Document:

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                                                                   Exhibit 10.1

   Confidential Materials omitted and filed separately with the Securities and
                Exchange Commission. Asterisks denote omissions.

                       DISTRIBUTION AND LICENSE AGREEMENT

Effective as of May 10, 2000 (the "Effective Date") SMI Medical, Inc., a
California corporation ("SMI") and Cambridge Heart Inc., a Delaware corporation
("CHI") hereby agree as follows.

BACKGROUND

A. CHI has developed certain proprietary products used in the non-invasive
diagnosis and measurement of T-wave alternans, which are defined below as
"Products".

B. SMI manufactures and distributes cardiac stress test products, in part
through its wholly owned subsidiary SMI Burdick, and desires to distribute
Products that are compatible with such stress test products.

C. CHI desires to grant SMI the right to distribute Products in accordance with
the terms and conditions contained herein.

Agreement for SMI to have the non-exclusive right to distribute the Cambridge
Heart (CHI) OEM Alternans Product as part of its stress test systems and to
distribute CHI Alternans Sensors to customers who have purchased the OEM
Alternans Product.

DEFINITIONS

1. As used herein, the following terms shall have the following definitions:

         1.1. CHI MARKS shall mean the following CHI trademarks: Alternans Test,
Alternans Sensors, Analytic Spectral Method

         1.2. CONTRACT YEAR shall mean a period of one year except for the first
Contract Year which shall end eighteen months from the successful completion of
the Beta Product Integration by CHI.

         1.3. OBJECT CODE shall mean the machine readable computer software to
be delivered by CHI pursuant to Section 5.2 below.

         1.4. PRODUCTS shall mean CHI's Alternans Patient Module, CHI's
Alternans Patient Cable and CHI's Alternans Sensors. The combination of CHI's
Object Code, Alternans Patient Module and CHI's Alternans Patient Cable shall be
referred to herein as an OEM ALTERNANS SYSTEM. The term Products shall also
include the software Object Code necessary for the operation of CHI Alternans
Sensors with the CHI Alternans Patient Module.

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         1.5. PRODUCT INTEGRATION shall mean the integration to be performed by
CHI pursuant to Article 5 below that will enable the Products to perform in
accordance with their Specifications when used in conjunction with SMI's stress
test products. The final stage of the Product Integration shall be the Beta
Product Integration.

         1.6. SPECIFICATIONS shall mean the specifications associated with the
Products, as set forth in Appendix A and the applicable Product documentation.

         1.7. TARGET GROUP shall mean hospitals, cardiologists and internal
medicine group practices.

         1.8. TARGET GROUP SALES RATE means the percentage of Quest Systems sold
to Target Group customers during a given Contract Year that contained an OEM
Alternans System.

         1.9. TERRITORY shall mean the world, excluding for the first two years
of the term of this Agreement only: Germany, France, Greece and Japan.

TERMS

2.       GRANT OF RIGHTS. CHI hereby grants to SMI, the non-exclusive right
to market, distribute and service Products, to customers who have purchased
SMI's stress test systems, through the direct and distributor sales
organizations of SMI and its subsidiaries in the Territory. SMI may assign
subdistributors or sales agents on such terms and conditions, as it deems
appropriate. The foregoing grant shall include the right to use the CHI Marks
in connection with SMI's marketing and distribution of the Products. SMI
shall appropriately credit CHI for any such use of the CHI Marks. SMI shall
obtain CHI's prior written consent for each use of such CHI Marks.

3.       PURCHASE OF PRODUCTS.

         3.1. SMI may purchase from CHI and CHI hereby agrees to sell Products
to SMI at prices discounted from CHI's then current list price in accordance
with the provisions of this Article 3. CHI shall ship purchased Products FOB
Bedford, Mass. CHI shall invoice SMI upon shipment and payment shall be due and
payable thirty (30) days from shipment by CHI.

         3.2. SMI shall issue purchase orders to CHI from time to time as
needed, using SMI's then current standard purchase order terms. CHI shall use
its best efforts to ship Products in accordance with the shipments dates
specified in such purchase orders. In the event of any conflict between the
terms of such purchase order terms and the terms of this Agreement, the terms of
this Agreement shall prevail.

         3.3. At the beginning of each Contract Year during the term of this
Agreement, SMI will select its target level discount from the three discount
levels listed on Appendix B. Within 30 days after the completion of each
Contract Year, SMI shall provide CHI with a written report setting forth SMI's
actual Target Group Sales Rate based upon sales results for the prior Contract
Year. In the event the Target Group Sales Rate during such prior Contract Year
is below the required threshold for the discount level selected by SMI, SMI
shall pay to CHI a reconciliation payment equal to the difference between the
aggregate purchase price for Products paid by SMI during such Contract Year and
the aggregate purchase price for Products that would have been

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 Confidential Materials omitted and filed separately with the Securities and
                Exchange Commission. Asterisks denote omissions.

payable by SMI during such Contract Year at the discount level corresponding
to actual Target Group Sales Rate achieved by SMI during such Contract Year.
CHI shall make a corresponding reconciliation payment to SMI in the event
SMI's actual Target Group Sales Rate met or exceeded the threshold for a
higher discount rate. Such payments shall be made within 60 days of the
completion of the Contract Year.

         3.4. SMI shall, in SMI's discretion, have the option of allowing
SMI's customers to acquire Products through CHI's Alternans Acquisition
Program, as set forth in Appendix B during such period as such Alternans
Acquisition Program is offered by CHI. All Products purchased by SMI's Target
Group Customers shall be included in the calculation of the Target Group
Sales Rate.

         3.5. CHI shall have the right to audit such books and records of SMI
as necessary to verify SMI's performance under Section 3.2 above, at CHI's
expense. If CHI's audit shows an SMI error with respect to any such
reconciliation payment, SMI or CHI as applicable shall make the payment
necessary to correct such error. In addition, if such audit shows an
underpayment to CHI in excess of THE GREATER OF: (a) $3,000 or (b) ten
percent of the aggregate purchase price for Products paid by SMI during such
Contract Year, SMI will, in addition to paying the actual amount of such
shortfall, pay CHI's reasonable audit expenses.

4.       SALE PRICING. SMI shall have discretion in selecting the prices at
which it may sell Products; provided, however SMI shall not sell Alternans
Sensors in the United States for a price in excess of the Alternans Sensor
Maximum List Price set forth in Appendix B.

5.       PRODUCT INTEGRATION.

         5.1. SMI shall provide CHI with the temporary use of a stress test
system to enable CHI to perform the Product Integration. SMI shall provide CHI
with reasonable technical support to assist CHI in completion of the Product
Integration. Both parties will use good faith efforts to complete Product
Integration tasks and product introduction according to the schedule in Appendix
C.

         5.2. Upon completion of the Beta Product Integration, CHI shall deliver
to SMI the computer software in machine readable format which, when incorporated
into SMI's stress test products, will enable the Products to perform in
accordance with their specifications when used in conjunction with SMI's stress
test products, referred to herein as the "Object Code".

         5.3. Following confirmation by SMI of the successful completion of the
Beta Product Integration, SMI will be responsible for incorporation of the
Object Code into its future stress test systems and enhancements and updates of
its stress test systems. CHI will provide reasonable technical support to SMI
for its initial integration of such Object Code as well as efforts associated
with any future updates, upgrades or other modifications of the Products.

6.       DEMO UNITS. SMI shall, within 60 days of the Effective Date or the
date that Beta Product Integration is complete, whichever is later, place a
purchase order for [***]more units of

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   Confidential Materials omitted and filed separately with the Securities and
                Exchange Commission. Asterisks denote omissions.

the OEM Alternans System. It will thereafter maintain in working order a
minimum of [***] demo unit of the OEM Alternans System in the field for each
of its acute care salespersons selling diagnostic cardiology products. These
demo units may be purchased by SMI at the highest discount level for the OEM
Alternans Product set forth in Appendix B hereto.

7.       MARKETING. SMI shall use good faith efforts to promote, advertise
and market the Products and to execute the specific Marketing Activities in
Appendix D.

8.       FIELD SUPPORT. CHI district sales managers in the United States
shall provide support to SMI field personnel in sales of Products
substantially equivalent to the support which CHI routinely provides to CHI's
contracted Manufacturer's Representatives. Such support shall include without
limitation, assistance in training of existing and future SMI field personnel
and during initial training stages, providing qualified CHI personnel to
accompany such personnel on calls to customers. CHI shall provide its
district sales managers with commissions on sales of Products by SMI.

