Document:

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                                                                  EXHIBIT 10.3

PURCHASING AND LICENSING AGREEMENT, DATED APRIL 17, 1997, BETWEEN ZOLL MEDICAL
CORPORATION AND MASIMO CORPORATION.

CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTIONS OF THIS DOCUMENT HAVE
BEEN REDACTED AND HAVE BEEN SEPARATELY FILED WITH THE COMMISSION.
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                       PURCHASING AND LICENSING AGREEMENT

                                     BETWEEN

                            ZOLL MEDICAL CORPORATION

                                       AND

                               MASIMO CORPORATION

                              DATED: APRIL 17,1997

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                                   EXHIBITS

Exhibit A.   MASIMO SET(R) Definition
Exhibit B.   Licensed Trademark
Exhibit C.   List of Patents and Patent Applications
Exhibit D.   Price of Products
Exhibit E.   ZOLL Product Line
Exhibit F.   Form of Purchase Order
Exhibit G.   Specifications for Products
Exhibit H.   End-User License Agreement
Exhibit I.   Zoll Distributors

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                       PURCHASING AND LICENSING AGREEMENT

      THIS PURCHASING AND LICENSING AGREEMENT ("Agreement") is made and entered
into as of this 17th day of April, 1997 by and between ZOLL Medical Corporation,
a Massachusetts corporation ("ZOLL"), and MASIMO CORPORATION, a Delaware
corporation ("MASIMO"), with reference to the following:

                                 R E C I T A L S

      A. MASIMO has developed a new technology known as Signal Extraction
Technology ("MASIMO SET" as defined in Exhibit A) MASIMO SET(R) incorporates
circuitry and software which, among other things, acquires and detects signals
generated by red and infrared LEDs, and which is designed to extract oxygen
saturation and pulse rate values from such signals.

      B. ZOLL is engaged in the design, development and manufacturing of medical
equipment and desires to incorporate MASIMO SET for SpO2 into its medical
equipment for distribution by ZOLL throughout the world.

      C. MASIMO has acquired substantial Know-How (as defined below) in
extracting signals from signals contaminated by noise.

      D. MASIMO and ZOLL have acquired and expect to continue to acquire a
reputation for excellence, and their trademarks have and will continue to
acquire valuable goodwill.

      NOW, THEREFORE, in consideration of the premises and the mutual covenants
hereinafter set forth, ZOLL and MASIMO hereby agree as follows:

      1. DEFINITIONS. As used in this Agreement, the following terms, whether
used in the singular or the plural shall have the following meaning:

            1.1 Accessory means cables (including, but not limited to the MASIMO
      PC08 and PC 12 8 ft. and 12 ft. patient cables) or any other accessory
      manufactured by MASIMO and used with any of the SpO, Sensors or Licensed
      Devices.

            1.2 Improvement means any invention, adaptation, modification or
      change made to the MASIMO Technology.

            1.3 Licensed Devices means ZOLL's products incorporating MASIMO SET
      whether made in circuit board, software or integrated circuit form for
      SP02 Measurements. Licensed Devices shall not include ZOLL products which
      include any methods other than MASIMO SET for calculating arterial blood
      oxygen saturation. Licensed Devices specifically excludes all Fetal
      Oximetry applications and venous oxygen saturation applications.

             1.4 Licensed Reviver Devices means ZOLL's line of
      pacemaker/defibrillator/patient monitor products designated ZOLL's Reviver
      (and related platform derivatives), incorporating MASIMO SET whether made
      in circuit board, software or integrated circuit form for SpO2,
      Measurements. The Licensed Reviver Device is only one of a series of
      devices within ZOLL's Reviver series. Licensed Reviver Devices shall not
      include ZOLL products which include any methods other than MASIMO SET for
      calculating arterial blood oxygen saturation.

             1.5 Licensed Trademark means the MASIMO SET product designation set
      forth on Exhibit B to this Agreement.

             1.6 MASIMO confidential Information means information and
      proprietary materials designated by MASIMO as Confidential Information and
      which ZOLL may obtain as a result of MASIMO's relationship with ZOLL or
      access to MASIMO's premises. Confidential Information includes, but is not
      limited to, the following types of information and other information of a
      similar nature: ideas, concepts,

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  materials, techniques, models, data, designs, documentation, flow charts,
  budgets, projections, forecasts, marketing, manufacturing and development
  plans, the Masimo Technology, the Software, MASIMO's communication protocols,
  and MASIMO's testing procedures.

         1.7 MASIMO Products means SpO(sub 2), Sensors, Accessories and MS-1
Boards.

         1.8 MASIMO Technology means technical information, inventions,
  products, components, concepts, trade secrets, know-how, techniques, designs,
  processes, communications protocols, the Software, whether patentable or not
  patent applications, copyright applications, the Patent Rights, and copyrights
  and all other intellectual property rights owned by MASIMO and relating to
  MASIMO SET alone or incorporated in MS-1 Boards, SpO(sub 2), Sensors,
  Improvements and related documentation generated prior to or pursuant to this
  Agreement.

         1.9 MS-1 Boards means MASIMO's standard circuit board or chip set
  (manufactured now or in the future) which contains MASIMO SET and algorithms
  necessary to process the information transmitted from the SpO(sub 2), Sensor
  and convert it into SpO(sub 2) Measurements.

         1.10  Panel has the meaning set forth in Section 3.10 ("Excuses from
  Integration Commitment").

         1.11  Party means ZOLL or MASIMO; Parties means ZOLL and MASIMO.

         1.12 Patent Rights means all patents owned by MASIMO on technology
  developed by MASIMO which cover the SpO(sub 2), Measurement in the Licensed
  Devices. The present patent numbers and patent application are set forth on
  Exhibit C to this Agreement.

        1.13   Purchase Orders has the meaning set forth in Section 4.1
  ("Purchase Orders").

         1.14 Software means any and all computer/instrument software and/or
  firmware developed by MASIMO that is used or useful in connection with MASIMO
  Technology.

        1.15 SpO(sub 2), Measurements means noninvasive measurement of arterial
  oxygen saturation (accounting for Hb and HbO(sub 2), only) and pulse rate from
  neonate, pediatric and adult subjects (excludes fetal measurement and venous
  oxygen saturation).

         1.16 SpO(sub 2), Sensor means reusable and disposable MASIMO adult,
  pediatric or neonatal probes which together with the accessories and when
  affixed to a human subject projects light on one side of the tissue and
  detects the specific emitted light on the opposite side of the tissue
  (transluminance) or on the same side of the tissue (reflectance) and transmits
  this data to the MS-1 Board or any other pulse oximetry board supplied by
  MASIMO for processing and display. SpO(sub 2), Sensors currently manufactured
  by MASIMO have the following model numbers:

           LNOP(R) o Neo-Pt;      Disposable Neonatal Sensor (Pre-Term)
           LNOP(R) o Neo;         Disposable Neonatal Sensor
           LNOP(R) o Adt;         Disposable Adult Sensor
           LNOP(R) o Pdt          Pediatric/Slender Digit Sensor
           LNOP(R) o DC1;         Reusable Adult/Pediatric Digit Clip Sensor

MASIMO intends to produce additional standard models of the SpO(sub 2), Sensors.
As MASIMO produces such additional models, the Parties agree to negotiate in
good faith their inclusion in this agreement. While this Agreement is in effect,
ZOLL shall have the right to purchase any such additional standard models of
SpO(sub 2), Sensors on the same material terms contained in this Agreement.

         1.17 ZOLL Confidential Information means information and proprietary
  material designated by ZOLL as Confidential Information and which MASIMO may
  obtain as a result of MASIMO's

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relationship with ZOLL or access to its premises. Confidential Information
includes, but is not limited to, the following types of information and other
information of a similar nature: ideas, concepts, materials, techniques, models,
data, designs, documentation, flow charts, budgets, projections, forecasts,
marketing and development plans, distributors lists and sales reports.

        1.18 ZOLL Subsidiary means any majority owned subsidiary of ZOLL or any
of ZOLL's wholly owned subsidiaries.

2.    LICENSES GRANTED

      2.1   Licenses Granted to Licensee.

            2.1.1 MASIMO grants to ZOLL a personal, non-transferable, and
      non-exclusive worldwide license to incorporate the MS-1 Boards into the
      Licensed Devices, to demonstrate Licensed Devices, and to distribute
      Licensed Devices to (i) end user customers (not to an OEM or other medical
      equipment manufacturer) and (ii) ZOLL distributors and other medical
      equipment manufacturers specifically set forth on Exhibit I. This license
      includes the right of ZOLL to have the Licensed Devices manufactured by a
      third party for ZOLL; however, such Licensed Devices may only be supplied
      to the marketplace with ZOLL's or ZOLL's and ZOLL's distributors' private
      label and logo exclusively and distributed exclusively through ZOLL
      distribution channels. Nothing in this Agreement shall be construed to
      grant any rights to ZOLL in fetal oximetry, venous oximetry or any other
      application of MASIMO SET other than the use of the Licensed Devices to
      make SpO(sub2), Measurements as defined in 1.15, and nothing in this
      Agreement shall be construed to grant any rights to Zoll to distribute or
      otherwise market MS-1 Boards separate from Licensed Devices.

            2.1.2 Zoll may add distributors to Exhibit I, and agrees to promptly
      notify MASIMO of such additions. Notwithstanding the above, ZOLL may not
      distribute or otherwise sell Licensed Devices to [*] or [*] without the
      prior written consent of MASIMO.

            2.1.3 ZOLL agrees that it will not reproduce or disclose to any
      third party any portion of the Software and that it may transfer the
      Software only in conjunction with a transfer of a Licensed Device to end
      users and distributors listed on Exhibit I. ZOLL agrees to include the
      terms of the End-User License Agreement attached as Exhibit H in
      documentation shipped with the Licensed Devices.

            2.1.4 MASIMO retains all rights, title, and interest in the Software
      and in all patents, copyright, trade secret, and any other intellectual
      property and proprietary rights applicable to the Masimo Technology.
      Nothing in this Agreement should be construed as a sale of the Software or
      any copy of the Software.

            2.1.5 ZOLL agrees that the Masimo Technology contains trade secrets
      and proprietary information belonging to MASIMO. ZOLL agrees to maintain
      the confidential nature of such trade secrets and proprietary information
      and agrees not to use, print, copy, provide, or otherwise make available,
      in whole or in part, any portion of the Software except in accordance with
      this Agreement. ZOLL will not be provided access to source code for MASIMO
      SET. ZOLL agrees not to attempt to decipher, decompile, or modify the
      Software or develop source code for the Software or allow others to do so.

            2.1.6 No Implied License.  ZOLL agrees to include the following
      legend in the users manual for Licensed Devices:

                               NO IMPLIED LICENSE
             Possession or purchase of this device does not convey any express
             or implied license to use the device with replacement parts which
             would, alone, or in combination with this device, fall within the
             scope of one or more of the patents relating to this device.

* Confidential material redacted and filed separately with the Commission.

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  2.2   Limitation of Licenses Granted

        2.2.1 No license is granted under this Agreement with respect to the
  MS-1 Boards other than as integrated parts of the Licensed Devices. ZOLL shall
  not have the right to manufacture MS-1 Boards or SpO(sub2), Sensors or any
  circuity or software that performs the functions of the MS-1 Boards for the
  Licensed Devices.

        2.2.2 Except for a license to end users and distributors on Exhibit I,
  no right to grant sublicenses is granted under this Agreement.

  2.3   Use of Licensed Trademark.

        2.3.1 Grant by Masimo. MASIMO hereby grants to ZOLL a non-exclusive
  license to use the Licensed Trademarks with the Licensed Devices for
  identification purpose and for publicity and promotional purposes when it is
  advertising one of its Licensed Devices.

        2.3.2 Quality Control. In order for ZOLL to maintain its trademark
  license hereunder, ZOLL agrees that the Licensed Devices bearing the Licensed
  Trademark shall be of a high standard of quality, at least as high as ZOLL's
  historical products, so as to protect and enhance the goodwill pertaining to
  the MS-1 Boards and SpO(sub2) Sensors. MASIMO has the right to inspect, at its
  own expense, the manufacturing points of ZOLL for the Licensed Devices, at any
  reasonable time, to ensure the ongoing quality of the Licensed Devices. Should
  MASIMO at any time determine that the quality of any Licensed Device does not
  adhere to the quality standards set forth in the first section of this Section
  2.3.2. MASIMO will provide written notice to ZOLL. ZOLL shall have three
  months from such notice to bring the quality of such Licensed Device up to
  standard or to cease any further use of the Licensed Trademark in connection
  with the promotion or sale of such Licensed Device until MASIMO has indicated
  that it is satisfied that the deficiencies in quality of the Licensed Device
  have been corrected.

        2.3.3 Trademark Marking. ZOLL agrees that it shall use the MASIMO
  Product Designation as set forth in Exhibit B on all Licensed Devices. This
  obligation shall be excused for any period for which Masimo has indicated to
  ZOLL that ZOLL has failed to comply with the quality standards set forth in
  Section 2.3.2. ZOLL shall place the Product Designation of Exhibit B on or
  near the sensor interface (connector), in a space no smaller than 1/2" x 1/4"
  so long as it is in a plainly visible site.

        2.3.4 Advertising. All advertising for Licensed Devices must include one
  or more of the Licensed Trademarks. ZOLL shall accurately reproduce the
  Licensed Trademark, and shall refrain from inappropriate or inaccurate claims
  about Masimo SET, and improper trademark usage as defined in Sections 2.3.5
  and 2.3.6.

        2.3.5 The Licensed Trademarks may not be used on or in reference to any
  products other than the family of Licensed Devices.

        2.3.6 The trade names, trademarks, or symbols of one party may not be
  used in any way which may suggest that one party is a division, affiliate, or
  subsidiary of the other party or of a third party.

        2.3.7 ZOLL acknowledges the validity and exclusive ownership of the
  Licensed Trademark by MASIMO. ZOLL agrees not to use the Licensed Trademark in
  any way which might endanger MASIMO's rights in and ownership of the Licensed
  Trademark.

        2.3.8 The expense of obtaining and maintaining Licensed Trademark
  registrations shall be borne by MASIMO.

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             2.3.9 Patent Marking. ZOLL agrees to mark each Licensed Device
        manufactured or sold by it in accordance with the patent marking shown
        in Exhibit B. MASIMO will, from time to time, update the patent marking
        for ZOLL as patents issue. Provided, however, ZOLL's obligation to
        update its product marking shall not exceed once every two years and
        shall never exceed six MASIMO, patents. Initial Patent marking is shown
        in Exhibit B.

  3.    ZOLL COMMITMENTS/LICENSE FEE

        3.1  ZOLL agrees to purchase all SpO(sub 2) Sensors from MASIMO.

        3.2 Best Efforts. ZOLL agrees to use its best efforts to make MASIMO SET
its primary pulse oximetry technology, including, but not limited to by
integrating SET into its products for SpO(sub 2), Measurement and by promoting
the sale of such Licensed Devices over devices which do not incorporate MASIMO,
SET. MASIMO expressly acknowledges and agrees that ZOLL intends, and shall have
the right, to incorporate products from manufacturers of pulse oximetry products
other than MASIMO.

        3.3 Product Lines. Set forth on Exhibit E hereto are ZOLL's current
product lines (Licensed Devices) into which the MASIMO SET or MS-1 Boards will
be integrated together with the corresponding projected market release dates. In
the event ZOLL elects to integrate the MS-1 Boards into additional Licensed
Devices, at least ninety (90) days prior to the projected launch date of any
such product into which the MS-1 Boards are being integrated, ZOLL agrees to
inform MASIMO of its intent to integrate it into the product together with a
description and model number of the product. ZOLL agrees to provide MASIMO with
all customer product literature and published technical specifications on each
unit into which the MS-1 Boards are integrated.

