted
basis of the property (determined under Section 2.01(b) of this
Exhibit) with respect to which such depletion is claimed (“Simulated Depletion”).
The Partnership’s basis in any Depletable Property is adjusted from time to
time for the Simulated Depletion allocable to all Partners (and where the
context requires, each Partner’s allocable share thereof, which share shall be
determined in the same manner as the allocation of basis prescribed in Section 2.01(b) of
this Exhibit) is herein called “Simulated Basis.”  No
Partner’s Capital Account shall be decreased, however, by Simulated Depletion
deductions attributable to any Depletable Property to the extent such
deductions exceed such Partner’s allocable share of the Partnership’s remaining
Simulated Basis in such property. The Partnership shall compute simulated gain
(“Simulated Gain”)
or simulated loss (“Simulated
Loss”) attributable to the sale or other disposition of a Depletable
Property based on the difference between the amount realized from such sale or
other disposition and the Simulated Basis of such property, as theretofore
adjusted. Any Simulated Gain shall be allocated to the Partners and shall
increase their respective Capital Accounts in the same manner as the amount
realized from such sale or other disposition in excess of Simulated Basis shall
have been allocated pursuant to Section 2.01(b). Any Simulated Loss
shall be allocated to the Partners and shall reduce their respective Capital
Accounts in the same percentages as the costs of the property sold were
allocated up to an amount equal to each Partner’s share of the Partnership’s
Simulated Basis in such property at the time of such sale.

 

(c)                                  Any adjustments of
basis of Partnership property provided for under Sections 734 and 743 of the
Internal Revenue Code and comparable provisions of state law (resulting from an
election under Section 754 of the Code or comparable provisions of state
law) and any election by an individual Partner under Section 59(e)(4) of
the Code to amortize such Partner’s share of intangible drilling and
development costs shall not affect the Capital Accounts of the Partners (unless
otherwise required by applicable Treasury Regulations), and the Partners’
Capital Accounts shall be debited or credited pursuant to the terms of this Section 4.01
as if no such election had been made.

 

(d)                                 Capital Accounts shall
be adjusted, in a manner consistent with this Section 4.01, to
reflect any adjustments in items of Partnership income, gain, loss or deduction
that result from amended returns filed by the Partnership or pursuant to an
agreement by the Partnership with the Internal Revenue Service or a final court
decision.

 

(e)                                  In the case of
property carried on the books of the Partnership at an amount which differs
from its adjusted basis, the Partners’ Capital Accounts shall be debited or
credited for items of depreciation, cost recovery, Simulated Depletion,
amortization and gain or loss (including Simulated Gain or Simulated Loss) with
respect to such property computed in the same manner as such items would be
computed if the adjusted tax basis of such property were equal to such book
value, in lieu of the capital account adjustments provided above for such
items, all in accordance with Regulation Section 1.704-1(b)(2)(iv)(g).

 

(f)                                    It is the intention
of the Partners that the Capital Accounts of each Partner be kept in the manner
required under Regulation Section 1.704-1(b)(2)(iv). To the extent any
additional adjustment to the Capital Accounts is required by such regulations,
the General Partner is hereby authorized to make such adjustment after notice
to the Limited Partner.   [End of Exhibit D]

 

D-6

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00104-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00104-of-00352.parquet"}]]