9.       TRAINING. CHI will provide information, training and materials to
insure that SMI's designated marketing staff is kept up to date on all
pertinent information regarding the Products and their markets, including,
without limitation, market trends, new applications and new product or
technology introductions. CHI will provide, at SMI's request, 4 days of
training on the functionality, installation, training, service and support of
the Products at SMI's facility. SMI shall use commercially reasonable efforts
to have all of its acute care salespersons at such initial training. CHI will
provide a training session at SMI's facility for each significant upgrade or
enhancement of the Products. The length and content of such training sessions
shall be determined in accordance with the nature of the upgrade, but shall
not exceed 2 days, unless otherwise agreed by CHI.

10.      DOCUMENTATION. CHI will supply text files of operator's manuals in
English, German, French, Italian and Spanish for incorporation into SMI's
operator's manual.

11.      WARRANTY. (a) CHI warrants, that the OEM Alternans System shall
conform to the Specifications and shall be free from defects in material and
workmanship under normal and proper use in accordance with CHI's instructions
for a period of (12) months from date of installation at the customer but not
more than sixteen (16) months from shipment by CHI ("Warranty Period"), that
the Products shall conform to CHI's standard specifications and shall be free
from defects in material and workmanship under normal and proper use in
accordance with any instructions and directions of CHI applicable thereto.
SMI agrees to provide the necessary labor to replace any defective parts at
SMI's expense and to provide a 12-month parts and labor warranty to its
customers of the Products.

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     Confidential Materials omitted and filed separately with the Securities and
                Exchange Commission. Asterisks denote omissions.

         (b) THE EXPRESS WARRANTIES SET FORTH IN PARAGRAPH (a) CONSTITUTES THE
ONLY WARRANTIES WITH RESPECT TO THE PRODUCTS. CHI MAKES NO REPRESENTATION OR
WARRANTY OF ANY OTHER KIND, EXPRESS OR IMPLIED (EITHER IN FACT OF BY OPERATION
OF LAW), WITH RESPECT TO THE PRODUCTS, WHETHER AS TO MERCHANTABILITY, FITNESS
FOR PARTICULAR PURPOSE, OR ANY OTHER MATTER.

         (c) THE WARRANTIES SET FORTH HEREIN MAY BE ASSERTED BY SMI ONLY AND NOT
BY SMI's CUSTOMERS OR END USERS. SMI SOLE REMEDY FOR CHI LIABILITY OF ANY KIND,
INCLUDING NEGLIGENCE, WITH RESPECT TO ANY PRODUCT FURNISHED UNDER THIS
AGREEMENT, WHETHER THE CLAIMED LIABILITY IS BASED ON A DEFECT, WHETHER
DISCOVERABLE OR LATENT, IN ANY PRODUCT, SHALL BE LIMITED TO THE REMEDIES
PROVIDED IN PARAGRAPH (f) OF THIS AGREEMENT. Any other representations or
warranties made by any person, including employees or representative of CHI,
which are inconsistent herewith shall be disregarded by SMI and shall not be
binding upon CHI. If any Product model or sample was shown to SMI, such model or
sample was used merely to illustrate the general type and quality of the Product
and not to represent that the Product would necessarily conform to such model or
sample.

         (d) CHI's warranties set forth in Paragraph (a) shall not apply in
circumstances that would be excluded by its standard end user warranty terms,
such as misuse or alteration of the Product or use of the Product for other than
the specific purpose for which it is designed.

         (e) CHI's sole obligation under the hardware warranty set forth in
Paragraph (a) shall be to repair or replace, at CHI's option, the defective or
nonconforming hardware. CHI's sole obligation under the Software warranty set
forth in paragraph (a) shall be to: (i) accept, analyze and provide written
response to any reports from SMI of Software malfunction or error; and (ii) use
commercially reasonable efforts to provide responses to correct such errors when
they reflect significant deviations from CHI's design specifications for the
current release of the Software. The time required to repair or replace any
defective Product shall not extend the Warranty Period.

12.      SERVICE AND SUPPORT. SMI shall be responsible for providing service
for OEM Alternans Systems for SMI's customers and shall purchase and maintain
sufficient spare parts to provide adequate service. CHI will provide
telephone support for SMI personnel during its normal business hours. During
the term of this Agreement and for [***] thereafter, CHI shall sell
applicable spare parts to SMI at prices in CHI's then current distributor
spare parts price list. A copy of CHI's current parts list is attached hereto
as Appendix H.

13.      SOURCE CODE ESCROW. Upon request by SMI, the parties shall enter
into a Source Code Escrow Agreement substantially in the form attached hereto
as Appendix G. Thereafter, CHI shall deposit with Fort Knox Escrow Services,
or other mutually acceptable software escrow agent the source code for the
Object Code and for the software contained in the Products and

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related materials necessary to enable SMI to maintain the Products in the event
of the (i) bankruptcy, (ii) insolvency, (iii) dissolution, (iv) liquidation, (v)
cessation of business, or (vi) cessation of maintenance of the Software by CHI.

14. MARKING. SMI shall prominently display the following statement in its
operator's manuals, brochures and advertising for its applicable stress test
system: "T-wave Alternans technology supplied by Cambridge Heart, Inc." This
requirement shall be effective upon the next printing, trade show or advertising
insertion. SMI shall also refer to applicable CHI patents on a rear panel label
or software start-up screen.

15. REGULATORY COMPLIANCE. SMI will be responsible for insuring that its stress
test system incorporating the OEM Alternans Product meets regulatory
requirements in any jurisdiction where it currently distributes. CHI will
maintain 510K clearance, CE marking and Japanese MOH approvals for the OEM
Alternans Product hardware and software when sold as part of its own stress test
system and for the Alternans Sensors. CHI will provide documentation and
assistance on a good faith efforts basis to SMI in support of any regulatory
submissions that SMI may chose to make.

16. QUALITY ASSURANCE. CHI will manufacture the Products in compliance with FDA
QSR, ISO 9001, the MDD and any other applicable laws and regulations in Japan,
Canada and Australia. CHI shall be responsible for obtaining and documenting all
necessary clearances and approvals in the United States, Europe and Canada for
the Products when sold as part of its own systems. CHI shall provide SMI with
cooperation and all data and other information necessary to enable SMI, at SMI
discretion to submit to regulatory bodies in those and other countries.

17. RECALLS. In the event of a voluntary or mandatory recall or field correction
of the Products occasioned by any defect or deficiency in the materials or
manufacture of the Product, CHI and SMI shall comply with all applicable FDA or
other applicable laws or regulations. SMI will cooperate with CHI in providing
notice to its customers and distribution of repaired or replacement parts. CHI
shall bear all costs, expenses and liabilities in connection therewith
including, without limitation, costs related to notifying customers of the
recall and transporting the recalled items from customers to a location as SMI
shall designate in writing and for the replacement of the Products. Costs in
this context shall mean costs directly incurred by SMI arising solely from such
recall.

18.      SOFTWARE LICENSE.

         18.1. CHI grants to SMI a nontransferable license to use the Object
Code included in the OEM Alternans System and, for each OEM Alternans System
that it purchases from CHI, to distribute one copy of such Object Code to end
users in the United States who have signed SMI's standard Software License
Agreement, with the addition of provisions substantially in the form set forth
in Appendix F (THE "CHI LICENSE TERMS") and to sublicense SMI's subsidiaries and
distributors outside the United States to distribute such Object Code to end
users in accordance with SMI's standard international software licensing
practices.

         18.2. In connection with such international distribution by direct SMI
sales, SMI shall incorporate such foreign language translations of the CHI
License Terms as CHI from time to

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time, in its discretion and at CHI's expense, elects to provide to SMI. SMI's
efforts to insure compliance with the CHI License Terms shall not be less than
it applies to insure compliance with its own licensing terms. In connection with
international distribution by SMI through its distributor network, SMI shall
incorporate the CHI License Terms into SMI's Distributor Agreements in those
countries in which SMI sells OEM Alternans Systems through its distributors.
These Agreements will require that the distributors only sublicense the Object
Code to end users according to agreements or purchasing terms which incorporate
the CHI License Terms. SMI's efforts to insure compliance with these Agreements
with respect to the CHI Licensing Terms shall not be less than it applies to
insure compliance with its own licensing terms.

         18.3. SMI shall not distribute or enable the Object Code except in
accordance with this Article 18.

         18.4. Upon CHI's request, SMI shall, at CHI's, expense provide
reasonable cooperation to CHI in CHI's efforts to ensure that all end users
comply with the terms under which the Object Code is licensed to such end users,
including without limitation the CHI License Terms and shall promptly notify CHI
of any breaches of such terms that become known to SMI.