        3.4 Delivery of ZOLL Systems to MASIMO. ZOLL agrees to deliver free of
charge, one (1) complete prototype system to MASIMO which demonstrates the final
integration of the MS-1 Board into each ZOLL product line. In order to ensure
the quality of the Licensed Devices, MASIMO will have the right to test and make
recommendations for improvements to the Licensed Devices, at its own expense,
for compliance with the specifications of Exhibit G. After such testing, the
Licensed Device shall remain with MASIMO for further technical assistance and as
a demonstration unit. Title to this system shall remain vested in ZOLL.

        3.5 License Fee. As additional consideration for the license granted to
ZOLL hereunder, ZOLL shall pay a license fee to MASIMO in the amount of [*],
payable upon execution of this Agreement.

        3.6 Integration Commitment. ZOLL agrees that throughout the term of this
Agreement, ZOLL will adopt MASIMO SET as the primary pulse oximetry technology
in its Licensed Reviver Devices, and agrees to an integration plan such that, at
a minimum, Licensed Reviver Devices exclusively containing MASIMO SET for blood
oxygen saturation calculation will constitute eighty percent (80%) of ZOLL's
annual shipments of products within ZOLL's entire Reviver series of products
which incorporate SpO(sub 2), Measurement. The foregoing commitment is subject
to the continuing viability of MASIMO SET technology as determined pursuant to
Section 3.10 excuses from ("Integration Commitment") below.

        3.7 Quarterly Accounting. In order to insure compliance with the
integration commitment as specified in Section 3.6 ("Integration Commitment")
above, ZOLL agrees to provide MASIMO with a Quarterly Accounting of total pulse
oximetry product shipments and its shipments containing MASIMO MS-1 Boards.

        3.8    LIQUIDATED DAMAGES.  IF ZOLL SHOULD FAIL TO MEET THE INTEGRATION
CONDITIONS AS SPECIFIED IN 3.6 ABOVE, ZOLL AND MASIMO AGREE THAT THE AMOUNT OF
DAMAGES WHICH MASIMO WILL SUFFER WILL BE EXTREMELY DIFFICULT AND IMPRACTICAL TO
ASCERTAIN, THEREFORE, IF ZOLL SHALL FAIL TO MEET

* Confidential material redacted and filed separately with the Commission.

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  THE INTEGRATION COMMITMENT AS SPECIFIED IN 3.6 ABOVE, AND SUCH FAILURE IS NOT
  EXCUSED PURSUANT TO THE TERMS OF SECTION 3.10 ("EXCUSES FROM INTEGRATION
  COMMITMENT"). BELOW, MASIMO'S SOLE AND EXCLUSIVE REMEDY FOR SUCH DEFAULT BY
  ZOLL SHALL BE THE PAYMENT BY ZOLL TO MASIMO OF [*] (THE "PAYMENT") AT THE END
  OF EACH YEAR IN WHICH IT FAILS TO MEET ITS INTEGRATION COMMITMENT WHILE THIS
  AGREEMENT IS IN EFFECT; PROVIDED THAT TOTAL PAYMENTS TO MASIMO PURSUANT TO
  THIS LIQUIDATED DAMAGES PROVISION SHALL NOT EXCEED [*]. TO FURTHER EVIDENCE
  THAT THIS IS AN APPROPRIATE CASE FOR LIQUIDATED DAMAGES TO SELLER AND THAT THE
  SUM SET FORTH HEREIN IS A REASONABLE ESTIMATE OF MASIMO'S DAMAGES, MASIMO AND
  ZOLL HAVE SET FORTH THEIR INITIALS TO THIS PARAGRAPH.

                /s/ DRB                   /s/ JEK
               ---------                 ----------
                  ZOLL                     MASIMO

        3.9 Audit Rights. MASIMO shall have the right to verify, at its expense,
  and not more frequently than once per year and upon not less than ten (10)
  business days prior written notice to ZOLL, the accuracy of the accounting
  reports provided by ZOLL hereunder, through inspection of ZOLL's pertinent
  records and books of accounts maintained in the ordinary course of business.
  Such audit shall be conducted by a certified public accountant (the "CPA")
  chosen by MASIMO in it reasonable discretion, and which CPA is reasonably
  acceptable to ZOLL. MASIMO shall pay all costs, expenses and fees of the CPA
  unless (i) ZOLL has overstated its integration commitment as set forth in
  Section 3.6 by more than 10% and (ii) the corrected level of integration as
  described in Section 3.6 ("Integration Commitment") above is less than eighty
  percent (80%) for the entire annual period audited, in which event the CPA's
  costs, fees and expenses shall be paid by ZOLL.

      3.10 Excuses from Integration Commitment and Best Efforts. ZOLL will be
excused from its commitment set forth in Section 3.6 ("Integration Commitment")
and Section 3.2 ("Best Efforts"), if any of the following events occurs:

             3.10.1 [*]

             3.10.2 [*]

             3.10.3 MASIMO is prevented from delivering MASIMO Products or ZOLL
        is unable to ship Licensed Devices due to regulatory restrictions placed
        upon MASIMO or the MASIMO Products; or

             3.10.4 MASIMO breaches any material term of this Agreement with
        respect to the MASIMO Products; or

             3.10.5 Masimo fails to deliver Exhibit G compliant MASIMO Products
        according to the schedule stated in purchase orders accepted by Masimo,
        and as a Result ZOLL is unable to meet its commitments to deliver
        Licensed Devices or SpO(sub 2) Sensors to its customers for a period of
        45 days or more.

Upon the occurrence of any of the foregoing events, ZOLL's obligations pursuant
to Section 3.6 ("Integration Commitment") and Section 3.2 ("Best Efforts") shall
be excused for the duration of such foregoing event plus six (6) months, and
MASIMO shall not be entitled to any liquidated damage or other penalty for
ZOLL's failure to meet its commitment as set forth in Section 3.6 ("Integration
Commitment") during such period. Whether one of the events of Section 3.10.1
or 3.10.2 has occurred, shall be

* Confidential material redacted and filed separately with the Commission.

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determined by an independent three (3) member clinical evaluation panel (the
"Panel"). Each party shall select one member of the Panel, and the two Panel
members shall select a third member. No panel member may be an employee,
officer, director, or owner of five percent (5%) or more of the shares of either
Party, or related to any employee, officer, director or owner of five percent
(5%) or more of the shares of either Party, or otherwise affiliate with either
party such that such affiliation would tend to influence such persons ability to
independently evaluate the foregoing events.

4.    PURCHASE AND SALE

      4.1 Purchase Orders. During the term of this Agreement and in accordance
with its provisions, the purchase and sale of MASIMO Products between the
Parties shall be made by means of purchase orders placed by ZOLL or its designee
to MASIMO ("Purchase Orders"). Except for the initial Purchase Order, the
minimum quantity of MASIMO Products that may be purchased on a Purchase Order is
50 units of a cable-part number (e.g., PC08) or a reusable sensor (e.g.,
LNOP-DC1) or MS-1 Boards or 200 units of a disposable sensor (e.g., LNOP-Neo).
Purchase Orders and change orders may be placed by facsimile or mail. A Purchase
Order may provide for delivery for a period of up to ninety (90) days following
normal expiration of this Agreement and all terms and conditions of this
Agreement shall govern. No Purchase Order must be accepted by MASIMO after the
expiration or the termination of this Agreement. Any Purchase Order issued, or
to be issued, for any firm commitment or purchase hereunder shall be
non-cancelable, and ZOLL shall be responsible for taking deliveries of and
paying for all MASIMO Products set forth in such Purchase Order.

      4.2 Confirmation. MASIMO will notify ZOLL of receipt of Purchase Orders
within five (5) working days after receipt of ZOLL's Purchase Orders.
Confirmation of receipt and acceptance by MASIMO may be by facsimile or mail.

      4.3 Contents. All Purchase Orders submitted by ZOLL shall state the
following: (i) price, (ii) the quantities ordered, (iii) the requested delivery
dates, (iv) destination, (v) requested method of shipment, and (vi) model or
number of the MASIMO Products in accordance with the terms and conditions
hereof, ZOLL shall use the form of Purchase Order attached hereto as Exhibit F.
Any language on the Purchase Order of ZOLL or acknowledging form of MASIMO which
is inconsistent with any term or provision hereof shall be void and without any
force or effect.

      4.4 Initial Commitment. The first Purchase Order submitted by ZOLL will
include a non-binding forecast for 180 days, in addition to ZOLL's first firm
order, with shipments contemplated to begin on November 1, 1997.

      4.5 Ongoing Purchase Orders. After the initial Purchase Order ZOLL's
Purchase Orders issued as needed to MASIMO calling for delivery in ninety (90)
days or less are non-cancelable. Purchase Orders to MASIMO calling for delivery
in more than 90 days shall be alterable and cancelable by ZOLL up until ninety
days prior to the shipment date, after which such Purchase Orders become
binding.

      4.6 Emergency Orders. Any Purchase Orders placed by ZOLL calling for
delivery of MASIMO Products in less than ninety (90) days shall be considered
emergency Purchase Orders. MASIMO agrees to use reasonable efforts to deliver
such units of MASIMO Products on the requested schedule. MASIMO may require a
price modification for emergency orders.

5.    PRICES AND PAYMENT

      5.1 Price. MASIMO's transfer prices for the MASIMO Products delivered to
ZOLL in accordance with the terms of this Agreement shall be as set forth at
Exhibit D attached hereto. All prices are F.O.B. MASIMO's shipping dock and are
inclusive of each MS-1 Board, SpO(sub 2), Sensor or Accessory. Each SpO(sub 2),
Sensor is individually packaged and labeled per MASIMO guidelines with
ZOLL-supplied artwork and logos. Payment by ZOLL to MASIMO shall be made thirty
(30) days following receipt of invoice by ZOLL.

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      5.2 Pricing Adjustments. MASIMO shall have the right to adjust prices for
the MS-1 Boards annually, provided that any annual price increase shall be
limited to the percentage increase in the prior year's U.S. Consumer Price
Index.

      5.3 Currency Basis. Prices for the MASIMO Products to ZOLL shall be in
U.S. Dollars.

      5.4 F.O.B. Point. Risk of loss for MS-1 Boards, SpO(sub 2), Sensors and
Accessories shall pass to ZOLL, F.O.B. MASIMO's manufacturing facility or
distribution point, as selected by MASIMO.

6.    DELIVERY

      6.1 Transportation. The method of transportation and carrier selected
shall be as specified by ZOLL in its Purchase Orders. Unless otherwise agreed,
all transportation charges, including insurance, shall be paid by ZOLL.

      6.2 Packaging. MASIMO shall package the SpO(sub 2) Sensors, MS-1 Boards
and Accessories for shipment. Each shipment shall include a packing list
containing: (i) Purchase Order number, (ii) model number of the MASIMO Products,
(iii) quantity, (iv) serial number or date code of shipped products, and (v) the
results of applicable quality assurance and other tests performed with respect
to the MASIMO Products being shipped.

      6.3 Delivery. MASIMO shall use best efforts to fill all Purchaser Orders
by delivery dates and in the quantities specified by ZOLL in its Purchase
Orders. If a Purchase Order by ZOLL calls for more than a 25% increase as
compared to the previous 3-month average of MASIMO Products ordered, on a
product-by-product basis, MASIMO shall use best efforts to deliver an amount at
least equal to the previous three month average within ninety (90) days, and
shall use best efforts to ship the remainder within 120 days of receipt of the
Purchase Order.

7. COMPATIBILITY

      7.1 ZOLL agrees that its Licensed Devices will not be configured to
operate with oximetry sensors other than authorized Masimo SpO(sub 2) Sensors.
ZOLL agrees that it will not market Licensed Devices which operate with any
MASIMO probe except probes referenced in Section 1.16 hereof manufactured now or
in the future by MASIMO.

      7.2 ZOLL agrees that it will not market oximetry instrument(s), or any
other device(s) or accessory(ies), except Licensed Devices, that operate with or
are compatible with any MASIMO SpO(sub 2) Sensors.

      7.3 Future Upgrades. ZOLL agrees that by incorporating the MS-1 Board and
MASIMO SET into its Licensed Devices that it will not modify the functionality
of the MS-1 Board. ZOLL agrees that it will accept all future upgrades or
changes to products as long as (i) the upgrades or changes remain compatible
with previous versions in connections and functionality; (ii) the upgrade does
not increase the transfer price; (iii) such upgrades and changes do not result
in material degradation in performance or functionality of the MASIMO Products;
(iv) such upgrades and changes meet and continue to meet all applicable
regulatory requirements; and (v) such upgrades and changes are compatible with
ZOLL's current products.

      7.4 MASIMO Probes. ZOLL agrees that the SpO(sub 2) Sensors are designed to
be used with the MS-1 Board only, and that if ZOLL uses sensors by other
manufacturers that the MS-1 Board may yield different results. MASIMO SET will
be enabled for SpO(sub 2) Sensors only. ZOLL agrees to use its best efforts to
provide that its customers not use SpO(sub 2) Sensors with non-MS-1 Boards. ZOLL
agrees not to configure any non-MS-1 Boards in order for them to be used in
connection with SpO(sub 2) Sensors and agrees not to promote or instruct others
to so configure non-MS-1 Boards.

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        7.5 Engineering Support. MASIMO shall provide reasonable engineering
  support to ZOLL for the integration of MASIMO SET into Licensed Devices, at
  the cost of $150.00 per hour. Such support and payment by ZOLL shall be
  authorized in advance, in writing by ZOLL. Such services shall be provided at
  MASIMO's facility unless travel is required, in which event ZOLL shall
  additionally pay for necessary travel expenses.

8.      INSPECTION AND ACCEPTANCE

      8.1 MASIMO Inspection. MASIMO shall provide and maintain an inspection
procedure and quality assurance program for the MASIMO Products and its
production processes. Complete records of all inspection and quality assurance
work done by MASIMO shall be made available to ZOLL upon its request at
reasonable times during the term of this Agreement.

        8.2    ZOLL Inspection

             8.2.1 ZOLL may inspect the products upon receipt. For SpO(sub 2),
        Sensors, any lots of MASIMO Products ("Lot") which fail (as defined only
        as a failure under statistical lot sampling standard ANSI/ASQC Z1.4:1993
        AQL 1.0), or for MS-1 Boards, any board which fails, to meet MASIMO's
        written specifications as set forth in Exhibit G, may be rejected by
        ZOLL and returned to MASIMO for replacement; provided however, that ZOLL
        shall have the right to reject and return to MASIMO for replacement any
        MASIMO Products which fails to meet MASIMO's specification as set forth
        in Exhibit G. Prior to returning any MASIMO Products to MASIMO, ZOLL
        shall notify MASIMO by facsimile that ZOLL has rejected the MASIMO
        Products, inclusive of the reason or basis of such rejection. Within
        five (5) working days of the receipt of the notification, MASIMO will
        issue a "Return to Vendor" ("RTV") number to ZOLL by facsimile, which
        RTV number will be ZOLL's authorization to return the MASIMO Products.

             8.2.2 ZOLL shall promptly notify MASIMO of any incoming Lot
        failure. MASIMO Products which do not conform to MASIMO's specifications
        as set forth in Exhibit G shall be returned by ZOLL to MASIMO freight
        collect and insured for full replacement value. Within twenty (20) days
        after the date of receipt of the nonconforming MASIMO Products by
        MASIMO, replacement Product will be shipped to ZOLL at MASIMO's expense.
        Should MASIMO fail to replace rejected MASIMO Products by shipping
        conforming MASIMO Products to ZOLL within thirty (30) days of its
        receipt of the nonconforming MASIMO Products, ZOLL shall have the option
        to cancel without cost or liability the purchase of such MASIMO Products
        and receive, at ZOLL's option, a credit or rebate if payment has been
        made. ZOLL shall pay freight charges, insurance and other customary
        charges for transportation for improperly rejected MASIMO Products.

             8.2.3 If ZOLL attempts to correct deficiencies to the MASIMO
        Products purchased under this Agreement without prior written
        authorization from MASIMO, then MASIMO shall have no further obligations
        with respect to such MASIMO Products.