         18.5. CHI shall retain the right to enforce compliance with the CHI
License Terms by SMI's licensed end users, and in the event SMI, in SMI sole
discretion, decides to allow CHI to use SMI's name to prosecute an action
against SMI's licensed end users, CHI agrees to hold SMI and its distributors
harmless against any award of court costs or damages resulting from CHI's use of
SMI's name in such action.

         18.6. SMI shall maintain copies of all license agreements entered into
with customers of the OEM Alternans System in the United States and in other
countries and CHI shall have reasonable rights, not more than one time per year
and at CHI's expense, to audit those records of SMI necessary to insure
adherence to this Article 18 and shall not use any information learned in such
audit for any other purpose.

19.      PATENTS AND TRADEMARKS.

         19.1. CHI hereby represents and warrants that: (i) CHI is the exclusive
owner of the Object Code, the Product documentation, and, to the best of CHI's
information and belief, the CHI Marks; (ii) CHI has all rights necessary for the
grant of the rights and licenses in this Agreement and such grant will not
constitute a breach of any other binding obligation to which CHI is subject;
(iii) neither the Object Code nor the Products infringe any trade secret rights,
copyrights or U.S. patent rights of any third party; provided, however, that CHI
shall not be deemed to be in breach of this part (iii) if CHI was not aware of
such infringement as of the execution date of this Agreement and if CHI
indemnifies SMI against such claim in accordance with Section 21 below; and (iv)
Other than described in Appendix E, CHI has no knowledge of any facts or alleged
claims that should reasonably lead it to believe that the Object Code or
Products infringe any other intellectual property rights of any third party. If
the Object Code or Products become, or in CHI's opinion are likely to become,
the subject of such claim of infringement, CHI will, in addition to its
indemnification obligations hereunder, at its expense, either (A) procure rights
for SMI or its customers who have executed a software sublicense to

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continue using the Object Code and the Products, or (B) replace or modify the
Object Code or the Products, as the case may be, to prevent infringement with
performance substantially similar to the original performance; provided however
that if neither A nor B is practicable, CHI may, in its sole discretion,
terminate this agreement on 60 day prior written notice to SMI.

         19.2. All patents and patent rights, trademarks, copyrights, trade
names and other property rights in and with respect to the Products are and will
remain exclusively the property of CHI.

20. MUTUAL INDEMNIFICATION. Each party agrees to defend, indemnify and hold the
other harmless for any and all claims, demands, actions, suits, losses,
liabilities, damages, injuries, fines, penalties, costs and expenses, including
without limitation reasonable attorney fees (collectively "Claims") arising out
of any breach in performance or warranties under this Agreement by the
Indemnitor except to the extent such Claims arise out of the negligence or
willful misconduct of the Indemnitee. The Indemnitee shall provide the
Indemnitor with prompt written notice of and such Claim and grant the Indemnitor
control of the defense, compromise and settlement of such Claim, and shall
reasonably cooperate with the Indemnitor with the defense and settlement of such
Claim.

21.      THIRD PARTY INDEMNIFICATION.

         21.1. CHI shall defend, indemnify and hold harmless SMI from any Claim
arising out of, or resulting from (a) bodily injury (including death) or
property damages incurred by a third party, to the extent such claims are caused
by (i) any negligent or willful act or omission of CHI in connection with the
development, manufacture, sale or distribution of the Products or (ii) the
failure of the Products to perform according to their specifications or (b) any
claim that the use, reproduction or distribution of the Products infringes
intellectual property rights of a third party. In the event of such claim, SMI
agrees promptly to notify CHI of the claim and to permit CHI, at CHI's expense,
to control of the defense, compromise and settlement of such Claim, and shall
reasonably cooperate with CHI with the defense and settlement of such Claim.

         21.2. SMI shall defend, indemnify and hold harmless CHI from any Claim
arising out of, or resulting from (a) bodily injury (including death) or
property damages incurred by a third party, to the extent such Claim is caused
by (i) any negligent or willful act or omission of SMI in connection with the
development, manufacture, sale or distribution of its stress test systems or
(ii) the failure of such stress test systems to perform according to their
specifications or (b) any Claim that the use, reproduction or distribution of
the stress test systems infringes intellectual property rights of a third party.
In the event of such a Claim, CHI agrees promptly to notify SMI of the Claim and
to permit SMI, at SMI's expense, to control the defense, compromise and
settlement of such Claim, and shall reasonably cooperate with SMI with the
defense and settlement of such Claim.

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   Confidential Materials omitted and filed separately with the Securities and
                Exchange Commission. Asterisks denote omissions.

         21.3. In the event a Claim is based partially on an indemnified claim
described in Sections 21.1 or 21.2 above and partially on a non-indemnified
claim, or is based partially on a claim indemnified by CHI pursuant to Section
21.1 above and partially on a claim indemnified by SMI pursuant to Section 21.2
above, any payments and reasonable attorney fees incurred in connection with
such Claim are to be apportioned between CHI and SMI in accordance with the
degree of cause attributable to each party.

22. LIMITATIONS OF LIABILITY. IN NO EVENT SHALL EITHER PARTY BE LIABLE FOR
SPECIAL, INCIDENTAL, EXEMPLARY, INDIRECT OR CONSEQUENTIAL DAMAGES OF THE OTHER
PARTY OR ANYONE CLAIMING THROUGH OR ON BEHALF OF SUCH OTHER PARTY, INCLUDING
LOSS OF USE, REVENUE, OR PROFITS, IN CONNECTION WITH OR ARISING OUT OF THIS
AGREEMENT OR ANY BREACH OF THIS AGREEMENT BY A PARTY HERETO OR THE EXISTENCE,
FURNISHING, FUNCTIONING, OR THE OTHER PARTY'S OR ANY THIRD PARTY'S USE OF ANY
PRODUCTS OR SERVICES PROVIDED FOR IN THIS AGREEMENT, EVEN IF THE PARTY HAS BEEN
ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.

23.      CONFIDENTIALITY.

         23.1. CONFIDENTIAL INFORMATION. Both SMI and CHI acknowledge that the
technical, financial, marketing or sales information, (including, without
limitation, the Object Code) (1) disclosed by the other party, or (2) obtained
by inspection, examination, use or servicing from time to time of the Products
is confidential and proprietary information of such disclosing party and shall
remain the property of such disclosing party ("Confidential Information").
Except as otherwise expressly provided in this Agreement, neither SMI nor CHI
shall use or disclose to a third party the other's Confidential Information for
any purpose, other than in the performance of this Agreement, without the prior
written consent of the disclosing party. Each party's obligations under this
Section 23 shall terminate [***] after termination of this Agreement (including
any extension thereof).

         23.2. EXCLUSIONS. Confidential Information shall not include
information which: (i) at the time of disclosure is in the public domain; (ii)
after disclosure becomes part of the public domain by publication or otherwise,
except by breach of this Agreement; (iii) is received from a third party;
provided, however, that the recipient has no reason to know such information was
obtained by such third party, directly or indirectly, from the other party; (iv)
is independently developed by or for the recipient without reference to
Confidential Information; and (v) disclosure of which is required by applicable
law.

24. ANNOUNCEMENTS. The parties intend to jointly announce this Agreement. All
announcements pertaining to this Agreement must be approved in writing by both
parties.

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   Confidential Materials omitted and filed separately with the Securities and
                Exchange Commission. Asterisks denote omissions.

25. TERM AND RENEWAL. The initial term of this Agreement shall be from the
Effective Date through June 30, 2002. Upon the expiration of the initial term,
the term shall renew automatically for subsequent one-year terms unless either
party has notified the other in writing of its intent not to renew not less than
one hundred and eighty (180) days prior to the end of each term.

26.      TERMINATION.

         26.1. Either party may terminate this Agreement in the event of a
Default, as defined in Section 26.2 below, by the other party, upon thirty (30)
days prior written notice to the defaulting party or if either party is bought
or merged into another company and does not own more than 50% of the surviving
company's shares. Any notice given pursuant to this Section shall be of no
effect and this Agreement shall not terminate if the defaulting party has cured
the Default described in the notice and is not otherwise in Default at the end
of the thirty (30) days following written notice of Default. Termination of this
Agreement for Default shall not impair the terminating party's other rights and
remedies for such Default.