      8.3 Nonconforming Acceptance. ZOLL may choose to accept the MASIMO
Products which fail to conform in a minor aspect to the specifications
established by this Agreement without prejudice to its right to reject
nonconforming items in the future. If ZOLL so chooses, ZOLL will notify MASIMO
of its intent to accept nonconforming items. However, MASIMO accepts no
responsibility for nonconforming items accepted by ZOLL.

9.    CONFIDENTIALITY

9.1 MASIMO's Confidential Information. ZOLL shall not use MASIMO's Confidential
Information for any purpose other than performance of this Agreement or the
maintenance or repair of the MASIMO Products in accordance with this Agreement.
ZOLL shall not disclose MASIMO's Confidential Information to any third party
without the prior written consent of MASIMO.

                                       9
<PAGE>   13

      9.2 ZOLL's Confidential Information. MASIMO shall not use ZOLL's
Confidential Information, specifically and without limitation ZOLL's sales
reports, for any purpose other than performance of this Agreement, without the
prior written consent of ZOLL. MASIMO shall not disclose ZOLL's Confidential
Information to any third party without the prior written consent of ZOLL.

        9.3  Neither party's obligations under this confidentiality provision
shall apply to information that:

               9.3.1 prior to the transmittal was of general public knowledge;

               9.3.2 becomes a matter of general public knowledge otherwise
        than as a consequence of a breach under this Agreement;

               9.3.3  is made public by the Party claiming confidentiality;

              9.3.4 is required to be disclosed by applicable law; provided
        however, that the Party who may be required to disclose such information
        shall notify the other Party in sufficient time for the owner of such
        Confidential Information to file the appropriate documents with the
        court to obtain a protective order to enforce the confidentiality
        requirements of this Agreement;

             9.3.5 information which the receiving Party can establish by
        competent proof was in its possession at the time of disclosure by the
        disclosing Party and was not acquired, directly or indirectly, from the
        disclosing Party;

             9.3.6 information which is received from a third party; provided,
        however, that the receiving Party has no reason to know such information
        was obtained by said third party, directly or indirectly, from the other
        Party under a nondisclosure agreement; or

             9.3.7 can be documented was independently developed without
        reference to or reliance upon the other party's confidential
        information.

      9.4 Injunctive Relief. The Parties acknowledge that (a) the covenants set
forth in this Section 9 ("CONFIDENTIALITY") are essential elements of this
Agreement and that, but for the agreement of the parties to comply with such
covenants, this Agreement would not have been entered into; (b) neither party
will have any adequate remedy at law if the other party violates the terms of
this Section 9 ("CONFIDENTIALITY"); and (c) each party shall have the right, in
addition to any other rights it may have, to obtain in any court of competent
jurisdiction temporary, preliminary and permanent injunctive relief to restrain
any breach, threatened breach, or otherwise to specifically enforce any, of the
covenants in this Section 9 ("CONFIDENTIALITY") if the other party fails to
perform any of such covenants under this Section 9 ("CONFIDENTIALITY").

        9.5  Press Release

             9.5.1 Within 30 days following the signing of a definitive
        Agreement, MASIMO and ZOLL agree to issue a joint press release
        announcing the existence and general content of the Agreement. Except
        for the press release and discussing the existence and general nature of
        the Agreement, neither Party shall, without the other's prior written
        approval, disclose any terms of this Agreement. This provision shall not
        be interpreted to bar either Party from making any disclosure required
        of it by law, but if such disclosure includes the terms or provisions of
        this Agreement, then the other Party shall be given the opportunity to
        review the disclosure prior to its release.

10.   PROPRIETARY RIGHTS

        10.1 MASIMO Inventions and Improvements. Any Improvement made by ZOLL,
made jointly by ZOLL and MASIMO, or made solely by MASIMO shall be the sole
property of MASIMO, and MASIMO has the right to apply for copyrights, patents
(including utility and design patents), or other

                                       10
<PAGE>   14

protection for intellectual property rights anywhere in the world under its own
name and at its own expense. If such invention or Improvement is owned by MASIMO
and is applicable to the MS-1 Boards, SpO(sub 2), Sensors or Accessories,
provided that ZOLL has, and for so long as ZOLL continues to meet the eighty
percent (80%) integration commitment set forth in Section 3.6 ("Integration
Commitment") and its obligations under Section 3.2 ("Best Efforts"), MASIMO will
grant ZOLL, without additional compensation, a non-exclusive, non-transferable
license to use such Improvement to incorporate the MS-1 Boards having the
Improvement into the Licensed Devices, to demonstrate Licensed Devices and to
distribute Licensed Device to (i) end user customers (not to OEM or other
medical equipment manufacturer) and (ii) ZOLL distributors and other medical
equipment manufacturers specifically set forth on Exhibit I.

        10.2 ZOLL Inventions. Subject to the license rights granted to ZOLL
herein, MASIMO retains all right, title and interest in and to Masimo Technology
and all Improvements. If ZOLL makes any Improvement, ZOLL shall, and hereby
does, transfer all right, title and interest in and to all such Improvements.
ZOLL agrees that it shall promptly notify MASIMO of any Improvement. ZOLL agrees
that it shall take all actions and execute all documents, at MASIMO's expense
and as MASIMO may reasonably request, to effectuate the acknowledgment of
MASIMO's ownership contained herein and the vesting in MASIMO of complete and
exclusive ownership of any Improvement. ZOLL shall, at MASIMOs expense, secure,
maintain and defend for MASIMO's benefit all rights therein, including the right
to submit any patent, copyright or trademark application or registration.
Notwithstanding anything contained in this Agreement to the contrary, MASIMO
expressly acknowledges and agrees that ZOLL is engaged in the business of
designing, developing and selling medical technology devices, and as such ZOLL
shall have the right at all times during and after this Agreement to design,
develop, sell, market and distribute medical technology and products relating to
pulse oximetry, provided that such technology or products are not based upon
non-public proprietary or confidential information owned by MASIMO and disclosed
to ZOLL under this Agreement, and MASIMO expressly acknowledges and agrees that
ZOLL shall own all proprietary rights in and to all such technology and
products.

11.   WARRANTIES

      11.1  MASIMO Warranties

             11.1.1 MASIMO warrants the MS-1 Boards supplied by MASIMO to ZOLL
      for a period of [*] following receipt by ZOLL, or [*] following receipt by
      an End-User, whichever is earlier, to be free, under normal use and care,
      from defects in workmanship and material and to be in material conformity
      with MASIMO's specifications. Units returned to MASIMO for warranty
      repairs shall be shipped to MASIMO freight collect according to MASIMO's
      instruction. Within thirty (30) days of the receipt of MS-1 Boards, MASIMO
      shall replace or repair such units and shall ship them to ZOLL's
      designated return destination freight prepaid, if MASIMO reasonably
      determines that the unit is covered under this Warranty. The foregoing
      warranties extend to the MS-1 Boards returned by ZOLL's customers.

             11.1.2 MASIMO warrants that for a period of [*] following receipt
      by ZOLL or [*] following receipt by the End-User, whichever is earlier,
      the reusable probes LNOP-DCl, the PC08 and PC12 product cables supplied by
      MASIMO to ZOLL will be, under normal use and care, free from any defect in
      workmanship and material and to be in material conformity with MASIMO's
      specifications. Units returned to MASIMO for warranty repairs shall be
      shipped to MASIMO freight collect according to MASIMO's instruction.
      Within thirty (30) days of the receipt of reusable probes MASIMO shall
      replace or repair such units and shall ship them to ZOLL's designated
      return destination freight prepaid, if MASIMO reasonably determines that
      the unit is covered under this Warranty. The foregoing warranties extend
      to the covered items returned by ZOLL's customers.

             11.1.3 MASIMO warrants that for a period of [*] following receipt
      by ZOLL, or [*] following receipt by the End-User, or until [*],

* Confidential material redacted and filed separately with the Commission.

                                       11
<PAGE>   15

        whichever is earliest, the disposable probes (e.g., LNOP-Neo, LNOP-NeoPt
        and LNOP-Adt) supplied by MASIMO to ZOLL hereunder will be, under normal
        use and care, and only upon first use, free from any defect in
        workmanship and material and to be in material conformity with MASIMO's
        specifications therefor. Units returned to MASIMO for warranty repairs
        shall be shipped to MASIMO freight collect according to MASIMO's
        instruction. Within thirty (30) days of the receipt of disposable
        probes, MASIMO shall replace or repair such units and shall ship them to
        ZOLL's designated return destination freight prepaid, if MASIMO
        reasonably determines that the unit is covered under this Warranty. The
        foregoing warranties extend to the covered items returned by ZOLL's
        customers.

               11.1.4 This warranty does not extend to any unit that has been
        subject to misuse, neglect or accident; that has been damaged by causes
        external to the unit; that has been used in violation of MASIMO's
        instructions; that has been affixed to any nonstandard Accessory
        attachment; that has been modified, disassembled, or reassembled by
        anyone other than MASIMO.

               11.1.5 MASIMO represents and warrants to ZOLL that MASIMO has no
        knowledge that the use of MASIMO Products in compliance with the terms
        of this Agreement would infringe any patent, copyright, trademark, trade
        secret or any other proprietary right of any third party.

      11.2 MASIMO Maintenance and Repairs. For a period of three (3) years after
the expiration or termination of the warranty set forth in Sections 11.1
("MASIMO Warranties") of this Agreement, MASIMO agrees to replace MASIMO
Products at the original unit price of the MASIMO Products

        11.3 Limitation of Liability. EXCEPT FOR THE EXPRESS WARRANTIES SET
FORTH ABOVE, MASIMO GRANTS NO WARRANTIES, EITHER EXPRESS OR IMPLIED, ON THE
MASIMO PRODUCTS, INCLUDING ALL IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS
FOR A PARTICULAR PURPOSE, AND THE STATED EXPRESS WARRANTY IS IN LIEU OF ALL
LIABILITIES OR OBLIGATIONS OF MASIMO FOR DAMAGES, INCLUDING, BUT NOT LIMITED
TO, CONSEQUENTIAL DAMAGES OCCURRING OUT OF OR IN CONJUNCTION WITH THE USE OR
PERFORMANCE OF SUCH UNIT OF MASIMO PRODUCTS. IN NO EVENT SHALL MASIMO BE
RESPONSIBLE FOR CONSEQUENTIAL, INCIDENTAL, SPECIAL DAMAGES, LOSS OF PROFIT, OR
EXPENSE SUFFERED BY THE OTHER PARTY IN CONNECTION WITH THIS AGREEMENT.

12.     INDEMNIFICATION

      12.1 Notice. Recognizing the objectives of this Agreement, ZOLL agrees
that if it knows of or becomes aware of any patents that may be infringed by the
manufacture and sale of the MASIMO Products, it will promptly disclose such
information to MASIMO.

        12.2 MASIMO will defend, indemnify and hold ZOLL harmless against any
and all liability, loss, damages, costs or expenses which ZOLL may hereafter
incur, as a result of any injury, illness or death of any person which is caused
by any MASIMO Product, to the extent that such injury, illness or death resulted
from (i) MASIMO's design or manufacture of the MASIMO Products or (ii) failure
of the MASIMO Products at the time of shipment to ZOLL to materially comply with
the specification. MASIMO shall have no liability or responsibility of any kind
to ZOLL under this Section 12 to the extent that MASIMO's ability to defend or
settle any such claim is prejudiced by ZOLL's failure to (a) promptly notify
MASIMO in writing of any claim relating to this section, (b) provide reasonable
assistance to MASIMO, at MASIMO's expense, in connection with the defense and
settlement of any such claim, and (c) permit MASIMO to control the defense of
any such claim. MASIMO shall have no liability for settlements made without
express written consent. Should ZOLL desire to have its own counsel participate
in any such action, the cost of such counsel shall be exclusively ZOLL's.

      12.3 ZOLL will defend, indemnify and hold MASIMO harmless against any and
all liability, loss, damages, costs or expenses which MASIMO may hereafter
incur, as a result of any injury, illness or

                                       12
<PAGE>   16

death of any persons, or infringement or alleged infringement of any patent,
copyright, trademark, trade secret or any other proprietary right of any third
party, to the extent that such illness, injury, death or infringement results
from the Licensed Devices and results from technology or products not supplied
by MASIMO. ZOLL shall have no liability under this Section to the extent that
ZOLL's ability to defend or settle any such suit or claim is prejudiced by
MASIMO's failure to (a) promptly notify ZOLL in writing of any claim relating to
this Section, (b) provide reasonable assistance to ZOLL, at ZOLL's expense, in
connection with the defense and settlement of such claim, and (c) permit ZOLL to
control the defense of any such claim. ZOLL shall have no liability for
settlements made without its express written consent. Should MASIMO desire to
have its own counsel participate in any such actions, the cost of such counsel
shall be exclusively MASIMO's.

      12.4 MASIMO will defend, indemnify and hold ZOLL and its customers
harmless against infringement or alleged infringement by the SpO(sub 2), Sensors
furnished under this Agreement, or by the MS-1 Boards or Accessories, of any
patent, copyright, trademark, trade secret or any other proprietary right of any
third party. MASIMO shall have no liability under this section to the extent
that MASIMO's ability to defend or settle any such suit or claim is prejudiced
by ZOLL's failure to (a) promptly notify MASIMO promptly in writing of any such
claim or proceeding, (b) provide MASIMO reasonable assistance, at MASIMO's
expense, in connection with the defense and settlement of any such claim
including, but not limited to, where practical, to modify the SpO(sub 2) Sensors
and/or the MS-1 Boards to make them non-infringing or, where practical, to
obtain licenses under such intellectual property rights and (c) permit MASIMO to
control the defense of any such claim. MASIMO shall have no liability for
settlements made without its express written consent. MASIMO may, at its sole
discretion, modify the SpO(sub 2), Sensors and/or MS-1 Boards to make them
non-infringing, obtain a license to allow the continued use of the SpO(sub 2)
Sensors and/or MS-1 Boards or discontinue shipment of the SpO(sub 2) Sensors
and/or MS-1 Boards to ZOLL. In the event MASIMO discontinues shipment, and ZOLL
is restricted from selling Licensed Devices with MASIMO Products, ZOLL shall
have the right to terminate this Agreement and MASIMO agrees to buy back ZOLL's
inventory of MASIMO Products at the original transfer price. In the event that
ZOLL's ability to use the MASIMO Products is Genuinely Impaired by such a claim
under this Section and MASIMO does not, within ten (10) days after receipt of
notice of such impairment, procure for ZOLL the right to use such MASIMO
Products or replace such products with functionality equivalent products, ZOLL
shall have the right to terminate this Agreement, effective upon written notice
to MASIMO. "Genuinely Impaired" shall mean that MASIMO is temporarily or
permanently enjoined from selling the MASIMO Products or an equivalent, or that
a substantial volume of orders from ZOLL's customers are canceled due to the
infringement claim, or an infringement claim or allegation which has a material
negative impact on ZOLL's ability to sell Licensed Devices, but shall not be a
mere allegation, claim or filing of an infringement suit.

      12.5 Notwithstanding the above, Masimo shall have no indemnification
obligations under Section 12.4 for any infringement or claims of infringement
relating to Licensed Devices resulting solely from (a) modifications by Zoll or
any others to MASIMO Technology or the MASIMO Products, (b) from
electrical/electronics, software/firmware, sensors or product interface not
furnished by MASIMO, (c) the combination of the MASIMO Products with apparatus
not furnished by MASIMO, (d) use of products or components not supplied by
MASIMO, or the combination of MASIMO Technology with other technology not
furnished by MASIMO, (e) use of MASIMO Technology in products not permitted by
the license granted herein, or (f) for any claims not related directly to MASIMO
Technology or the MASIMO Products.

      12.6 Patent Defense. ZOLL agrees that it shall notify MASIMO of any claim
by a third party that such third party believes that MASIMO Patents or Patent
Rights are invalid. ZOLL agrees to promptly notify MASIMO of any such claim
whether or not such claim is asserted in court by such third party.

               12.6.1 During and after the term of this Agreement, ZOLL agrees
        not to challenge the validity of any of the Patent Rights. During the
        term of this Agreement, ZOLL agrees to disclose to MASIMO any prior art
        or any other information that is material to the validity of any of the
        Patent Rights or to the patentability of any pending MASIMO patent
        application of which ZOLL is aware.

                                       13
<PAGE>   17

        12.7 Regulatory Compliance

               12.7.1 ZOLL shall be solely responsible for identifying and
        obtaining, at its sole cost and expense, all FDA and United States
        safety agency approvals and any other agency or regulatory approvals
        which are required for the development, manufacture or sale of Licensed
        Devices. MASIMO will reasonably cooperate with ZOLL by providing at no
        charge to ZOLL any MASIMO data in its possession that is reasonably
        required to obtain the regulatory approvals, including but not limited
        to 51O(k) application materials submitted by MASIMO for its own products
        that incorporate MASIMO SET. Disclosure by ZOLL of any such data shall
        be subject to the confidentiality provisions of Article 9
        ("CONFIDENTIALITY"); provided however, that notwithstanding anything to
        the contrary contained in this Agreement, MASIMO expressly acknowledges
        and agrees that ZOLL will be applying for Food and Drug Administration
        ("FDA") approval for the Licensed Devices and ZOLL shall have the right,
        without prior approval from MASIMO, to furnish the FDA any information
        from MASIMO's 510-k submission and any information requested by the FDA
        deemed by ZOLL to be necessary or advisable to secure FDA approvals for
        the ZOLL Products. For additional MASIMO Confidential Information, ZOLL
        shall first seek approval from MASIMO, such approval not to be
        unreasonably withheld.

               12.7.2 ZOLL shall be solely responsible, at its sole cost and
        expenses, (i) for identifying and obtaining any necessary approvals or
        certifications by any non-U.S. governmental, safety or regulatory
        entity, including testing or other procedures, for the sale by ZOLL of
        Licensed Devices, (ii) for identifying and complying with any safety
        precautions, safety markings, labels or consumer notices required for
        ZOLL Product sales in any country other than the United States, and
        (iii) for assessing the appropriateness of the ZOLL Product for any
        particular Customer application. MASIMO will cooperate with ZOLL by
        providing any data in its possession that is reasonably required to
        obtain such approvals or certifications. Disclosure by ZOLL of any such
        data to any third party shall be subject to the confidentiality
        provisions of Article 9 ("CONFIDENTIALITY").

               12.7.3 In the event of any recall of any product incorporating
        MS-1 or SpO(sub 2), Sensors, the parties shall cooperate to the extent
        reasonably necessary to conduct such recall in accordance with ZOLL's
        policies and procedures.

               12.7.4 Regardless of any disclosure to MASIMO by ZOLL of an
        ultimate destination of the Licensed Devices or the Software, ZOLL shall
        not transfer or re-export, whether directly or indirectly, the Software,
        the MASIMO Products or Licensed Devices containing the Software, the
        related documentation, or other related proprietary information to
        anyone outside the U.S. as to which export may be in violation of the
        United States Export Laws or regulations without first obtaining the
        appropriate license from the U.S. Department of Commerce and/or any
        agency or department of the U.S. government, as required.

13.   INCIDENT REPORTING

        13.1 MASIMO Reporting. MASIMO represents and warrants that all MASIMO
Products manufactured and sold to ZOLL pursuant to this Agreement shall be
manufactured materially in conformance with all applicable requirements of the
FDA and in accordance with all United States federal, state and local statutes,
ordinances and regulations, including, but not limited to, the Federal Food,
Drug and Cosmetic Act (21 U.S.C. 301 et seq.). If MASIMO is prevented from
shipping product to ZOLL (for any period of time in excess of 30 days) due to
regulatory actions imposed by FDA, the 80% commitment shall be excused for the
period of shut down plus six months. If ZOLL requests an evaluation and/or
investigation into an alleged failure of a MASIMO device, MASIMO shall promptly
perform such investigation and provide ZOLL with written results of the
investigation within 5 business days after receipt of the defective material.

      13.2 ZOLL Reporting. ZOLL represents that in addition to being responsible
for all regulatory approvals for the Licensed Devices that should any incidents
of failure of the MASIMO Products which

                                       14
<PAGE>   18

result in bodily injury be reported to ZOLL, that it will promptly (i.e., within
two (2) business days) notify MASIMO of any such field performance problems or
deficiencies. ZOLL agrees to report to MASIMO any other incidents of failure
within a reasonable time.

        13.3 Recall. If for any reason MASIMO determines that a recall of
Product(s) is (are) necessary as defined in FDA regulations (21, CFR Part 7),
MASIMO shall notify ZOLL of the possibility of Product recall. If MASIMO
notifies ZOLL that the Product must be recalled, ZOLL agrees that it shall as
expediently as possible issue a recall notice to all its customers recalling the
MASIMO Products in question. Provided that the MASIMO Products meet the
specifications specified in Exhibit G, MASIMO's liability for a Product recall
shall be the repair or replacement of the part that causes the recall. If the
MASIMO Products fail to meet MASIMO's specifications as set forth in Exhibit G,
then MASIMO's sole responsibility, subject to MASIMO's obligations under this
Agreement, including without limitation, MASIMO's indemnification obligations
under Section 12 hereunder, shall be the cost which it incurs for repairing
and/or replacing the Product in question and for the payment of all freight or
shipping charges involved with such recall.

14.   TERM AND TERMINATION

        14.1 This Agreement shall become effective as of the effective date
first set forth above, and shall remain in effect for Five (5) years, thereafter
this Agreement is renewable for one-year periods with mutual consent.

        14.2 Termination

             14.2.1 The default by one Party on a material obligation of such
        Party under this Agreement shall entitle the other Party to give the
        Party in default written notice describing such default in detail and
        requiring it to remedy such default. If such default is not fully
        remedied within ninety (90) days after the date of such notice, the
        notifying Party shall be entitled to terminate this Agreement by a
        written notice to the defaulting Party.

             14.2.2 Either Party may terminate this Agreement at any time upon
        or after the filing against the other Party by any third party of a
        petition in bankruptcy or insolvency, or upon or after any adjudication
        that the other Party is insolvent, or upon or after the filing by the
        other Party of any petition or answer seeking reorganization,
        readjustment or arrangement of the business of the other Party under any
        law relating to bankruptcy or insolvency, or upon or after the
        appointment of a receiver for all or substantially all of the property
        of the other Party of any assignment or attempted assignment for the
        benefit of creditors, or upon or after the institution of any
        proceedings for the liquidation or winding up of the other Party's
        business.

      14.3 Rights Upon Termination. In the event of any valid termination of
this Agreement under Section 14.2 hereof ("Termination"), all of ZOLL's rights
under this Agreement shall be terminated. The termination of ZOLL's rights shall
include the termination of any rights of ZOLL to continue to use MASIMO
Technology, even though such technology may have entered the public domain prior
to or subsequent to termination. This restraint is agreed to be reasonable as
consideration for MASIMO's disclosing know-how to ZOLL prior to it entering the
public domain. No termination shall impact MASIMO's rights to collect for
accrued royalties and payment for delivered Product or either Parties rights to
pursue all available remedies in addition to those stated herein. ZOLL may
distribute existing inventory for a period not to exceed 12 months following
termination. Any outstanding purchase orders are automatically canceled on
termination by MASIMO.

15.     DISPUTE

If any dispute or difference shall arise between the parties concerning the
construction of this Agreement or the rights or obligations of either Party, the
Parties shall strive to settle the same amicably, but if they are unable to do
so within ninety (90) days after such dispute or difference has arisen, any
claim or

                                       15
<PAGE>   19

cause of action shall be filed in any court in Orange County, California, U.S.A.
MASIMO and ZOLL each consents to personal jurisdiction in any action brought in
the United States District Court for the Central District of California. In the
event that such action should be brought in a state court, ZOLL and MASIMO each
consents to personal jurisdiction in any action brought in Municipal Court or
Superior Court of the State of California in the County of Orange ("Notice") of
this Agreement. Notwithstanding the foregoing, any dispute arising out of
Section 2.3.2 or Section 3.10 shall be resolved by binding arbitration in
Boston, Massachusetts and MASIMO and ZOLL each consents to personal jurisdiction
and exclusive venue in any action brought in any court located in the
Commonwealth of Massachusetts. Notwithstanding anything contained in this
Section, either Party shall have the right to apply for injunctive relief for
any breach of the provisions of Section 9.

16.   MISCELLANEOUS

        16.1 Nonassignability. Except in connection with the sale of all or
substantially all of the assets or business of ZOLL, ZOLL may not assign,
transfer or sublicense any of the rights or obligations under this Agreement,
without the prior written consent of MASIMO. Notwithstanding the foregoing if
ZOLL is involved in any assignment or sale to an entity which has a pre-existing
license with MASIMO for SpO(sub 2), Measurement having terms in the aggregate
more favorable to MASIMO than the terms of this Agreement, MASIMO may elect for
the terms of the other License Agreement to apply to the exclusion of this
Agreement. Except in connection with the sale of all or substantially all of the
assets or business of MASIMO to which this license relates, MASIMO may not
assign or transfer any of the rights or obligations under this Agreement,
without prior written consent of ZOLL. This Agreement will inure to the benefit
of and bind the Parties successors and assigns.

        16.2 Failure to Enforce. The failure of either Party to enforce at any
time or for any period of time the provisions of this Agreement shall not be
construed to be a waiver of such provisions or of the right of such Party to
enforce each and every such provision.

      16.3 Governing Law. This Agreement shall be deemed to have been made in
the State of California, United States of America, and shall be governed by and
construed according to the laws of the State of California.

      16.4 Severability.  In the event that any of the provisions of this
Agreement shall be held by a court or other tribunal of competent jurisdiction
to be unenforceable, such provisions shall be deleted from this Agreement and
the remaining portions of this Agreement shall remain in full force and effect,
except where the economic equity of both parties hereto is materially affected
by such unenforceability.

      16.5 Notice. Except as either Party may hereafter notify the other with
respect to itself, the addresses of the Parties for all purposes of this
Agreement shall be:

        MASIMO:             MASIMO CORPORATION
                            23361 Madero, Suite 100
                            Mission Viejo, CA 92691
                            Attention:Joe E. Kiani

        ZOLL:               ZOLL MEDICAL CORPORATION
                            32 Second Avenue
                            Burlington, MA 01803
                            Attention: Vice President, Research and Development

        With copy to:       Raymond C. Zemlin, P.C.
                            GOODWIN, PROCTER & HOAR, LLP
                            Exchange Place,
                            Boston MA 02109-2881

                                       16
<PAGE>   20

All notices and communications pursuant to this Agreement shall be addressed as
set forth above and shall be delivered to the Party for whom intended by hand or
by postage prepaid, first class, registered or certified mail, return receipt
requested. Such notices and recommendations shall be deemed to have been given
and delivered as of the date of receipt.

        16.6 Force Majeure. Neither Party shall be liable to the other Party
hereto for any loss, injury, delay, damages or other casualties suffered or
incurred by such other Party due to strikes, riots, storms, fires, acts of God,
or war or any other cause beyond the reasonable control of either Party.

        16.7 Headings. Headings to paragraphs and sections of this Agreement are
to facilitate reference only, do not form a part of this Agreement, and shall
not in any way affect the interpretation hereof.

        16.8 Survival From This Agreement. The rights and obligations of the
parties hereto under Articles 9, 10, 11, 12, 13 and 14 of this Agreement shall
survive and continue after any expiration or termination of this Agreement and
shall bind the Parties and their representatives, successors, heirs and
assignees.

        16.9 Exhibits. All exhibits to which this Agreement refers are hereby
incorporated into and made a part of this Agreement.

        16.10 Entire Agreement. This Agreement constitutes the entire agreement
between ZOLL and MASIMO, and there are no other understandings, agreements or
representations, express or implied, written or oral, not specified herein. This
Agreement may only be amended by express written agreement and signed by
authorized representatives of both Parties.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date set forth above.

MASIMO CORPORATION                  ZOLL MEDICAL CORPORATION

By: /s/ JOE E. KIANI                 By: /s/ DONALD BOUCHER
    ----------------------               ----------------------
Joe E. Kiani                         Donald Boucher
President and CEO                    Vice President, Research & Development

                                       17
<PAGE>   21

                                   EXHIBIT A

                            MASIMO SET(R) DEFINITION

For the purpose of this agreement, MASIMO SET(R) is defined as all Masimo
Technology as contained in the Patent Rights; the claims which issue in the
patent applications listed in Exhibit C, and all legally protectable trade
secrets contained in the Masimo Confidential Information relating to LNOP(R),
AutoProCal(TM), ProCal(TM), DST(TM), and FST(TM) Technology.

<PAGE>   22

                                   EXHIBIT B

                           TRADEMARKS, LEGENDS, LOGOS

I.      MASIMO SET(R) PRODUCT DESIGNATION:

                                [MASIMO SET(R) LOGO]
                                Panatone Red / PMS Black
                                185C MAT

II.     LICENSED TRADEMARKS:

                                [MASIMO SET(R) LOGO]

                                [MASIMO SET(R) LOGO]

                                [MASIMO SET(R) LOGO]

            (MASIMO WILL PROVIDE CAMERA READY ARTWORK UPON REQUEST)

III.    PATENT MARKING:

<PAGE>   23

                                   EXHIBIT D

                               PRICE OF PRODUCTS

Price for MS-1 Boards: MASIMO's transfer prices to Zoll for the MS-1 Boards
(including the Masimo MS-3 Boards) delivered in accordance with this Agreement
are as follows:

Quantity Purchased per Year             Unit Price
---------------------------             ----------

Less Than 2500                             [*]
2500 or more                               [*]

In the first twelve month period following the first month after ZOLL places its
first Purchase Order for MASIMO Products, the price for MS-1 Boards shall be
fixed at [*] per unit. For subsequent years, MS-1 Board pricing shall be set at
the pricing for the quantity purchased by Zoll during the entire preceding year.

Transfer Price for Sensors and Accessories: MASIMO's transfer prices to ZOLL for
the SpO2 Sensors and Accessories delivered in accordance with this Agreement are
as follows:

Product                                              Part #   Price Each
-------                                              ------   ----------

LNOP(R).Adt (Adult Disposable Probe)                  1001        [*]
LNOP(R).Pdt (Pediatric Disposable Probe)              1025        [*]
LNOP(R).Neo (Neonatal Disposable Probe)               1002        [*]
LNOP(R).NeoPt (Pre-Term Neonatal Disposable Probe)    1003        [*]
LNOP(R).DC-1 (Adult Re-usable Probe)                  1004        [*]
PC-08 (8 Ft. Patient Cable)                           1005        [*]
PC-12 (12 Ft. Patient Cable)                          1006        [*]

* Confidential material redacted and filed separately with the Commission.

<PAGE>   24

                                   EXHIBIT E

                                 PRODUCT LINES

1.      Reviver Pacemaker/Defibrillator/Patient Monitor Series

        - Anticipated initial product launch in [*]

* Confidential material redacted and filed separately with the Commission.