         26.2. DEFAULT. A party shall be in "Default" if: (1) It voluntarily
files a petition under the federal Bankruptcy Act or any similar or successor
law relating to bankruptcy, insolvency, arrangement, or reorganization, or under
any state bankruptcy or insolvency act, or admits its insolvency or the
inability to pay its debts, or fails within sixty (60) days, to gain a discharge
or stay of involuntary proceedings brought for its reorganization, dissolution,
or liquidation, or is adjudged as bankrupt, or has a trustee or receiver
appointed, or makes an assignment for the benefit of its creditors, or if there
is an attachment, execution, or other judicial seizure of any material portion
of its assets which is not discharged within sixty (60) days; (2) It is involved
in a merger in which it is not the surviving entity or is otherwise dissolved or
ceases to be in existence; or (3) It breaches any material term of this
Agreement.

27. EFFECT OF TERMINATION. Upon termination or expiration of this Agreement, SMI
may continue to sell Products in its inventory or, at CHI's option, CHI may
purchase Products in SMI's inventory at the original purchase price paid by SMI.
Thereafter, the licenses granted to SMI under Section 2 shall expire, except to
the extent necessary to enable SMI to service the Products sold by SMI
hereunder. Except in the event of termination of this Agreement due to Default
by SMI, SMI shall have the right to purchase Alternans Sensors from CHI for
resale to SMI's customers for a period of seven years following termination at
the discount level in effect at termination provided that SMI purchases at least
[***] sensor sets per month during such period.

28. GOVERNING LAW. This Agreement shall be governed by and interpreted under the
laws of the Commonwealth of Massachusetts.

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29.      MISCELLANEOUS.

         29.1. INSURANCE. Throughout the term of this Agreement, CHI and SM
shall each maintain one or more commercial general liability insurance policies
that, in the aggregate, shall provide coverage, including products liability
coverage, of not less than One Million Dollars (U.S. $1,000,000) per occurrence
and Two Million Dollars (U.S. $2,000'000) aggregate. The policies shall be
issued by an insurance company with a minimum Best's rating of A-XII. Each
policy shall provide coverage for claims arising both within the United States
and in foreign countries. CHI and SMI shall annually exchange certificates of
insurance. In addition, CHI and SMI shall each maintain an excess liability
policy of no less than Three Million Dollars ($3,000,000).

         29.2. NOTICE. Any notice permitted or required to be given under this
Agreement shall be effective upon personal delivery (including delivery by
commercial courier service or facsimile with confirmed transmission), or five
(5) days after such notice is mailed by registered or certified mail, return
receipt requested, properly directed to the recipient at the address set forth
below the party's signature on this Agreement. Either party may change its
address by giving written notice of the change in the manner provided above for
giving notice.

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

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

         29.5. SUCCESSORS AND ASSIGNS. No portion of this Agreement may be
transferred or assigned by CHI or SMI without the prior written consent of the
other party which consent shall not be unreasonably withheld, provided, however,
either party may assign this Agreement to any subsidiary of that party or of its
parent company. Subject to the foregoing, this Agreement shall be binding upon
the respective successors and assigns of the parties.

         29.6. FORCE MAJEURE. Each party shall be excused from any delays or
failure in performance (other than payment obligations) hereunder caused by
reason of any occurrence of an event of Force Majeure, namely, an act of God,
war, fire, flood, earthquake, riots, unforeseen changes in government laws or
regulations and government embargo. If any Force Majeure condition occurs, the
party delayed or unable to perform shall give reasonably prompt notice to the
other party, and this Agreement shall be suspended for the duration of the Force
Majeure condition; PROVIDED, HOWEVER, that if the suspension of this Agreement
under this Section has

                                       11
<PAGE>

continued for a period of sixty (60) or more days, either party may immediately
terminate this Agreement upon notice to the other party.

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

         29.8. SURVIVAL. Sections 3.5, 4, 11 12, 17, 18, 19.1 (last sentence
only), 20, 21, 23, 24, 27, 28, 29.2-29.8 of this Agreement shall survive its
expiration or termination for any reason. Expiration or termination of this
Agreement for any reason shall not affect any end user licenses which may have
been granted prior to expiration or termination.

SPACELABS MEDICAL, INC.                     CAMBRIDGE HEART, INC.

By   /s/ Dennis Larsen                      By   /s/ Jeffrey M. Arnold
---------------------------------           ------------------------------------
         Dennis Larsen                               Jeffrey M. Arnold
         Vice President, Business                    Chairman, President and CEO
         Development

ADDRESS:                                    ADDRESS:

15220 N.E. 40th Street                      Cambridge Heart, Inc.
P.O. Box 97013                              One Oak Park Drive
Redmond, Washington 98073-9713              Bedford, MA 01730
Fax No. (425) 883-7091                      Facsimile:  (781) 275-8431
Attn:  Dennis Larsen                        Attn:  Jeffrey M. Arnold

With a facsimile copy to:
Eugene V. DeFelice
Vice President and General Counsel
Fax No. (425) 583-7091

                                       12
<PAGE>

                           APPENDEX A: SPECIFICATIONS

<TABLE>
<CAPTION>

----------------------------------------------------------------------------------------------------------------------
                                 CAMBRIDGE HEART
--------------------- ------------------------------------------------------------------------------------------------
<S>                   <C>
TITLE:                OEM ALTERNANS PRODUCT SPECIFICATIONS

--------------------- ------------------------------------------------------------------------------------------------
SUBJECT:.             THIS DOCUMENT PROVIDES THE TECHNICAL SPECIFICATIONS FOR THE OEM ALTERNANS
                      PRODUCT AS USED IN THE SPACELABS QUEST STRESS TEST SYSTEM.

--------------------- ------------------------------------------------------------------------------------------------
DOC. NO.:             00-0339-001
----------------------------------------------------------------------------------------------------------------------
                             REVISION CONTROL SHEET
<CAPTION>

-------------- ---------- ------------- ------------------------------------------------------- ----------------------
     DCN         Rev.         Date                      Description of Change                          Author
-------------- ---------- ------------- ------------------------------------------------------- ----------------------
<S>            <C>        <C>           <C>                                                     <C>
N/A            A          02/15/00      Baseline release                                        K. Librett
-------------- ---------- ------------- ------------------------------------------------------- ----------------------
               B          02/21/00      UI on QUEST                                             G. Isensee
-------------- ---------- ------------- ------------------------------------------------------- ----------------------
               C          4/7/00        Reference for section 6.0, added 7.0, 8.0, updates to   G. Isensee
                                        6.0 data, Communication requirement for report, and
                                        Purchase order information, CTICK, CE markings,
                                        storage/operating conditions
-------------- ---------- ------------- ------------------------------------------------------- ----------------------
               D          4/15/00       Effective Date, clarification of accessories P/N,       G. Isensee
                                        data cable removed from description
-------------- ---------- ------------- ------------------------------------------------------- ----------------------
               E          4/20/00       Added CH part numbers and updated "replaceable          K. Librett
                                        leadset" description in Sections 8.0 & 9.0.
-------------- ---------- ------------- ------------------------------------------------------- ----------------------
               F          5/1/00        Corrected several part descriptions in sections 8.0     K. Librett
                                        and 9.0; Deleted single pouch of Sensors from section
                                        8.0; Changed group of 5 pouches to group
                                        of 10 pouches in Section 8.0.
-------------- ---------- ------------- ------------------------------------------------------- ----------------------
               G          5/9/00        Added lead length descriptions for patient cables.      G. Isensee
                                        Belt LxW. Added SLB P/N for IEC 10 lead cable.
                                        Figure 5.1 indicates PM-3 nomenclature.
----------------------------------------------------------------------------------------------------------------------
                  CAMBRIDGE HEART, INC. PROPRIETARY INFORMATION

         This document was developed by Cambridge Heart at our expense.
The information contained herein is the property of Cambridge Heart, Inc. and is
  NOT to be released without written permission of a Cambridge Heart official.
----------------------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

   Confidential Materials omitted and filed separately with the Securities and
                Exchange Commission. Asterisks denote omissions.

APPENDIX B: PRICES AND DISCOUNTS

OEM ALTERNANS PRODUCT:

<TABLE>
<S>                                                                    <C>
Suggested List Price:                                                  $[***]

Level 1 Discount:                                                      [***]%

Level 2 Discount:                                                      [***]%

Level 3 Discount:                                                      [***]%

ALTERNANS SENSORS:

Maximum U.S. List Price:                                               $ [***] Per set

Level 1 Discount                                                       [***]%

Level 2 Discount                                                       [***]%

Level 3 Discount                                                       [***]%
</TABLE>

DISCOUNT LEVELS:

SMI shall be entitled to Level 1 Discounts if the Target Group Sales Rates is at
least [***]%.

Level 2 Discounts shall apply if the Target Group Sales Rate is from [***]% to
[***]%.

Level 3 Discounts shall apply if the Target Group Sales Rates is less than
[***]%.