<PAGE>   25

                                   EXHIBIT F

                             FORM OF PURCHASE ORDER

<PAGE>   26

<TABLE>
<S>                                             <C>                                             <C>

        ZOLL MEDICAL CORPORATION                                DATE                            NUMBER

        32 Second Avenue
ZOLL    Burlington, Massachusetts 01803-4420
        U.S.A.

        617 229-0020
        800 348-9011
        617 272-5578 Telefax                                                 IMPORTANT
                                                      Our Order Number must appear on invoices, Packages and
                                                Correspondence. Acknowledge if unable to deliver by date required.
__________________________________________________________________________________________________________________

__________________________________________________________________________________________________________________

__________________________________________________________________________________________________________________

__________________________________________________________________________________________________________________

[ ] Confirmation Only - Do Not Duplicate
[ ] Change Order
                                                By  ______________________________________________________________
__________________________________________________________________________________________________________________
</TABLE>

                                     VENDOR

<PAGE>   27

<TABLE>
<S>                                             <C>                                             <C>

        ZOLL MEDICAL CORPORATION                                DATE                            NUMBER

        32 Second Avenue
ZOLL    Burlington, Massachusetts 01803-4420
        U.S.A.

        617 229-0020
        800 348-9011
        617 272-5578 Telefax                                                 IMPORTANT
                                                      Our Order Number must appear on invoices, Packages and
                                                Correspondence. Acknowledge if unable to deliver by date required.
__________________________________________________________________________________________________________________

__________________________________________________________________________________________________________________

__________________________________________________________________________________________________________________

__________________________________________________________________________________________________________________

[ ] Confirmation Only - Do Not Duplicate
[ ] Change Order
                                                By  ______________________________________________________________
__________________________________________________________________________________________________________________
</TABLE>

                                ACCOUNTS PAYABLE

<PAGE>   28

<TABLE>
<S>                                             <C>                                             <C>

        ZOLL MEDICAL CORPORATION                                DATE                            NUMBER

        32 Second Avenue
ZOLL    Burlington, Massachusetts 01803-4420
        U.S.A.

        617 229-0020
        800 348-9011
        617 272-5578 Telefax                                                 IMPORTANT
                                                      Our Order Number must appear on invoices, Packages and
                                                Correspondence. Acknowledge if unable to deliver by date required.
__________________________________________________________________________________________________________________

__________________________________________________________________________________________________________________

__________________________________________________________________________________________________________________

__________________________________________________________________________________________________________________

[ ] Confirmation Only - Do Not Duplicate
[ ] Change Order
                                                By  ______________________________________________________________
__________________________________________________________________________________________________________________
</TABLE>

                                   PURCHASING

<PAGE>   29

                                   EXHIBIT G

                          SPECIFICATIONS FOR PRODUCTS

MS-1 is a complete pulse oximeter, based on Masimo SET, on a circuit board. The
circuit board interfaces directly to LNOP sensors, driving the LEDs in the
sensor to acquire the patient signal, calculates SpO2 and Pulse Rate, and
communicate the information off board.

PERFORMANCE SPECIFICATION:

<TABLE>
<S>             <C>                                             <C>                     <C>
RANGE           Saturation (SpO2):                              35-100%
                Pulse Rate:                                     25-240 BPM (Beats Per Minute)

                Perfusion: ( %)                                 Transmission (dB)
                greater than or equal to 1                      greater than or equal to -50 dB
                0.02 - 1                                        greater than or equal to -23.98-SS ( %) - 26.02

ACCURACY
                Adults

                SpO2 Range                                      70%-100%                0% to 69%
                Accuracy (plus or minus 1 Std. Dev.)*           plus or minus 2 digits  Unspecified

                Pulse Rate Range                                25-240 BPM
                Accuracy (plus or minus 1 Std. Dev.)*           plus or minus 4 BPM

                Neonates

                SpO2 Range                                      70%-95%                 0% to 69%
                Accuracy (plus or minus 1 Std. Dev.)*           plus or minus 3 digits  Unspecified

                Pulse Rate Range                                25-240 BPM
                Accuracy (plus or minus 1 Std. Dev.)*           plus or minus 4 BPM
</TABLE>

NOTE: The MS-1 pulse oximeter board is calibrated to read oxyhemoglobin
saturation (%SpO2) of functional hemoglobin as compared to a Nellcor N-200
pulse oximeter and/or a CO-Oximeter. Significant levels of dysfunctional
hemoglobin (e.g., methemoglobin, carboxyhemoglobin) may affect the accuracy of
the instrument. Indocynnine green, methylene blue, and other intra-vascular
dyes, depending upon their concentrations, may interfere with the accuracy of
the instrument. MS-1 performance will be compromised if there is no arterial
blood at the test site due to excessive patient motion (e.g., squeezing at a
pressure close to subject's diastolic blood pressure), ultra low perfusion,
excessive electrosurgical interference, or intense environmental illumination.

*   Testing is based on healthy adult volunteers in induced hypoxia studies with
    LNOP(R) Adt sensors; during no motion. Testing to verify saturation
    specifications is done against a Nellcor N-200 pulse oximeter and/or a
    CO-Oximeter. Testing to verify pulse rate specification is done against a
    Nellcor N-200 pulse oximeter and/or an ECG.

                                      [**]

** Confidential material redacted and filed separately with the Commission.

<PAGE>   30

MS-1 HARDWARE:

      POWER CONSUMPTION                 less than or equal to 2.3 Watts (typ)
                                        = 2.5 Watts (max)
      STORAGE ENVIRONMENT
              Temperature Range         -50 - 100 degrees C
              Relative Humidity           0 - 97% non-condensing
              Atmospheric Pressure       50 - 113 kPa

      OPERATING ENVIRONMENT
              Temperature Range          0 - 70 degrees C
              Relative Humidity          0 - 97% non-condensing
              Atmospheric Pressure      68 - 113 kPa

      MTBF                              150,000 hours minimum
                                        (Ground Benign)

      FAILURE COVERAGE                  Single Fault Coverage

PLETHYSMOGRAPHIC WAVEFORM SPECS

<TABLE>
<CAPTION>

WAVEFORM TYPE        RANGE          RESOLUTION                     BANDWIDTH                                DELAY
-------------        -----          ----------                     ---------                                -----
<S>                 <C>       <C>                      <C>

Raw Signal           0 to 1   2(-7), 2(-15), 2(-31)    Hz - greater than or equal to 8 Hz       less than or equal to 0.60 sec
Band Pass Signal    -1 to 1   2(-7), 2(-15), 2(-31)    less than or equal to .7 Hz -            less than or equal to 2.25 sec
                                                               greater than or equal to 4 Hz
Autoscaled Signal   -1 to 1   2(-7), 2(-15), 2(-31)    less than or equal to .7 Hz -            less than or equal to 2.50 sec
                                                               greater than or equal to 4 Hz
</TABLE>

<TABLE>
<CAPTION>
                                                TYPICAL HEAT
  SENSOR          DESCRIPTION                   DISSIPATION                             MAXIMUM SKIN TEMP AT SITE
  ------          -----------                   ------------                            -------------------------
<S>             <C>                    <C>                              <C>

LNOP(R) DC-1    Adult Reusable         less than or equal to 50 mW     less than or equal to 41 degrees C @ 37 degrees C Ambient
LNOP(R) Adt     Adult Disposable       less than or equal to 50 mW     less than or equal to 41 degrees C @ 37 degrees C Ambient
LNOP(R) Neo     Neonatal Disposable    less than or equal to 50 mW     less than or equal to 39 degrees C @ 37 degrees C Ambient
LNOP(R) NeoPt   Neonatal Disposable
                (Pre-Term)             less than or equal to 50 mW     less than or equal to 39 degrees C @ 37 degrees C Ambient
LNOP(R) Neo     Pediatric Disposable   less than or equal to 50 mW     less than or equal to 41 degrees C @ 37 degrees C Ambient
</TABLE>

<PAGE>   31
                                   EXHIBIT H

                           END-USER LICENSE AGREEMENT

        THIS DOCUMENT IS A LEGAL AGREEMENT BETWEEN YOU, THE "PURCHASER", AND
ZOLL. IF YOU DO NOT AGREE TO THE TERMS OF THIS AGREEMENT, PROMPTLY RETURN THE
ENTIRE PACKAGE, INCLUDING ALL ACCESSORIES, IN THEIR ORIGINAL PACKAGE, WITH YOUR
SALES RECEIPT TO ZOLL FOR A FULL REFUND.

1.      Grant of License. In consideration of payment of the license fee, which
is part of the price paid for this product, ZOLL grants to Purchaser a
nonexclusive license, without right to sublicense, to use the copy of the
incorporated software/firmware, and documentation in connection with Purchaser's
use of the MASIMO Products for their labeled purpose. ZOLL reserves all rights
not expressly granted to Purchaser.

2.      Ownership of Software/Firmware. Title to, ownership of, and all rights
and interests in, any MASIMO software and/or firmware and the documentation, and
all copies thereof, remain at all times vested in MASIMO Corporation, licensor
to ZOLL, and they do not pass to Purchaser.

3.      Assignment. Purchaser may assign or transfer this License except to a
person or entity engaged in the development of software/firmware competitive
with the software/firmware incorporated in this product.

4.      Copy Restrictions. The software/firmware and the accompanying written
materials are copyrighted. Unauthorized copying of the software, including
software that has been modified, merged, or included with other software, or
other written materials is expressly forbidden. You may be held legally
responsible for any copyright infringement that is cause or incurred by your
failure to abide by the terms of this license. Nothing in this license provides
any rights beyond those provided by 17 U.S.C. Section 117.

5.      Use Restriction. As the Purchaser, you may physically transfer the
products from one location to another provided that the software/firmware is not
copied. You may not electronically transfer the software/firmware from the
products to any other device. You may not disclose, publish, translate, release
or distribute copies of the software/firmware or accompanying written materials
to others. You may not modify, adapt, translate, reverse engineer, decompile,
disassemble, or create derivative works based on the software/firmware. You may
not modify, adapt, translate, or create derivative works based on the written
materials without the prior written consent of ZOLL.

6.      Beneficiary. Masimo Corporation is a Beneficiary of this Agreement and
has the right to enforce its provisions.<PAGE>   1

                                                                  EXHIBIT 10.10

CROSS-LICENSING AGREEMENT, DATED 5/2, 1998, BETWEEN MASIMO LABORATORIES AND
MASIMO CORPORATION.

CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTIONS OF THIS DOCUMENT HAVE
BEEN REDACTED AND HAVE BEEN SEPARATELY FILED WITH THE COMMISSION.
<PAGE>   2
                                                                   EXHIBIT 10.10

                           CROSS-LICENSING AGREEMENT

                                     BETWEEN

                               MASIMO LABORATORIES

                                       AND

                               MASIMO CORPORATION

                                 DATED 5/2, 1998

<PAGE>   3

                            CROSS-LICENSING AGREEMENT

         THIS CROSS-LICENSING AGREEMENT ("Agreement") is made and entered into
  as of this 2nd day of May, 1998, by and between MASIMO LABORATORIES, a
  Delaware corporation ("LABS"), and MASIMO CORPORATION, a Delaware corporation
  ("MASIMO"), with reference to the following:

  RECITALS:

         A. MASIMO has developed a new technology ("Masimo Technology" as
  defined herein). Masimo Technology incorporates circuitry and software which,
  among other things, acquires and detects signals generated by red and infrared
  LEDs, and which is designed to extract arterial oxygen saturation and pulse
  rate values from such signals.

         B. LABS desires a license to MASIMO Technology for certain applications
 other than Vital Signs Monitoring.

         C. LABS further desires a license to make, use and sell devices which
  incorporate MASIMO Technology for Vital Signs Monitoring for distribution
  throughout the world.

         D.  MASIMO desires an option to purchase a license to technology
 developed by LABS for use in blood glucose monitoring applications in the
 hospital market.

         E.  MASIMO has acquired substantial Know-How (as defined below) in
 extracting signals from signals contaminated by noise.

         F.  MASIMO has acquired and expects to continue to acquire a
 reputation for excellence, and its Trademark has and will continue to acquire
 valuable goodwill.

         NOW, THEREFORE, in consideration of the premises and the mutual
  covenants hereinafter set forth, LABS and MASIMO hereby agree as follows:

         1. DEFINITIONS. As used in this Agreement, the following terms, whether
  used in the singular or the plural shall have the following meaning:

               1.1 Accessory means cables (including but not limited to MASIMO's
        PC08 and PC12 8-foot and 12-foot patient cables, or any other accessory
        manufactured by MASIMO and used with any of the SpO(Sub 2) Sensors.

               1.2 Average Selling Price means the total amount, in dollars
        (based upon the first sale to arms-length customers), for Products
        divided by the number of Products sold that quarter, on a Product by
        Product basis.

              1.3 Distributor means a party that markets Licensed Devices or
        Stand Alone Licensed Devices to End-Users on behalf of LABS or a
        customer of LABS that buys Licensed Devices or Stand Alone Licensed
        Devices from LABS, private labels such devices, and markets such
        Licensed Devices or Stand Alone Licensed Devices to End-Users.

            1.4 End User is a direct user of Licensed Devices or Stand Alone
        Licensed Devices in a clinical environment for medical diagnostic
        purposes on patients.

            1.5   Improvement means any invention, adaptation, modification
        or change.

                                       1
<PAGE>   4

         1.6 LABS Technology means technical information, inventions, concepts,
  products, components, trade secrets, know-how, techniques, designs, processes,
  communications protocols, software, Improvements, whether patentable or not,
  patents, patent applications, including any patents issuing thereon and any
  and all divisions, continuations and continuations-in-part thereof, and any
  and all reissues and reexaminations of any such patents, copyrights, copyright
  registrations and applications, and all other intellectual property rights
  conceived, originated, discovered, or developed by LABS, solely or jointly
  with others, or by others under LABS' direction during the term of this
  Agreement.

         1.7 Licensed Applications means use of MASIMO SET in all applications
  with the exception of applications for Vital Signs Monitoring.

         1.8 Licensed Devices means devices for-use in Licensed Applications,
  alone or in combination with MASIMO Applications.

         1.9 Licensed Trademarks means the MASIMO SET product designation and
  word mark(s) set forth on Exhibit B.

         1.10   MASIMO Applications means use of MASIMO SET for Vital Signs
  Monitoring.

         1.11 MASIMO Confidential Information means confidential information and
  proprietary material of MASIMO and includes, but is not limited to, the
  following types of information and other information of a similar nature:
  ideas, concepts, materials, techniques, models, data, designs, documentation,
  flow charts, budgets, projections, forecasts, marketing and development plans,
  the Masimo Technology, the Software, communication protocols, and testing
  procedures.

         1.12 MASIMO Technology means technical information, inventions,
  concepts, products, components, trade secrets, know-how, techniques, designs,
  processes, communications protocols, the Software, whether patentable or not
  patent applications, copyright applications, the Patent Rights, and copyrights
  and all other intellectual property rights relating to MASIMO SET alone or
  incorporated in MS Boards, SpO(Sub 2). Sensors, Improvements to the above and
  related documentation generated or acquired by MASIMO prior or subsequent to
  the effective date of this Agreement.

         1.13 MS Boards means MASIMO's standard circuit board or chip set which
  contains MASIMO SET and algorithms necessary to process the information
  transmitted from the SpO(Sub 2) Sensor and convert it into SP0(Sub 2)
  Measurements.

         1.14 Net Selling Price means the total sales revenue (including any
  amounts received for rental or leasing of the Licensed Devices by LABS) for
  the product in question, excluding charges for returns, outbound prepaid or
  allowed transportation charges, sales taxes, tariffs or duties directly
  imposed with reference to particular sales or similar items. Net Selling Price
  shall only include one sale per Licensed Device.

        1.15 Party means LABS or MASIMO; Parties means LABS and MASIMO.

        1.16 Patent Rights means all patents owned by MASIMO on technology
  developed by MASIMO which cover Licensed Applications and MASIMO Applications.
  The present patent numbers and patent application are set forth on Exhibit C
  to this Agreement.

        1.17   Products are MS Boards, SpO(Sub 2) Sensors and Accessories.

                                       2
<PAGE>   5

         1.18 Software means any and all computer/instrument software and/or
  firmware owned by or licensed to MASIMO that is used or useful in connection
  with MASIMO Technology for use in any Licensed Application and MASIMO
  Applications, including any and all future updates, revisions and Improvements
  thereto, all in source code and object code format, and all written
  documentation relating to such software.

         1.19 SpO(Sub 2), Measurement means noninvasive measurement of arterial
  oxygen saturation (accounting for at least Hb and HbO(Sub 2), and possibly
  accounting for HbCO and/or HbMeth), plethysmographic waveforms, and/or pulse
  rate from neonate, pediatric and adult subjects (excludes fetal measurement
  and venous oxygen saturation).