<PAGE>

   Confidential Materials omitted and filed separately with the Securities and
                Exchange Commission. Asterisks denote omissions.

ALTERNANS ACQUISITION PROGRAM

SMI may sell Products under CHI's Alternans Acquisition Program, the terms of
which include the following:

Option A: The customer commits to purchase[***] sensors sets per month for three
years at a price of $[***] per sensor set. The contract is assigned to the
leasing company selected by CHI. The leasing company purchases the OEM Alternans
System from CHI. CHI supplies SMI with the OEM Alternans Product and a
commission of $[***]. The leasing company using CHI as its agent, will ship and
bill the customer for [***] sensor sets per month.

Option B: The customer commits to purchase [***] sensor sets per month for three
years. The contract is assigned to the leasing company selected by CHI. The
leasing company purchases the OEM Alternans System from CHI and a stress test
system from SMI at a price of $[***] CHI supplies SMI with the OEM Alternans
System and a commission of $[***]. The leasing company, using CHI as its agent,
will ship and bill the customer for [***] sensor sets per month.

<PAGE>

APPENDIX C: SCHEDULE

SMI ships stress test system for development and testing to CHI by March 21,
2000

CHI completes Alpha Level product integration by May 29, 2000, and Beta Level
integration by June 26, 2000

CHI delivers user manual content to SMI by May 8, 2000

SMI's regulatory submission will be July 15, 2000

SMI will release the Products by November 15, 2000

<PAGE>

APPENDIX D: MARKETING ACTIVITIES

SMI will complete the following marketing activities:

1.       Create a new T-Wave Alternans Datasheet by July 15, 2000.

2.       Add T-Wave Alternans information to the Quest Brochure by August 4,
2000.

3.       Add T-Wave Alternans information to the SMI Burdick Virtual Salesman CD
by August 4, 2000.

4.       Complete a direct mailing to existing Quest customers by September 8,
2000.

5.       Attend and display T-Wave Alternans and Quest at the following trade
shows: ACC, NASPE and AHA.

<PAGE>

APPENDIX E: PATENTS

A patient issued in 1999 to Richard Verrier and licensed to Marquette,
#5,921,94, has claims substantially similar to some of those in a patent issued
to CHI in 1997, #5,570,696. CHI has received an opinion from its patent counsel,
Fish and Richardson, that the Verrier patent is not valid.

<PAGE>

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APPENDIX F: LICENSE AGREEMENT TERMS

1. The Products licensed hereunder contain hardware and Alternans Software from
Cambridge Heart, Inc. ("CHI") intended for use in measuring T-wave alternans
(collectively, "CHI Products"). This Agreement and the purchase of CHI Products
hereunder do not provide the Customer with a license to use the CHI Alternans
Software or applicable CHI patents. A license to use the CHI Alternans Software
is conferred by payment of the fees described in the following paragraph.

         2. A $50.00 fee, payable in advance, is due to CHI for each alternans
         test performed by the Customer with the CHI Products. This fee is
         included in the purchase price of CHI Alternans Sensors manufactured by
         CHI, such that no additional fee is due for a particular alternans test
         performed using CHI Alternans Sensors. This fee requirement is
         perpetual and shall survive the expiration, cancellation or termination
         of this Agreement.

         3. At no time does the purchase of CHI Products or the use of CHI
         sensors in the performance of an alternans test provide the Customer
         with any rights of ownership or use of CHI's patents or other
         intellectual property.

         4. The license to use the CHI Alternans Software will terminate
         immediately upon use of the CHI Alternans Software to perform an
         alternans test without payment in advance of the per-use fee for that
         test. The Customer acknowledges that the performance of an alternans
         test without payment of the per-use fee constitutes a violation of
         CHI's rights.

CHI is a third-party beneficiary of this Agreement and shall have the right to
enforce the terms of this Agreement directly against the Customer.

<PAGE>

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APPENDIX G: FORM OF SOURCE CODE ESCROW AGREEMENT

THIS SOURCE CODE ESCROW AGREEMENT is made effective as of the __________ day of
___________,2000 (the "Effective Date"), by and among CAMBRIDGE HEART, INC., a
Delaware corporation ("Licensor"); SPACELABS MEDICAL, INC., a California
corporation ("Licensee"); and FORT KNOX ESCROW SERVICES (the "Escrow Agent").

RECITALS

                  A. Pursuant to the terms of a Distribution and License
         Agreement entered into by and between the parties effective as of May
         _, 2000 (the "License Agreement"), Licensor has granted Licensee a
         license to incorporate into its products the object code version of
         certain software developed and owned by Licensor and has agreed to make
         the source code version of the software incorporated into the
         Licensor's Products (collectively, the "Software"), available to
         Licensee under the terms of this Agreement.

                  B. Licensee has required Licensor to furnish Licensee with
         access to the source code corresponding to such Software.

                  C. Licensor has agreed to place such source code in escrow for
         the benefit of Licensee on the terms and conditions hereof.

AGREEMENT

1.       DEFINITIONS

For purposes of this Agreement, each capitalized term not otherwise defined
herein shall have the meaning that is ascribed to such term in the License
Agreement. The following definitions shall apply to the following respective
capitalized terms:

                  1.1      "IMPACT EVENT" means any of the following:

                           (a) Licensor's admission in writing that it is unable
                           to pay its debts generally as they become due;

                           (b) Licensor's making of a general assignment for the
                           benefit of creditors;

                           (c) the commencement of foreclosure proceedings
                           affecting the Software by any creditor of Licensor,
                           which proceedings are not dismissed within sixty (60)
                           days after service thereof on Licensor;

                           (d) Licensor's consent to the filing of a petition of
                           bankruptcy against it;

                           (e) the filing of a petition of bankruptcy against
                           Licensor that remains unstayed or is not dismissed
                           within sixty (60) days after such filing;

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                           (f) the adjudication of Licensor as being bankrupt or
                           insolvent by a court of competent jurisdiction;

                           (g) any action by Licensor seeking reorganization
                           under any bankruptcy act or law of debtor's
                           moratorium or Licensor's consent to the filing of a
                           petition seeking such reorganization;

                           (h) the entry of a decree against Licensor by a court
                           of competent jurisdiction appointing a receiver,
                           liquidator, trustee, or assignee in bankruptcy or in
                           insolvency covering all or substantially all of
                           Licensor's property or providing for the liquidation
                           of Licensor's property or business affairs;

                           (i) the termination of substantially all of
                           Licensor's on-going business operations relating to
                           the Software;

                           (j) any liquidation of Licensor, or involuntary sale;

                           (k) cessation of business or of the maintenance or
                           support of the Software by Licensor.

                  1.2 "SOURCE CODE" means a copy of the source code
                  corresponding to the Software, including all Source Code
                  Updates delivered to the Escrow Agent from time to time
                  pursuant to this Agreement, plus any pertinent commentary or
                  explanation that may be necessary to render the Source Code
                  understandable and useable by a computer-programming expert.
                  The Source Code shall include system documentation, statements
                  of principles of operation and schematics, all as necessary or
                  useful for the effective understanding and use of the Source
                  Code. Insofar as the "development environment" employed by
                  Licensor for the development, maintenance, and implementation
                  of the Source Code includes any device, programming, or
                  documentation not commercially available to Licensee on
                  reasonable terms through readily known sources other than
                  Licensor, the Source Code shall include all such devices'
                  programming, or documentation. The foregoing reference to such
                  "development environment" is intended to apply to any
                  programs, including compilers, "workbenches," tools, and
                  higher-level (or "proprietary") languages, used by Licensor
                  for the development, maintenance, and implementation of the
                  Source Code.

                  1.3 "SOURCE CODE UPDATE" means a copy of the Source Code
                  version of each Upgrade.

2.       REPRESENTATIONS AND WARRANTIES OF LICENSOR

                  2.1 OWNERSHIP OF SOURCE CODE. Licensor represents and warrants
                  that it is the owner of, and holder of all rights in, the
                  Source Code, free and clear of all claims, liens and
                  encumbrances and has the right to grant to Licensee the
                  license rights to the Source Code pursuant to Section 5 hereof
                  and to deposit the Source Code with the Escrow Agent pursuant
                  to the terms of this Agreement.

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                  2.2 SOFTWARE CORRESPONDS WITH SOURCE CODE. Licensor represents
                  and warrants that the Source Code deposited with the Escrow
                  Agent will at all times be the source code version of the
                  current version of the Software, together with any and all
                  Upgrades.