         1.20 SpO(Sub 2) Sensor means reusable and disposable standard adult,
  pediatric and neonatal Sensors for use with making SpO(Sub 2) Measurements.
  Standard SpO(Sub 2) Sensors currently manufactured by Masimo have the
  following model number

         LNOP(R)-NEO-PT      Disposable Neonatal Sensor (preterm)
         LNOP(R)-NEO         Disposable Neonatal Sensor
         LNOP(R)-Adt         Disposable Adult Sensor
         LNOP(R)-Pdt         Disposable Pediatric/Slendor Digit Sensor
         LNOP(R)-DC1         Reusable Adult Finger Clip Sensor

         Masimo intends to produce additional standard models of SpO(Sub 2)
  Sensors. As Masimo produces such additional models, the Parties agree to
  negotiate in good faith their pricing for this agreement.

         1.21 Stand Alone Licensed Devices means LABS' completed patient monitor
  devices which do not incorporate a Licensed Application but incorporate MS
  Boards to provide SpO(Sub 2) Measurements. Stand Alone Licensed Devices shall
  not include any methods or devices other than MS Boards to account for Hb and
  HbO(Sub2) in arterial blood oxygen saturation.

         1.22 Standard Cost means the cost for direct materials and labor,
  overhead and administration, in accordance with generally accepted accounting
  principal

         1.23 LABS Confidential Information means confidential
  information and proprietary material of LABS and includes, but is not limited
  to, the following types of information and other information of a similar
  nature: ideas, concepts, materials, techniques, models, data, designs,
  documentation, flow charts, budgets, projections, forecasts, marketing and
  development plans, communication protocols and testing procedures.

         1.24 Vital Signs Monitoring means SPO(Sub 2) Measurement peripheral
  venous oxygen saturation measurement, mixed venous oxygen saturation
  measurement fetal oximetry, Sudden Infant Death Syndrome "SIDS") monitoring
  ECG, blood pressure (non-invasive blood pressure, invasive blood pressure and
  continuous non-invasive blood pressure), temperature and respiration
  monitoring.

  2.     LICENSES GRANTED TO LABS

         2.1    Licenses Granted to LABS.

                2.1.1 MASIMO grants to LABS an exclusive (including of MASIMO),
         perpetual, worldwide license to (i) use the MASIMO Technology to
         develop Licensed Applications alone or combined with MASIMO
         Applications and to develop Licensed Devices, (ii) to make, have made,
         use, and sell Licensed Devices, (iii) to sublicense the MASIMO

                                       3
<PAGE>   6

         Technology for the development of or for use in Licensed Applications
         and Licensed Devices, and (iv) to sublicense the use, manufacture and
         sale of Licensed Devices.

               2.1.2 MASIMO further grants to LABS an exclusive, perpetual,
         worldwide license to copy, modify, and make derivative works of the
         Software for incorporation into Licensed Devices, to distribute the
         Software in conjunction with a transfer of a Licensed Device to
         End-Users and Distributors, and to sublicense the right to copy and
         modify the Software for incorporation into Licensed Devices.

               2.1.3 MASIMO further grants to LABS the right to incorporate MS
         Boards into Stand Alone Licensed Devices and to make, have made, use
         and sell such Stand Alone Licensed Devices to Distributors, to End
         Users of such devices and through other patient monitoring companies
         (including, but not limited to, in a private label contract which does
         not include LABS name). LABS shall also have the right to sublicense to
         one subsidiary, affiliated company, or entity under common control with
         LABS at the time of the sublicense, its right to incorporate MS Boards
         into Stand Alone Licensed Devices and to make, have made, use and sell
         Stand Alone Licensed Devices.

               2.1.4 LABS agrees to distribute (i) Stand Alone Licensed Devices
         and (ii) Licensed Devices which include MASIMO Applications in
         conjunction with and by providing the end-user with an end-user
         agreement materially equivalent to the "License Agreement" that is
         attached hereto as Exhibit D.

               2.1.5 MASIMO retains all rights, title, and interest in the
         Masimo Technology, including, without limitation, all patents,
         copyrights, trade secrets, and any other intellectual property and
         proprietary rights. Nothing in this Agreement should be construed as a
         sale of the Software or any copy of the Software.

               2.1.6 LABS agrees that the Masimo Technology contains trade
         secrets and proprietary information belonging to MASIMO. LABS agrees to
         maintain the confidential nature of such trade secrets and proprietary
         information and agrees not to use, print, copy, provide, or otherwise
         make available, in whole or in part, any portion of the Software or
         related materials except with an accompanying confidentiality
         agreement.

     2.2 Limitations of License Granted. LABS' license under this Agreement
does not include the right to sell MS Boards or SpO(Sub 2) Sensors on an OEM
basis unless such sale is for integration into a Licensed Device, or in
connection with a sublicense of Stand Alone Licensed Devices.

     2.3 Trademarks, Legends and Logos.

               2.3.1 No Implied License. LABS agrees to include the following
         legend on the exterior of or in manuals or other documentation provided
         with Licensed Devices which include Masimo Applications and Stand Alone
         Licensed Devices which it sells directly.

               NO IMPLIED LICENSE

               Possession or purchase of this device does not convey any express
               or implied license to use the device with replacement parts which
               would, alone, or in combination with this device, fall within the
               scope of one or more of the patents relating to this device.

         A sample label is shown in Exhibit B. LABS agrees to use reasonable
         efforts to cause all sublicensees to include this or a similar legend
         on devices containing MASIMO Technology or in the use manuals or other
         documentation shipped with such instruments.

                                       4
<PAGE>   7

      2.3.2 Grant by Masimo. MASIMO hereby grants to LABS a perpetual,
nonexclusive license, including the right to grant sublicenses, to use the
Licensed Trademarks in connection with the Licensed Devices, Stand Alone
Licensed Devices, and any products or services within the Licensed Applications,
and in connection with the design, manufacture, distribution, advertisement,
promotion, sale and offering for sale of its Licensed Devices, Stand Alone
Licensed Devices and any other products or services within the Licensed
Applications. MASIMO also grants to LABS a perpetual, non-exclusive license to
use the trademark "MASIMO" and the Masimo Product Designation as part of its
trade and company name.

      2.3.3 Quality Control - Tradename. LABS agrees that its use of the
tradename "MASIMO" and the accompanying Masimo Product Designation will adhere
to the same high quality standards which MASIMO has provided in connection with
its products and services on the date of this Agreement. MASIMO shall have the
right upon its reasonable request, to inspect and approve samples of goods and
services offered in connection with the use of the term "MASIMO" and/or the
Masimo Product Designation, and to exercise quality control with resect thereto.
If MASIMO requests samples, MASIMO's approval is deemed if the use is not
disapproved within five (5) business days. If MASIMO disapproves of a use of
MASIMO as a trade or company name due to inadequacy of quality, MASIMO may
provide detailed written notice to LABS of the quality issue. LABS will have
three months from notice from MASIMO to bring the quality up to standard or to
cease any further use of the term MASIMO and the Product Designation as a
tradename until MASIMO has indicated that it is satisfied with the deficiencies
have been corrected. Termination of the right to use MASIMO and the Masimo
Product Designation as part of a tradename shall not affect the remaining terms
of this Agreement and shall not affect Licensed Devices and Stand Alone Licensed
Devices.

      2.3.4 Quality Control - Devices. LABS agrees that the Licensed Devices and
Stand Alone Licensed Devices bearing the Licensed Trademark, and any products or
services of LABS associated with the Licensed Trademarks shall be of a high
standard of quality, so as to protect and enhance the goodwill pertaining to the
Licensed Trademarks. MASIMO has the right to inspect the manufacturing and
distribution points of LABS for products bearing Licensed Trademarks, at any
reasonable time, to ensure the ongoing quality of the Licensed Devices, Stand
Alone Licensed Devices, and any products or services offered under the MASIMO
name. Should MASIMO at any time determine that the quality of any Licensed
Device, Stand Alone Licensed Device or any product or service offered under the
MASIMO name, does not adhere to MASIMO's quality standards, MASIMO will provide
written detailed notice to LABS. LABS shall have three months from such notice
to bring the quality of such Licensed Device, Stand Alone Licensed Device,
other product or service up to standard or to cease any further use of the
Licensed Trademark in connection with the promotion or sale of such device or
product until MASIMO has indicated that it is satisfied that the deficiencies in
quality of the Licensed Device have been corrected. For any sublicenses granted
under the Licensed Trademarks, LABS agrees to use its best efforts to coordinate
quality control consistent with this Section 2.3.4 over the manufacture,
advertisement, promotion and sale of the License Devices, Stand Alone Licensed
Devices, and any products or services within the Licensed Applications offered
in connection with the Licensed Trademarks by the sublicensee.

      2.3.5 Delivery of LABS Systems to MASIMO. LABS agrees to make available to
MASIMO, upon request, one (1) production sample of each Licensed Device and
Stand Alone Licensed Devices which includes a MASIMO Application. In order to
ensure the quality of the MASIMO Application in the Licensed Devices, MASIMO
will have the right to test this Licensed Device or Stand Alone Licensed Device
and to approve the

                                       5
<PAGE>   8

functionality of MASIMO SET for the MASIMO Application in such production
Licensed Device. Such approval will not be unreasonably withheld. In the event
that any of the Licensed Devices or Stand Alone Licensed Devices do not meet
specifications, LABS will have three months from notice from MASIMO to bring the
quality of such Licensed Device or Stand Alone Licensed Device up to standard or
to cease any further use of the Licensed Trademark in connection with the
promotion or sale of such Licensed Device or Stand Alone Licensed Device until
MASIMO has indicated that it is satisfied with the deficiencies and quality of
the Licensed Device has been corrected. After such testing, the Licensed Device
or Stand Alone Licensed Device may remain with MASIMO for further technical
assistance and as a demonstration unit as long as this Agreement is in effect.

       2.3.6 Trademark Marking. LABS agrees that it shall use the Masimo
Product Designation set forth in Exhibit B on all Licensed Devices which include
a Masimo Application and which as marketed directly by LABS, and all Stand Alone
Licensed Devices which are marketed directly by LABS in a plainly visible site
associated with the Masimo Application. Prior to any such use, LABS shall obtain
consent from MASIMO as to the use and location of the Licensed Trademark, which
consent shall not be unreasonably withheld. LABS shall use reasonable efforts to
cause all sublicensees and Distributors to include such MASIMO Product
Designation in accordance with this provision.

      2.3.7 Advertising. All advertising directly by LABS for Licensed Devices
and Stand Alone Licensed Devices which include MASIMO Applications must include
one or more of the Licensed Trademarks. LABS agrees to use reasonable efforts to
have sublicensees and Distributors comply with the provisions of this section.

      2.3.8 Except for the LABS trademark and/or trade names or LABS
sublicensees' or Distributors trademarks or trade names, the Licensed Trademarks
may not be used in direct combination with other trade names, trademarks or
symbols.

      2.3.9 LABS agrees not to use the Licensed Trademark in any way which might
endanger MASIMO's rights in and ownership of the Licensed Trademark.

     2.3.10 The expense of obtaining and maintaining Licensed Trademark
registrations shall be borne by MASIMO.

     2.3.11 Trademark Rights on Change in Control. In the event of a change In
control of MASIMO, and the acquiring entity or party ceases to use MASIMO as a
company name, all rights to the MASIMO trademark shall be and are hereby
assigned to LABS including all goodwill associated with the trademark. In such
event, LABS grants to MASIMO a license to use the MASIMO Product Designation in
connection with the sale of devices for MASIMO Applications. In such event,
quality control passes to LABS with the rights as set forth in Section 2.3.3 in
LABS control instead of MASIMO'S control.

     2.3.12 Patent Marking. LABS agrees to mark each Licensed Device containing
a Masimo application and Stand Alone Licensed Devices manufactured or sold by it
in accordance with the Statutes of the United States relating to marking of
patented articles. MASIMO will, from time to time, update its patent numbers for
LABS as patents issue. When MASIMO updates its patent numbers, LABS's obligation
to update its product marking shall occur upon the earlier of the exhaustion of
labels for Licensed Devices bearing the current patent numbers or one year from
the update by MASIMO. The Initial Patent marking is shown in Exhibit B. LABS
agrees to use reasonable efforts to cause its sublicensees and Distributors to
comply with this provision.

                                       6
<PAGE>   9

  3.    ROYALTIES

         3.1 Royalties to MASIMO For Licensed Devices. LABS shall pay to MASIMO
  royalties in the amount of the lesser of 10% of the Net Selling Price or $100
  per MASIMO Application for each Licensed Device sold or otherwise distributed
  by LABS which uses MASIMO Applications. This Royalty shall not apply if such
  Licensed Device uses an MS-Board or other coreprocessor board purchased from
  MASIMO.

         3.2 Royalties to MASIMO for integrated Consumable. LABS shall pay to
  MASIMO royalties in the amount of three percent (3%) of LABS' Net Selling
  Price of sensors or accessories which provide for SpO(Sub 2) Measurement in
  combination with other measurements in a Licensed Device.

         3.3 No Royalty on Stand Alone Licensed Devices and Products. No
  royalty is payable by LABS for Products or Stand Alone Licensed Devices.

         3.4 Quarterly Accounting. The Parties agree to provide the other Party
  with a quarterly accounting of total product shipments upon which a royalty is
  payable to the other Party, along with an accounting of the Net Selling Price
  for such products. LABS shall also include in the accounting sufficient
  information regarding LABS Average Selling Price to permit MASIMO to verify
  margin splits, if such splits are elected. If margin split is checked by LABS,
  MASIMO shall provide, as part of its accounting, its standard cost.

         3.5 Audit Rights. Each Party shall have the right to verify, at the
  requesting Party's expense, and not more frequently than once per year and
  upon not less than ten (10) business days prior written notice to the other
  Party, the accuracy of the accounting reports provided by the other Party
  hereunder, through inspection of the other Party's pertinent records and books
  of accounts maintained in the ordinary course of business. Such audit shall be
  conducted by a certified public accountant (the "CPA") chosen by the
  requesting Party in it reasonable discretion, and which CPA is reasonably
  acceptable to the Party being audited. The requesting Party shall pay all
  costs, expenses and fees of the CPA unless the audited Party has understated
  royalties or other payments owing to the requesting Party by more than five
  percent (5%), in which event the CPA's costs, fees and expenses shall be paid
  by the audited Party.

  4.     OPTION GRANTED TO MASIMO

         4.1 Option. LABS grants to MASIMO an option to purchase a license to
  make, use and sell devices incorporating LABS Technology for use in blood
  glucose measurement applications devices and total hemoglobin measurement
  applications devices for marketing or other distribution directly to, and only
  for use in, hospitals.

         4.2 Option Fee. MASIMO agrees to fund research and development
  conducted by LABS related to, among other things, noninvasive blood glucose
  measurement, for a period of up to two (2) years following the effective date
  of this Agreement, and in an amount of two million dollars ($2,000,000). LABS
  will request reimbursement for such research costs no more often than monthly,
  and MASIMO shall reimburse LABS for such research within 30 days following
  receipt of such request for reimbursement. MASIMO understands that LABS has no
  proof of concept for glucose and total hemoglobin measurements.

         4.3 Exercise of the Option. Provided MASIMO has paid the Option Fee set
  forth above, the option described herein shall be exercisable upon delivery of
  written notice thereof to LABS within the earlier of LABS providing reasonable
  proof of feasibility for noninvasive glucose measurement or non-invasive
  hematocrit measurement or fifteen (15) days after the two (2) year

                                       7
<PAGE>   10
anniversary of the effective date of this Agreement. After such time, the option
irrevocably expires.