                  2.3 USEABILITY OF SOURCE CODE. Licensor represents and
                  warrants that the Source Code is and shall be understandable
                  and useable by a trained computer programmer. Licensor further
                  represents and warrants that the Software does not involve any
                  proprietary languages or programming components that such a
                  programmer could not reasonably be expected to understand,
                  except to the extent the Source Code contains sufficient
                  commentary to enable such programmer to understand and use
                  such languages or components. Licensor further represents and
                  warrants that the Source Code includes all of the devices,
                  programming, and documentation necessary for the maintenance
                  of the Software by Licensee upon release of the Source Code
                  pursuant to this Agreement.

3.       DEPOSIT, CUSTODY, RELEASE AND EXAMINATION OF SOURCE CODE

                  3.1 DEPOSIT OF SOURCE CODE. The Escrow Agent agrees to accept
                  from Licensor, and Licensor agrees to deposit with the Escrow
                  Agent, within ten (10) days of the Effective Date of this
                  Agreement, a copy of the Source Code relating to the current
                  version of the Software. The Escrow Agent will issue a receipt
                  to Licensor, accompanied by a general list or description of
                  the materials so deposited.

                  3.2 DEPOSIT OF SOURCE CODE UPDATES. The Escrow Agent agrees to
                  accept from Licensor, and Licensor agrees to deposit with the
                  Escrow Agent within ten (10) days after each Software Upgrade
                  is made available to Licensee, a corresponding Source Code
                  Update. For each deposit, the Escrow Agent will issue a
                  receipt to Licensor, accompanied by a general list or
                  description of the materials so deposited.

                  3.3 CUSTODY OF SOURCE CODE. The Escrow Agent shall exercise
                  reasonable care to protect and safeguard all Source Code
                  delivered pursuant to this Agreement and shall segregate and
                  label such Source Code according to the date of delivery and
                  any other identifying information supplied by Licensor.

                  3.4 RELEASE OF SOURCE CODE. The Escrow Agent shall release
                  copies of the Source Code deposited in escrow pursuant to this
                  Agreement only in accordance with the terms of this Agreement.

                  3.5 VERIFICATION AND TESTING OF SOURCE CODE. Licensee shall be
                  permitted, in the presence of the Escrow Agent and Licensor to
                  inspect, compile, test, verify, confirm and review the Source
                  Code (subject to appropriate undertakings of confidentiality
                  and restrictions on copying, subsequent use, or disclosure) in
                  connection with the initial deposit of the Source Code in
                  escrow and at the time of each subsequent deposit hereunder
                  and the Escrow Agent shall permit such inspections and testing
                  promptly upon request.

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4.       IMPACT EVENT AS BASIS FOR RELEASE OF SOURCE CODE

                  4.1 RELEASE. If Licensor suffers an Impact Event at any time,
                  Licensor shall immediately so notify Licensee. In the event
                  Licensee becomes aware that Licensor has suffered an Impact
                  Event as a result of notice from Licensor or otherwise
                  Licensee may so notify the Escrow Agent in writing. Licensee's
                  notice to the Escrow Agent shall be accompanied by a copy of
                  written notice from Licensee to Licensor informing Licensor of
                  Licensee's intent to request release of the Source Code by the
                  Escrow Agent on a release date that shall be not less than
                  fourteen days from the date of such notice (the "Release
                  Date") unless (a) for Impact Events "a" through "h" and "j"
                  Licensor shall obtain an order from a court of competent
                  jurisdiction hereunder enjoining the release of the Source
                  Code or, (b) for Impact Events "i" and "k", Licensor objects
                  in writing within ten (10) days of Licensor's receipt of
                  Licensee's written notice of the occurrence of the Impact
                  Event, in which case such dispute shall be resolved through
                  expedited arbitration in accordance with Section 4.3 below.
                  During the pendency of such arbitration regarding Impact
                  Events "i" and "k" the Escrow Agent shall not release the
                  Source Code. Upon the Release Date, unless the Licensor shall
                  have delivered such objection notice to the Escrow Agent and
                  the Licensee, the Escrow Agent shall promptly release and
                  deliver a copy of the Source Code to Licensee.

                  4.2 INTENTION. In the event that Licensor or its successors or
                  representatives rejects or terminates the License Agreement or
                  this Agreement in breach of the provisions thereof or hereof,
                  including as contemplated under Section 365 of the Bankruptcy
                  Code, it is acknowledged that this Agreement contemplates the
                  manner in which Licensee may retain its rights in the
                  Software, including associated intellectual property rights,
                  if Licensee chooses to do so in accordance with Section 365(n)
                  of the Bankruptcy Code. This Agreement serves as a contract
                  supplementary to the License Agreement in such regard. It is
                  the parties' intent that the rights Licensee shall be entitled
                  to retain shall be of the scope provided in Section 6 hereof
                  in all items delivered or required to be delivered under the
                  License Agreement and this Agreement. Further, such rights
                  shall be subject to no restriction following an election by
                  Licensor, to reject or terminate the License Agreement or this
                  Agreement. Such rights shall be exclusive and either renewable
                  or perpetual to the extent so provided under the License
                  Agreement.

                  4.3 EXPEDITED ARBITRATION. In the event objection notice is
                  given by Licensor under Section 4.1 (b) above, the controversy
                  as to the occurrence of Impact Events "i" or "k" shall be
                  settled by binding arbitration in accordance with the Rules of
                  the American Arbitration Association using its provisions
                  regarding Expedited Procedures. The hearing shall be held in
                  Seattle, Washington before a single neutral arbitrator who
                  shall be selected by the American Arbitration Association. The
                  sole issue for arbitration shall be whether either Impact
                  Events "i" or "k" has occurred. The arbitrator shall have no
                  authority to modify, amend or change this Agreement, the
                  License Agreement, or any other agreements between Licensor
                  and Licensee. The parties shall prepare their arguments for
                  presentation before the arbitrator within fifteen (15) days
                  from the day of appointment of the

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                  arbitrator. No more than two (2) business days shall be
                  allotted for oral argument. The arbitrator shall render its
                  decision within ten (10) days of the completion of oral
                  arguments, and the arbitrator shall agree to comply with this
                  schedule before accepting appointment. If the arbitrator
                  decides that either Impact Event "i" or Impact Event "k" has
                  occurred, the arbitrator shall order the release of, and
                  Escrow Agent shall so release to Licensee, the Source Code for
                  use by Licensee in accordance with the provisions of this
                  Agreement. The decision of the arbitrator shall be final and
                  binding on the Licensor and Licensee and may be entered and
                  enforced in any court of competent jurisdiction.

5.       LICENSE OF SOURCE CODE

In the event that a copy of the Source Code is authorized hereunder to be
delivered out of escrow to Licensee, Licensee shall immediately be granted,
without any further action, authorization, or instrument, a paid-up,
irrevocable, perpetual, nonexclusive license from Licensor to use, modify,
maintain, and update the Source Code in any manner that may be necessary or
appropriate to enable Licensee to fulfill Licensor's support and maintenance
obligations with respect to the Software and for no other purpose.

  6.     FEES AND PAYMENTS

                  6.1 ESCROW FEES. Licensor shall pay to the Escrow Agent,
                  annually in advance during the term hereof, all fees of the
                  Escrow Agent at its prescribed rate. Licensee shall reimburse
                  Licensor for fifty percent (50%) of such fees within thirty
                  (30) days after receipt of Licensor's invoice for such amount,
                  accompanied by a copy of the Escrow Agent's receipt. In the
                  event that Licensor shall fail to pay such fees, Licensee
                  shall have the right, but not the obligation, to pay all of
                  such fees and shall be entitled to set off against any sums
                  owing to Licensor its share of such fees.

                  6.2 PAYMENTS FOR SOFTWARE. In the event the Source Code is
                  released to Licensee pursuant to this Agreement, Licensee
                  shall continue to pay any Product Fees, Royalties, or Purchase
                  Price Payments due and not yet paid under the terms of the
                  License Agreement, the Software License Agreement or the Asset
                  Purchase Agreement, reduced by any loss or expense incurred by
                  Licensee as a result of the events giving rise to the release
                  of the Source Code.

7.       LIMITATION UPON OBLIGATION OF THE ESCROW AGENT

                  7.1 LIMITED DUTY OF INQUIRY. The Escrow Agent shall not be
                  required to inquire into the truth of any statements or
                  representations contained in any notices, certificates, or
                  other documents required or permitted hereunder, and it may
                  assume that the signatures on any such documents are genuine,
                  that the persons signing on behalf of any party thereto are
                  duly authorized to issue such document, and that all actions
                  necessary to render any such documents binding on any party
                  thereto have been duly undertaken.

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                  7.2 RELEASE AND INDEMNIFICATION OF THE ESCROW AGENT. Licensor
                  and Licensee do hereby release, and agree to indemnify and
                  hold harmless, the Escrow Agent from and against any and all
                  liability for losses, damages, and expenses (including
                  attorney's fees) that may be incurred by it on account of any
                  action taken by the Escrow Agent in good faith pursuant to
                  this Agreement, and agree to defend and indemnify the Escrow
                  Agent from and against any and all claims, demands, or actions
                  arising out of or resulting from any action taken by the
                  Escrow Agent in good faith pursuant to this Agreement.

8.       TERM OF AGREEMENT

                  8.1 TERM. The term of this Agreement shall commence on the
                  effective date hereof and shall continue from year to year
                  until this Agreement is terminated hereunder.

                  8.2      TERMINATION. This Agreement may be terminated:

                           (a) By mutual consent of Licensor and Licensee at any
                           time;

                           (b) By the E crow Agent at any time, provided that
                           the Escrow Agent has given Licensor and Licensee
                           notice to that effect in writing at least one hundred
                           twenty (120) days before the contemplated date of
                           termination, whereupon Licensee may identify an
                           independent successor Escrow Agent, who is agreeable
                           to assuming, and will assume, all further obligations
                           of the Escrow Agent hereunder; or

                           (c) Automatically, in the event that a copy of the
                           Source Code is released to Licensee in accordance
                           with the terms of this Agreement.

                           Upon termination of this Agreement, following
                           distribution of a complete copy to Licensee to the
                           extent so required hereunder, any remaining copies of
                           the Source Code shall be delivered to Licensor,
                           except that in the event of termination at the
                           instance solely of the Escrow Agent, such copies
                           shall be delivered to the successor Escrow Agent.

9.       MISCELLANEOUS

                  9.1 ENTIRE AGREEMENT. This Agreement is the entire agreement
                  among the parties with respect to the subject matter hereof
                  and may only be modified in a writing signed by all parties.

                  9.2 SURVIVAL. The terms of this Agreement that by their nature
                  should survive the expiration or termination of this Agreement
                  will do so.

                  9.3 INVALIDITY OF A PROVISION. If one or more of the
                  provisions of this Agreement is invalid or unenforceable, all
                  other provisions of this Agreement will remain in full force.
                  The parties will substitute the invalid or unenforceable

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                  provision with a valid or enforceable provision that most
                  closely approximates their original commercial intent.

                  9.4 NO ASSIGNMENT. No portion of this Agreement may be
                  transferred or assigned by Licensor or Licensee without the
                  prior written consent of the other party which consent shall
                  not be unreasonably withheld, provided, however, either party
                  may assign this Agreement to any subsidiary of that party or
                  of its parent company. Subject to the foregoing, this
                  Agreement shall be binding upon the respective successors and
                  assigns of the parties.

                  9.5 INDEPENDENT CONTRACTORS. The parties hereto are
                  independent contractors and are not and shall not be deemed or
                  considered to be joint venturers, partners, agents, servants,
                  employees, fiduciaries, or representatives of one another, and
                  no party to this Agreement shall have the right or power to
                  bind or obligate any other party to, or third party
                  beneficiary of this Agreement, except as set forth herein.
                  Without limiting the generality of the foregoing, the Escrow
                  Agent shall be regarded as an independent custodian of the
                  Source Code and not as an agent or trustee of Licensor.

                  9.6 NOTICES. All notices sent hereunder must be in writing and
                  will be deemed given when delivered in person or when received
                  by mail, postage prepaid, registered or certified mail,
                  express courier, or telefax with proof of delivery received by
                  the sending party:

                  If to Licensee:           Spacelabs Medical, Inc.
                                            15220 N.E. 40th Street
                                            P.O. Box 97013
                                            Redmond, Washington 98073-9713
                                            Attention: Roy Hays, Vice President,
                                            Product Development
                                            Facsimile: (425) 883-7091

                  With a copy to:           Spacelabs Medical, Inc.
                                            15220 N.E. 40th Street
                                            P.O. Box 97013
                                            Redmond, Washington 98073-9713
                                            Attention: Eugene V. DeFelice, Vice
                                            President, General Counsel and
                                            Secretary
                                            Facsimile: (425) 883-7091

                  If to Licensor:           Cambridge Heart, Inc.
                                            One Oak Park Drive
                                            Bedford, MA 01730
                                            Attn: Jeffrey M. Arnold, Chairman,
                                            President and CEO
                                            Facsimile: (781) 275-8431

<PAGE>

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                  With a copy to:           Steve Singer, Esq.
                                            Hale and Dorr LLP
                                            60 State Street,
                                            Boston, Massachusetts 02109
                                            Facsimile: (617) 526-5000

                  If to Escrow Agent:       Fort Knox Escrow Services, Inc.
                                            2100 Norcross Parkway
                                            Suite 150
                                            Norcross, Georgia 30071
                                            Attention: Meredith Paleen
                                            Facsimile: (770) 239-9201

                  9.7 GOVERNING LAW AND JURISDICTION. This Agreement will be
                  governed by the internal laws of the Commonwealth of
                  Massachusetts, without regard to conflict of laws provisions
                  that may provide a different result. Any suit related to this
                  Agreement must be brought in a state or federal court located
                  in Boston, Massachusetts, and the parties irrevocably consent
                  to the venue and personal jurisdiction of such courts.

                  9.8 COUNTERPARTS. This Agreement may be executed in
                  counterparts, each of which will constitute an original and
                  enforceable instrument, but all of which will constitute one
                  and the same agreement.

                  9.9 NO WAIVER. No party shall, by mere lapse of time, without
                  giving notice or taking other action hereunder, be deemed to
                  have waived any breach by the other party(ies) of any of the
                  provisions of this Agreement. Further, the waiver by any party
                  of any particular breach of this Agreement by any other party
                  shall not be construed to constitute a continuing waiver of
                  such breach or of any other breaches of the same or other
                  provisions of this Agreement.

                  9.10 BINDING EFFECT. This Agreement shall be binding upon, and
                  shall inure to the benefit of, the parties hereto and their
                  respective successors and assigns.

                  9.11 REMEDIES. The description of the possible occurrences
                  that would constitute an Impact Event, and the consequences
                  thereof, shall create no presumption that Licensor may or
                  should be permitted to reject or terminate the License
                  Agreement or this Agreement under applicable law. The parties
                  agree that such a rejection or termination would be highly
                  prejudicial to Licensee's interests, and enforcement of the
                  Agreement will not provide a complete or adequate remedy for
                  the harm to Licensee's interests.

                  9.12 LIABILITY OF ESCROW AGENT. Except for intentional
                  misrepresentation, negligence or intentional misconduct Fort
                  Knox shall not be liable to Licensor or to Licensee for any
                  act, or failure to act, by Fort Knox in connection with this
                  Agreement. Any liability of Fort Knox regardless of the cause
                  shall be limited to

<PAGE>

------------------ -------------------------------------- -------------- -------
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------------------ -------------------------------------- -------------- -------

                  $50,000. Fort Knox will not be liable for special, indirect,
                  incidental or consequential damages hereunder.

LICENSEE:                                   LICENSOR:

SPACELABS MEDICAL, INC.                     CAMBRIDGE HEART, INC.

By:   /s/Dennis Larsen                      By:   /s/Jeffrey M. Arnold
   ------------------------------              ---------------------------------

Title:   Vice President, Business           Title:   Chairman, President and CEO
         Development                              ------------------------------
         ------------------------
ESCROW AGENT:

FORT KNOX ESCROW SERVICES, INC.

By:_____________________________
            (signature)
Name:___________________________

Title:__________________________

<PAGE>

------------------ -------------------------------------- -------------- -------
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------------------ -------------------------------------- -------------- -------

   Confidential Materials omitted and filed separately with the Securities and
                Exchange Commission. Asterisks denote omissions.