     4.4 License Terms. Upon exercise of the option, LABS shall grant to MASIMO
the license to make, use and sell devices incorporating LABS Technology for use
in blood glucose measurement and total hemoglobin measurement applications for
distribution directly or through distributors to hospitals, only for use in
hospitals ("Hospital Glucose Devices"). Such license shall be exclusive for the
earlier of three (3) years following the date that such devices are ready for
sale in such market, or four (4) years from the date that LABS makes the
technology available to MASIMO. Thereafter, this license shall be nonexclusive.
Such license shall include the right to sell such devices on an OEM basis
(excluding companies in glucose monitoring business) to no more than two OEM
companies at any one time. At the initiation of the exclusive license, MASIMO
agrees to pay LABS five million dollars ($5,000,000) in monthly payments over a
period of two years as a license fee. Such license will require MASIMO to pay to
LABS royalties in the amount of ten percent (10%) of the Net Selling Price of
products incorporating the LABS Technology for use in blood glucose measurement
and total hemoglobin applications and ten percent (10%) of the Net Selling Price
of sensors and accessories incorporating the LABS Technology for use in blood
glucose and total hemoglobin measurement applications. The Parties understand
that the exclusivity in this license to MASIMO will in no way preclude LABS from
conducting testing and studies in hospitals relating to blood glucose and total
hemoglobin measurement. Upon exercise of the option, the provisions of Section
2.3, except 2.3.2 and 2.3.3, shall apply in reverse with respect to the LABS
trademarks and any LABS product designation, as required by LABS,

     4.5 Payment on Change in Control. Upon any change in control of Masimo
(defined as a change in ownership of more than 50% of masimo's assets or stock),
the option of Sections 4.3 and 4.4 is automatically exercised, unless objected
to by LABS. Upon such change in control, MASIMO agrees to pay LABS the five
million dollars ($5,000,000) license fee of Section 4.4 immediately.

     4.6 Minimum Royalties. In addition to the license fee, MASIMO agrees to the
minimum yearly royalties set forth below. These royalties begin upon the first
commercial sale of any device by MASIMO including LABS Technology, but not later
than one year after LABS delivers a pilot prototype production core processor
board and sensor for either noninvasive glucose measurement or hematocrit.
Subsequent year payments are due within thirty (30) days of the anniversary of
the first commercial sale. Failure to pay the minimum royalties automatically
converts MASIMO'S license-to non-exclusive.

<TABLE>
<CAPTION>
         Year 1              Year 2             Year 3            Year 4
         ------              ------             ------            ------
         <S>                 <C>                <C>               <C>
         $150,000            $500,000           $1,000,000        $2,000,000
</TABLE>

     4.7 Termination of Exclusivity. The exclusivity of Section 5.4 above shall
terminate if MASIMO is not aggressively marketing a device incorporating LABS
Technology for use in blood glucose measurement or total hemoglobin measurement
within one (1) year of the grant of such license, as follows:

         LABS must first notify MASIMO of its intent to cancel the exclusivity.
     MASIMO shall have sixty (60) days to cure its failure to aggressively
     market such devices. If MASIMO has not cured its failure within such sixty
     (60) day period, LABS may terminate the exclusivity on written notice to
     MASIMO of such termination. In the event that LABS and MASIMO disagree as
     to whether MASIMO is aggressively marketing such devices, the

                                       8
<PAGE>   11

        Party shall submit the disagreement to an independent three-member panel
        (the "Panel"). Each Party shall select one member of the Panel, and the
        two members shall select a third member. No Panel member may be an
        employee, officer, director, or owner of any shares of either Party, or
        related to any employee, officer, director or owner of any shares of
        either Party, or otherwise affiliated with either Party such that such
        affiliation would tend to influence such person's ability to
        independently evaluate this issue.

        4.8 Delivery of MASIMO Systems to LABS. MASIMO agrees to make available
to LABS upon request, one (1) sample of each device of MASIMO which includes
blood glucose measurement and/or hemoglobin measurement based upon the LABS
Technology. LABS will have the right to test this device and to approve the
functionality of LABS Technology in such device. Such approval will not be
unreasonably withheld. After such testing, the device may remain with LABS, at
LABS' option, for further technical assistance and as a demonstration unit as
long as this Agreement is in effect.

5.      Purchase and Sale of Products

        5.1 Purchase of Products. During the term of this Agreement and in
accordance with its provisions, the purchase and sale of Products between the
parties shall be made by means of purchase orders placed by one Party or its
designee to the other Party. For purposes of the Products, the minimum quantity
of Products that may be purchased on a purchase order is 50 units of a
cable-part number, or reusable sensor or MS Board and 500 units of disposable
sensors. Purchase orders issued before expiration or termination of this
Agreement calling for delivery in ninety (90) days or less are non-cancelable.
Purchase orders to MASIMO calling for delivery in more than ninety (90) days
shall be alterable and cancelable by LABS until ninety (90) days prior to the
shipment date, after which such purchase orders become binding.

        5.2 Emergency Orders. Purchase orders placed by LABS shall not prevent
LABS from placing emergency orders for units of the Products for delivery in
less than ninety (90) days. MASIMO agrees to use reasonable efforts to delivery
such Products on the requested schedule.

        5.3 Price. MASIMO's transfer price for the Products delivered to LABS in
accordance with the terms of this Agreement shall be as set forth on Exhibit E.
All prices are F.O.B. MASIMO's manufacturing facility or distribution point in
the United States. The transfer price for SpO(sub 2). Sensors and Accessories
includes packaging and labeling with LABS-supplied artwork and logos complying
with MASIMO Standard Packaging Guidelines. The transfer price does not include
custom packaging or labeling for SpO(sub 2) Sensors, Accessories, or MS Boards.
If custom labeling for SpO(sub 2). Sensors or Accessories is desired and
feasible as determined by MASIMO, all costs associated with such labeling will
be paid by LABS. Payment by LABS to MASIMO shall be made forty-five (45) days
following receipt of invoice by LABS.

        5.4  Currency Basis.  Prices for the Products to LABS shall be in
 United States dollars.

        5.5 Taxes and Levies. All payments to LABS or to MASIMO under this
Agreement are exclusive of taxes and each party shall be responsible for paying
all taxes relating to products marketed by that party (except taxes based upon
the other party's income), including but not limited to all sales, use, personal
property, customs, duties, assessments, levies, and other government impositions
of any nature.

        5.6 Transportation. The method of transportation and carrier selected
for Products purchased by LABS shall be as specified by LABS in its purchase
orders. Unless otherwise agree, all transportation charges for Products,
including insurance, levies, and taxes, shall be paid by LABS.

                                       9
<PAGE>   12

        5.7 Packaging. MASIMO shall package the Products for shipment. Each
shipment shall include a packing list containing: (i) purchase order number;
(ii) model number of the Products; (iii) quantity; (iv) serial number or lot
code of shipped Products; and (v) certificates of compliance for the applicable
quality assurance test performed for the Products being shipped.

        5.8 Delivery. MASIMO shall use reasonable commercial efforts to fill all
purchase orders for Products by delivery dates and in the quantity specified by
LABS in its purchase orders. Notwithstanding the above, MASIMO shall have no
obligation to deliver Products in less than ninety (90) days from confirmation.
If a purchase order by LABS calls for more than a 25% increase as compared to
the previous three (3) month average of Products ordered, on a
Product-by-Product basis, MASIMO shall use reasonable commercial efforts to
deliver an amount at least equal to the previous three (3) month average within
ninety (90) days, and shall use reasonable commercial efforts to ship the
remainder within one hundred twenty (120) days of receipt of the purchase order.

6.      COMPATIBILITY

        6.1 MASIMO Probes. LABS agrees that it will not design or modify SpO(sub
2) Sensors to be used with other than the MS Boards or other Boards designed by
MASIMO for MASIMO Applications. LABS will purchase Sensors for MASIMO
Applications from MASIMO unless the measurements for MASIMO Applications and
Licensed Applications are best integrated in one sensor. In such case, LABS may
manufacture integrated sensors and pay MASIMO a royalty of three percent (3%) of
LABS' Net Selling price of integrated sensors. MASIMO SET will be enabled for
SpO(sub 2). Sensors or other sensors which include MASIMO Applications
measurement capability.

        6.2 Engineering Support. During the period that MASIMO is funding LABS'
research and development, MASIMO shall provide engineering support to LABS for
the integration of MASIMO SET into Licensed Devices and Stand Alone Licensed
Devices. MASIMO shall deliver a copy of all Software for MASIMO SET and
sufficient information and documentation to permit LABS to reasonably use and
modify such Software and to reasonably use and modify the Masimo Technology.
Masimo shall continue to deliver, as reasonably requested by LABS, sufficient
information and documentation to permit LABS to reasonably use Masimo Technology
in accordance with the terms of this Agreement

7.      INSPECTION AND ACCEPTANCE

        7.1 MASIMO Inspection. MASIMO shall provide and maintain an inspection
procedure and quality assurance program for the Products and its production
processes. Complete records of all inspection and quality assurance work done by
MASIMO shall be made available to LABS upon its request at reasonable times
during the term of this Agreement

        7.2    LABS Inspection

               7.2.1 LABS may inspect the Products upon receipt Any of the
        Products or lots of Products ("Lot") which materially fail to meet the
        specifications set forth in Exhibit E may be rejected by LABS and
        returned to MASIMO for replacement. Prior to returning any Products to
        MASIMO, LABS shall notify MASIMO by facsimile that LABS has rejected the
        Products, inclusive of the reason or basis of such rejection. Within
        five (5) working days of the receipt of the notification, MASIMO will
        issue a "Return to Vendor" ("RTV") number to LABS by facsimile, which
        RTV number will be LABS' authorization to return the Products.

               7.2.2  LABS shall promptly notify MASIMO of any incoming Lot
        failure. Products which do not conform to MASIMO's specifications shall
        be returned by LABS to

                                       10
<PAGE>   13
     MASIMO freight collect and insured for full replacement value. Within
     twenty (20) days after the date of receipt of the nonconforming Products by
     MASIMO, replacement Product will be shipped to LABS at MASIMO's expense.
     Should MASIMO fail to replace rejected Products by shipping conforming
     Products to LABS within thirty (30) days of its receipt of the
     nonconforming Products, LABS shall have the option to cancel without cost
     or liability the purchase of such Products and receive, at LABS' option, a
     credit or rebate if payment has been made. LABS shall pay freight charges,
     insurance and other customary charges for transportation for improperly
     rejected Products.

             7.2.3 All costs to replace including transportation with respect to
        the defective Products shall be the sole responsibility of MASIMO.

               7.2.4 If LABS attempts to correct deficiencies to the Products
        purchased under this Agreement without prior written authorization from
        MASIMO, then MASIMO shall have no further obligations with respect to
        such Products.

        7.3 Nonconforming Acceptance. LABS may choose to accept the Products
which fail to conform in a minor aspect to the specifications established by
this Agreement without prejudice to its right to reject nonconforming items in
the future. If LABS so chooses, LABS will notify MASIMO of its intent to
accept nonconforming items. However, MASIMO accepts not responsibility for
nonconforming items accepted by LABS.

8.      CONFIDENTIALITY

        8.1 MASIMO's Confidential Information. LABS shall not use MASIMO's
Confidential Information for any purpose other than exercising the rights
granted to LABS under this Agreement. LABS shall not disclose MASIMO's
Confidential Information to any third party without the prior written consent of
MASIMO.

        8.2 LABS's Confidential Information. Except as otherwise expressly
provided in this Agreement, MASIMO shall not use LABS's Confidential Information
for any purpose other than performance of this Agreement, without the prior
written consent of LABS. MASIMO shall not disclose LABS's Confidential
Information to any third party without the prior written consent of LABS.

        8.3 Neither Party's obligations under this confidentiality provision
shall apply to information that:

               8.3.1  prior to the transmittal was of general public knowledge;

               8.3.2  becomes a matter of general public knowledge otherwise
        than as a consequence of a breach under this Agreement;

               8.3.3  is made public by the Party claiming confidentiality;

               8.3.4  is required to be disclosed by applicable law; provided
        however, that the Party who may be required to disclose such information
        shall notify the other Party in sufficient time for the owner of such
        Confidential Information to file the appropriate documents with the
        court to obtain a protective order to enforce the confidentiality
        requirements of this Agreement;

               8.3.5 information which the receiving Party can establish by
        competent proof was in its possession at the time of disclosure by the
        disclosing Party and was not acquired, directly or indirectly, from the
        disclosing Party; or

                                       11
<PAGE>   14

                8.3.6 information which is received from a third party;
         provided, however, that the receiving Party has no reason to know such
         information was obtained by said third party, directly or indirectly,
         from the other Party under a nondisclosure agreement.

         8.4 Injunctive Relief. The Parties acknowledge that (a) the covenants
  set forth in this Section 7 ("CONFIDENTIALITY") are essential elements of this
  Agreement and that, but for the agreement of the Parties to comply with such
  covenants, this Agreement would not have been entered into; (b) neither Party
  will have any adequate remedy at law if the other Party violates the terms of
  this Section 7 ("CONFIDENTIALITY"); and (c) each Party shall have the right in
  addition to any other rights it may have, to obtain in any court of competent
  jurisdiction temporary, preliminary and permanent injunctive relief to
  restrain any breach, threatened breach, or otherwise to specifically enforce
  any, of the covenants in this Section, 7 ("CONFIDENTIALITY") if the other
  Party fails to perform any of such covenants under this Section 7
  ("CONFIDENTIALITY").

  9.    PROPRIETARY RIGHTS

        9.1 LABS Improvements for Licensed Applications. Any Improvement to
  MASIMO Technology or Labs Technology made by LABS, by MASIMO, or jointly by
  LABS with MASIMO or any third party, which relates to any Licensed
  Application, and any new technology acquired by LABS shall be the sole
  property of LABS, and LABS has the right to apply for copyrights, patents
  (including utility and design patents), or other protection for intellectual
  property rights anywhere in the world under its own name and at its own
  expense. LABS hereby grants to MASIMO, without additional compensation, a
  nonexclusive, nontransferable, perpetual license to make, use and sell devices
  consistent with the terms of the License granted to MASIMO in Section 4.4
  incorporating such Improvement for use in MASIMO Applications.

        9.2 MASIMO Improvements for MASIMO Applications. Any Improvement to
  MASIMO Technology made by MASIMO, LABS, or jointly by MASIMO with LABS or any
  third party, which relates to any MASIMO Application, shall be the sole
  property of MASIMO, and MASIMO has the right to apply for copyrights, patents
  (including utility and design patents), or other protection for intellectual
  property rights anywhere in the world under its own name and its own expense.
  MASIMO hereby grants to LABS, without additional compensation, a nonexclusive,
  perpetual license, with the right to grant sublicenses, in accordance with the
  provisions of Section 2.

        9.3 Further Action. LABS and MASIMO agree to take such further action
  and execute such further documents as reasonably necessary to establish
  ownership as set forth in Sections 9.1 through 9.3.

  10.   INDEMNIFICATION

        10.1 MASIMO will defend, indemnify and hold LABS harmless against any
  and all liability, loss, damages, costs or expenses which LABS may hereafter
  incur, as a result of any injury, illness or death of any person which is
  caused by any Product manufactured by MASIMO to the extent that such injury,
  illness or death resulted from MASIMO's Products. MASIMO shall have no
  liability or responsibility of any kind to LABS under this Section 9 unless
  LABS shall have notified MASIMO within a reasonable time of such claims, and
  shall have given MASIMO an adequate opportunity to defend, including complete
  control of such defense. Should LABS desire to have its own counsel
  participate in any such. action, the cost of such counsel shall be exclusively
  LABS's.

        10.2 LABS will defend, indemnify and hold MASIMO harmless against any
  and all liability, loss, damages, costs or expenses which MASIMO may hereafter
  incur, as a result of any injury, illness or death of any person which is
  caused by any product or device manufactured by

                                       12
<PAGE>   15

LABS and purchased by MASIMO from LABS, to the extent that such injury, illness
or death results directly from such products manufactured by LABS. LABS shall
have no liability or responsibility of any kind to MASIMO under this Section
unless MASIMO shall have notified LABS within a reasonable time of such claims,
and LABS shall have had an adequate opportunity to defend. Should MASIMO desire
to have its own counsel participate in any such action, the cost of such counsel
shall be exclusively MASIMO's.

        10.3 MASIMO shall settle or defend, at MASIMO's own expense, and pay any
damage, costs or fines resulting from all proceedings, threats of proceedings or
claims against LABS or its customers for infringement or alleged infringement by
the MASIMO Applications in Licensed Devices or Stand Alone Licensed Devices, of
intellectual property rights of third parties. LABS agrees to notify MASIMO
promptly in writing of any such proceeding, and to give MASIMO necessary
assistance where practical, to modify the MASIMO Technology to make it
noninfringing or, where practical, to obtain licenses under such intellectual
property rights.

        10.4 During and after the term of this Agreement, the Parties agree not
to challenge the validity of any of the patents of the other Party to which this
Agreement relates.

11.      REGULATORY COMPLIANCE

        11.1 LABS shall be solely responsible for identifying and obtaining, at
its sole cost and expense, all FDA and United States safety agency approvals and
any other agency or regulatory approvals which are required for the development,
manufacture or sale of the Licensed Devices and Stand Alone Licensed Devices.
MASIMO will reasonably cooperate with LABS by providing at no charge to LABS any
MASIMO data in its possession that is reasonably required to obtain the
regulatory approvals, including but not limited to 510(k) application materials
submitted by MASIMO for its own products that incorporate MASIMO Technology.
Disclosure to LABS of any such data shall be subject to the confidentiality
provisions of Section 7 ("CONFIDENTIALITY").

        11.2 LABS shall be solely responsible, at its sole cost and expenses,
(i) for identifying and obtaining any necessary approvals or certifications by
any non-U.S. governmental, safety or regulatory entity, including testing or
other procedures, for the sale by LABS of Licensed Devices and Stand Alone
Licensed Devices, (ii) for identifying and complying with any safety
precautions, safety markings, labels or consumer notices required for Licensed
Devices in any country other then the United States, and (iii) for assessing the
appropriateness of the Licensed Devices for any particular Customer application.
MASIMO will cooperate with LABS by providing any data in its possession that is
reasonably required to obtain such approvals or certifications. Disclosure to
LABS of any such data to any third party shall be subject to the confidentiality
provisions of Section 7 ("CONFIDENTIALITY).

        11.3 Masimo shall be solely responsible for identifying and obtaining,
at its sole cost and expense, all FDA and United States safety agency approvals
and any other agency or regulatory approvals which are required for the
development, manufacture or sale of Hospital Glucose Devices. LABS will
reasonably cooperate with MASIMO by providing at no charge to MASIMO any LABS
data in its possession that is reasonably required to obtain the regulatory
approvals, including but not limited to 510(k) application materials submitted
by LABS for its own products that incorporate LABS Technology for non-invasive
glucose measurements. Disclosure to MASIMO of any such data shall be subject to
the confidentiality provisions of Section 7 ("CONFIDENTIALITY").

        11.4 Regardless of any disclosure to MASIMO by LABS of an ultimate
destination of the Licensed Devices or the Software, LABS shall not transfer or
re-export, whether directly or indirectly, the Software or Licensed Devices
containing the Software, the related documentation, or other related proprietary
information to anyone outside the U.S. as to which export may be in

                                       13
<PAGE>   16

         violation of the United States Export Laws or regulations without first
         obtaining the appropriate license from the U.S. Department of Commerce
         and/or any agency or department of the U.S. government, as required.

         12.   INCIDENT REPORTING.  LABS represents that in addition to being
responsible for all regulatory approvals, that should any incidents of failure
of the Licensed Devices which include MASIMO Applications or Stand Alone
Licensed Devices or injury related to such devices be reported to LABS, that it
will promptly (i.e., within two (2) business days) notify MASIMO of any such
field performance problems or deficiencies.

         13.   TERMINATION

                13.1 Termination for Breach. The default by one Party of a
         material obligation of such Party under this Agreement shall entitle
         the other Party to give the Party in default written notice describing
         such default in detail (including all supporting documentation) and
         requiring it to remedy such default If such default is not fully
         remedied within ninety (90) days after the date of such notice, the
         notifying Party shall be entitled to, in addition to all other remedies
         available to such Party, terminate this Agreement by a written notice
         to the defaulting Party.

                13.2 Termination on Insolvency. Either Party may terminate this
         Agreement at any time upon or after the filing against the other Party
         by any third party of a petition in bankruptcy or insolvency, or upon
         or after any adjudication that the other Party is insolvent, or upon or
         after the filing by the other Party of any petition or answer seeking
         reorganization, readjustment or arrangement of the business of the
         other Party under any law relating to bankruptcy or insolvency, or upon
         or after the appointment of a receiver for all or substantially all of
         the property of the other Party of any assignment or attempted
         assignment for the benefit of creditors, or upon or after the
         institution of any proceedings for the liquidation or winding up of the
         other Party's business.

                13.3 Rights Upon Termination. In the event of any valid
         termination of this Agreement under Section 13.1 (Termination for
         Breach) or 13.2 ("Termination on Insolvency), each Party's rights under
         this Agreement shall be terminated except as follows: No termination of
         this Agreement shall terminate or otherwise impact LABS' rights under
         Sections 2.1.1, 2.1.2, 2.1.4, 2.3 or any sublicenses and private label
         patient monitoring company contracts under 2.1.3. No termination shall
         impact either Party's rights to collect for accrued royalties or the
         licenses granted in this Agreement which continue after termination on
         the terms and conditions existing upon termination.

         14. DISPUTE. If any dispute or difference shall arise between the
Parties concerning the construction of this Agreement or the rights or
obligations of either Party, the Parties shall strive to settle the same
amicably, but if they are unable to do so within ninety (90) days after such
dispute or difference has arisen, and any claim or cause of action shall be
filed in any court in Orange County, California, U.S.A. MASIMO and LABS each
consents to personal jurisdiction in any action brought in the United States
District Court for the Central District of California and to service of process
upon it in the manner set forth in Section 15.5 hereof ("Notice"). In the event
that such action should be brought in a state court, LABS and MASIMO each
consents to personal jurisdiction in any action brought in Municipal Court or
Superior Court of the State of California in the County of Orange and to service
of process upon it in the manner set forth in Section 15.5 ("Notice") of this
Agreement.

         15.  MISCELLANEOUS

                15.1 Nonassignability. Except in connection with the sale of all
         or substantially all of the assets or business of MASIMO to which this
         Agreement relates, MASIMO may not assign this Agreement. LABS may
         freely assign this Agreement. This Agreement will inure to the benefit
         of and bind each Party's successors and assigns.

                                       14
<PAGE>   17

         15.2 Failure to Enforce. The failure of either Party to enforce at any
  time or for any period of time the provisions of this Agreement shall not be
  construed to be a waiver of such provisions or of the right of such Party to
  enforce each and every such provision.

        15.3 Governing Law. This Agreement shall be deemed to have been made in
the State of California, United States of America, and shall be governed by and
construed according to the laws of the State of California.

        15.4 Severability. In the event that any of the provisions of this
Agreement shall be held by a court or other tribunal of competent jurisdiction
to be unenforceable, such provisions shall be deleted from this Agreement and
the remaining portions of this Agreement shall remain in full force and effect,
except where the economic equity of both Parties hereto is materially affected
by such unenforceability.

        15.5 Notice. Except as either Party may hereafter notify the other with
respect to itself, the addresses of the Parties for all purposes of this
Agreement shall be:

        MASIMO:              MASIMO CORPORATION
                             2852 Kelvin Ave. Irvine, CA 92614
                             Attention:  Chief Executive Officer

        LABS:                MASIMO LABORATORIES
                             35 Brindisi
                             Laguna Niguel, CA 92677
                             Attention: Chairman

All notices and communications pursuant to this Agreement shall be addressed as
set forth above and shall be delivered to the Party for whom intended by hand or
by postage prepaid, first class, registered or certified mail, return receipt
requested. Such notices and recommendations shall be deemed to have been given
and delivered as of the date of receipt.

        15.6 Force Majeure. Neither Party shall be liable to the other Party
hereto for any loss, injury, delay, damages or other casualties suffered or
incurred by such other Party due to strikes, riots, storms, fires, acts of God,
or war or any other cause beyond the reasonable control of either Party.

        15.7 Headings. Headings to paragraphs and sections of this Agreement are
to facilitate reference only, do not form a part of this Agreement, and shall
not in any way affect the interpretation hereof.

        15.8 Survival From This Agreement. The rights and obligations of the
Parties hereto under Sections 8 ("Confidentiality"), 9 ("Proprietary Rights"), 1
0 ("Indemnification"), 11 ("Regulatory Compliance"), 12 ("Incident Reporting"),
2.1.1, 2.1.2, 2.1.4, 2.3 ("Trademarks, Legends and Logos"), or any sublicenses
and private label patient monitoring company contracts under 2.1.3, and 4
("Option Granted to MASIMO") of this Agreement shall survive and continue after
any expiration or termination of this Agreement and shall bind the Parties and
their representatives, successors, heirs and assignees.

        15.9 Exhibits. All exhibits to which this Agreement refers are hereby
incorporated into and made a part of this Agreement.

       15.10 Entire Agreement. This Agreement constitutes the entire agreement
between LABS and MASIMO, and there are no other understandings, agreements or
representations, express or

                                       15
<PAGE>   18

        implied, written or oral, not specified herein. This Agreement may only
        be amended by express written agreement and signed by authorized
        representatives of both Parties.

        IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as
of the date set forth above.

MASIMO CORPORATION                        MASIMO LABS

By: /s/  JOE E. KIANI                 By: /s/ BRAD LANGDALE
   ---------------------------            -------------------------------------
Joe E. Kiani, President                   Brad Langdale, Secretary

                                       16
<PAGE>   19

                                   EXHIBIT A

                            MASIMO SET(R) DEFINITION

For the purpose of this agreement, MASIMO SET(R) is defined to include all
MASIMO Technology including LNOP(R), AutoProCal(TM), ProCal(TM), DST(TM), and
FST(TM) Technology. MASIMO SET(R) is further described as follows:

Transducers (sensor/probe) designed to reduce cost, reduce noise and improve
accuracy;

The technique of building a reference generator for calculating substantially a
noise or signal reference;

Use of noise reference or signal reference to minimize the effect of unwanted
noise components (e.g., motion artifacts) from the physiological waveforms
(e.g., photo-plethysmographic waveforms);

Use of reference generator along with a correlation canceler (e.g., Joint
Process Estimator) to map natural photo-plethysmographic waveforms into oxygen
saturation space;

Use of Saturation Transform: which is the technique of mapping plethysmographic
wave forms into saturation space (e.g., saturation vs. power or probability and
saturation vs. frequency or pulse rate); and/or

Use of transducers, circuitry, general digital signal processing techniques,
mathematical algorithms for processing physiological signals and providing one
or more final results (e.g., arterial blood oxygen saturation, pulse rate and/or
photo-plethysmographic wave forms).

                                       1

<PAGE>   20

                                   EXHIBIT B

Panatone Red / PMS Black

                                    1850 MAT

            (MASIMO WILL PROVIDE CAMERA READY ARTWORK UPON REQUEST)

                            NO IMPLIED LICENSE LABEL

                                       2

<PAGE>   21

                                   EXHIBIT D

                           END USER LICENSE AGREEMENT

        THIS DOCUMENT IS A LEGAL AGREEMENT BETWEEN YOU, THE "PURCHASER", AND
LABS. IF YOU DO NOT AGREE TO THE TERMS OF THIS AGREEMENT, PROMPTLY RETURN THE
ENTIRE PACKAGE, INCLUDING ALL ACCESSORIES, IN THEIR ORIGINAL PACKAGE, WITH YOUR
SALES RECEIPT TO LABS FOR A FULL REFUND.

1.      Grant of License.

        In consideration of payment of the license fee, which is part of the
price paid for this product, LABS grants to Purchaser a nonexclusive,
nonstransferable license, without right to sublicense, to use the copy of the
incorporated software/firmware, and documentation in connection with Purchaser's
use of the Products for their labeled purpose. LABS reserves all rights not
expressly granted to Purchaser.

2.      Ownership of Software/Firmware.

        Title to, ownership of, and all rights and interests in, any MASIMO
software and/or firmware and the documentation, and all copies thereof, remain
at all times vested in MASIMO Corporation, licensor to LABS, and they do not
pass to Purchaser.

3.      Assignment.

        Purchaser shall not assign or transfer this License, in whole or in
part, by operation of law or otherwise, without LABS's prior written consent;
any attempt without such consent, to assign any rights, duties or obligations
arising hereunder shall be void.

4.      Copy Restrictions.

        The software/firmware and the accompanying written materials are
copyrighted. Unauthorized copying of the software, including software that has
been modified, merged, or included with other software, or other written
materials is expressly forbidden. You may be held legally responsible for any
copyright infringement that is cause or incurred by your failure to abide by the
terms of this license. Nothing in this license provides any rights beyond those
provided by 17 U.S.C. Section 117.

5.      Use Restriction.

        As the Purchaser, you may physically transfer the products from one
location to another provided that the software/firmware is not copied. You may
not electronically transfer the software/firmware from the products to any other
device. You may not disclose, publish, translate, release or distribute copies
of the software/firmware or accompanying written materials to others. You may
not modify, adapt, translate, reverse engineer, decompile, disassemble, or
create derivative works based on the software/firmware. You may not modify,
adapt, translate, or create derivative works based on the written materials
without the prior written consent of LABS.

6.      Transfer Restrictions.

        The software/firmware is licensed to the Purchaser, and may not be
transferred to anyone, except other end-users, without the prior written consent
of LABS. In no event may you transfer, assign, rent, lease, sell, or otherwise
dispose of the software/firmware or the products on a temporary basis.

7.      Beneficiary.

        Masimo Corporation is a Beneficiary of this Agreement and has the right
to enforce its provisions.

                            RESTRICTED RIGHTS LEGEND

        The software/firmware and documentation is commercial computer software
as defined in DFARS Section 252.277.7014(a)(1). The Government shall have only
those rights specified in this Agreement. DFARS Section 227.7202-3(a).

                                       1

<PAGE>   22

                                   EXHIBIT E

                               PRICE OF PRODUCTS

Price for MS Boards: MASIMO's transfer prices to LABS for the MS-1 and MS-3
Boards are [*].

Transfer Price for Sensors and Accessories: MASIMO's transfer prices to LABS
for the SpO2 Sensors and Accessories delivered in accordance with this
Agreement are as follows:

Product                                              Part #   Price Each
-------                                              ------   ----------

LNOP(R).Adt (Adult Disposable Probe)                  1001        [*]
LNOP(R).Pdt (Pediatric Disposable Probe)              1025        [*]
LNOP(R).Neo (Neonatal Disposable Probe)               1002        [*]
LNOP(R).NeoPt (Pre-Term Neonatal Disposable Probe)    1003        [*]
LNOP(R).DC1 (Adult Re-usable Finger Clip Probe)
PC-08 (8 Ft. Patient Cable)                           1005        [*]
PC-12 (12 Ft. Patient Cable)                          1006        [*]

        LABS may elect, at any time following execution, to continue to pay the
initial baseline pricing set forth above or elect [*]. If LABS elects [*], the
transfer price is calculated as follows: [*]. On a quarterly basis, LABS will
account for [*] and will pay to MASIMO the amount of any underpayment [*] or
MASIMO will pay to LABS the amount of any overpayment [*] within thirty (30)
days of the end of the quarter. Prior to March 31, 1999, the transfer price for
the LNOP(R).DC1 will, in no event, be below [*]. [*] subject to the audit
provisions of Section 3.5. Once [*], LABS may not return to the baseline pricing
transfer pricing, except on written approval by MASIMO.

        LABS shall receive the [*] for Products. In the event that MASIMO [*],
effective immediately.

* Confidential material redacted and filed separately with the Commission.

                                       2

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