                          APPENDIX H: PARTS PRICE LIST

<TABLE>
<CAPTION>

----------------------- -------------------------------------------- ---------------------------- --------------------
                                                                            RECOMMENDED               DISTRIBUTOR
       PART NO.                         DESCRIPTION                          LIST PRICE                  PRICE
----------------------- -------------------------------------------- ---------------------------- --------------------
<S>                     <C>                                          <C>                          <C>
10-0148-001             PM-3 Patient Module                                    $[***]                   $[***]
----------------------- -------------------------------------------- ---------------------------- --------------------
10-0153-001             PM-3 Alternans Patient Cable (US) -- for                [***]                    [***]
                        Alternans Testing
----------------------- -------------------------------------------- ---------------------------- --------------------
10-0153-002             PM-3 Alternans Patient Cable (Int'l) --                 [***]                    [***]
                        for Alternans Testing
----------------------- -------------------------------------------- ---------------------------- --------------------
10-0192-001             PM-3 Alternans Patient Cable (US) -- for                [***]                    [***]
                        Standard Stress Testing
----------------------- -------------------------------------------- ---------------------------- --------------------
10-0192-002             PM-3-Lead Patient Cable (Int'l) -for --                 [***]                    [***]
                        Standard Stress Testing
----------------------- -------------------------------------------- ---------------------------- --------------------
20606-002               Replacement Belt and Buckle                             [***]                    [***]
----------------------- -------------------------------------------- ---------------------------- --------------------
20-0723-001             Replacement Leadwire Clips (set of 10)                  [***]                    [***]
----------------------- -------------------------------------------- ---------------------------- --------------------
</TABLE><PAGE>

                                                                 EXECUTION COPY

              FOURTH AMENDMENT AND WAIVER, dated as of July 14, 2000 (this
"AMENDMENT AND WAIVER"), to the CREDIT AND GUARANTEE AGREEMENT, dated as of
August 14, 1996 (as amended pursuant to the First Amendment thereto, dated as
of June 19, 1997, the Second Amendment thereto, dated as of September 30,
1997, the Third Amendment thereto, dated as of November 19, 1998, and as the
same may be further amended, supplemented or otherwise modified from time to
time, the "CREDIT AGREEMENT"), among DAL-TILE INTERNATIONAL INC., a Delaware
corporation ("HOLDINGS"), DAL-TILE GROUP INC., a Delaware corporation (the
"BORROWER"), the several banks and other financial institutions from time to
time parties thereto (collectively, the "LENDERS"), CREDIT SUISSE FIRST
BOSTON, as documentation agent (in such capacity, the "DOCUMENTATION AGENT"),
and THE CHASE MANHATTAN BANK ("CHASE"), a New York banking corporation, as
administrative agent for the Lenders (in such capacity, the "ADMINISTRATIVE
AGENT").

                                W I T N E S S E T H :

              WHEREAS, the Borrower has requested that the Lenders amend and
waive the Credit Agreement in the manner provided for herein; and0

              WHEREAS, the Lenders are willing to amend and waive the Credit
Agreement in the manner and on the terms and conditions provided for herein;
and

              WHEREAS, the Borrower intends to enter into a joint venture
transaction with EMILCERAMICA through a newly formed jointly owned company
all as described in Annex A hereto;

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

              SECTION 1.    DEFINITIONS AND SECTION REFERENCES

              1.1    DEFINED TERMS.  Unless otherwise defined herein, terms
which are defined in the Credit Agreement and used herein are so used as so
defined.

              1.2    SECTION REFERENCES.  Unless otherwise indicated, all
Section and subsection references are to the Credit Agreement.

              SECTION 2.    AMENDMENTS TO CREDIT AGREEMENT

              2.1    AMENDMENT TO SUBSECTION 7.1.  Subsection 7.1 of the
Credit Agreement is hereby amended by (i) adding the word "and" at the end of
paragraph (b) thereof and (ii) deleting paragraph (c) of such subsection in
its entirety.

<PAGE>

                                                                              2

              2.2    AMENDMENT TO SUBSECTION 8.4(e).  Subsection 8.4 of the
Credit Agreement is hereby amended by deleting paragraph (e) of such
subsection in its entirety and inserting in lieu thereof the following new
paragraph:

              "(e) guarantees by Holdings and its Subsidiaries incurred in
the ordinary course of business for an aggregate amount not to exceed
$20,000,000 at any one time outstanding."

              2.3    AMENDMENT TO SUBSECTION 8.7.  Subsection 8.7 of the
Credit Agreement is hereby amended by deleting such subsection in its
entirety and inserting in lieu thereof the following new subsection:

              "8.7   LIMITATION ON LEASES.  Permit Consolidated Lease Expense
for any fiscal year of the Borrower to exceed (a) for fiscal year 2001,
$55,000,000, (b) for fiscal year 2002, $65,000,000, and (c) for fiscal year
2003, $65,000,000."

              2.4    AMENDMENT TO SUBSECTION 8.9.  Subsection 8.9 of the
Credit Agreement is hereby amended by deleting the table appearing in such
subsection in its entirety and inserting in lieu thereof the following new
table:

<TABLE>
<CAPTION>

                     FISCAL YEAR ENDING        AMOUNT
                     ------------------        ------
                     <S>                     <C>
                          12/31/00           $35,000,000

                          12/31/01            65,000,000

                          12/31/02            70,000,000

                          12/31/03            70,000,000
</TABLE>

              SECTION 3.    WAIVER OF SECTION 7.9

              The Administrative Agent and the Required Lenders hereby
expressly waive the application of Section 7.9(b) of the Credit Agreement to
the extent such section would require any Joint Venture Entity (as defined in
Annex A hereto) or any Subsidiary of any Joint Venture Entity to become a
Subsidiary Guarantor, to grant a security interest in its assets or to create
a Lien on any Capital Stock owned by it or to deliver any certificates with
respect thereto.

              SECTION 4.    MISCELLANEOUS

              4.1    REPRESENTATIONS AND WARRANTIES.  On and as of the date
hereof, Holdings and the Borrower hereby confirm, reaffirm and restate the
representations and warranties set forth in Section 5 of the Credit Agreement
MUTATIS MUTANDIS (after giving effect to any amendments thereto pursuant to
this Amendment and Waiver), except to the extent that such representations
and warranties expressly relate to a specific earlier date in which case
Holdings

<PAGE>

and the Borrower hereby confirm, reaffirm and restate such representations
and warranties as of such earlier date.

              4.2    EFFECTIVENESS.  This Amendment and Waiver shall become
effective as of the date (the "EFFECTIVE DATE") upon which the Administrative
Agent shall have received this Amendment and Waiver, executed and delivered
by a duly authorized officer of Holdings, the Borrower and the Required
Lenders with a counterpart for the Administrative Agent and a counterpart or
a conformed copy for each Lender.

              4.3    CONTINUING EFFECT; NO OTHER AMENDMENTS OR WAIVERS.
Except as expressly amended and waived hereby, all of the terms and
provisions of the Credit Agreement are and shall remain in full force and
effect.  The amendments and waivers provided for herein are limited to the
specific subsections of the Credit Agreement specified herein and shall not
constitute an amendment or waiver of, or an indication of the Administrative
Agent's or the Lenders' willingness to amend or waive, any other provisions
of the Credit Agreement or the same subsection for any other date or time
period (whether or not such other provisions or compliance with such
subsections for another date or time period are affected by the circumstances
addressed in this Amendment and Waiver).

              4.4    EXPENSES.  The Borrower agrees to pay and reimburse the
Administrative Agent for all reasonable costs and out-of-pocket expenses
incurred by the Administrative Agent in connection with the preparation and
delivery of this Amendment and Waiver, including, without limitation, the
reasonable fees and disbursements of counsel to the Administrative Agent.

              4.5    COUNTERPARTS.  This Amendment and Waiver may be executed
in any number of counterparts by the parties hereto (including by facsimile
transmission), each of which counterparts when so executed shall be an
original, but all the counterparts shall together constitute one and the same
instrument.

              4.6    GOVERNING LAW.  THIS AMENDMENT AND WAIVER SHALL BE
GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF
THE STATE OF NEW YORK.

<PAGE>

              IN WITNESS WHEREOF, the parties hereto have caused this
Amendment and Waiver to be executed and delivered by their respective duly
authorized officers as of the date first above written.

                                  DAL-TILE INTERNATIONAL INC.

                                  By:
                                     --------------------------------
                                     Name:
                                     Title:

                                  DAL-TILE GROUP INC.

                                  By:
                                     --------------------------------
                                     Name:
                                     Title:

                                  THE CHASE MANHATTAN BANK, as
                                  Administrative Agent and as a Lender

                                  By:
                                     --------------------------------
                                     Title:

                                  ALLIED IRISH BANK

                                  By:
                                     --------------------------------
                                     Title:

                                  BANK LEUMI USA

                                  By:
                                     --------------------------------
                                     Title:

<PAGE>

                                  BANK OF AMERICA

                                  By:
                                     --------------------------------
                                     Title:

                                  BANK OF NEW YORK

                                  By:
                                     --------------------------------
                                     Title:

                                  THE BANK OF NOVA SCOTIA

                                  By:
                                     --------------------------------
                                     Title:

                                  BANK OF TOKYO-MITSUBISHI

                                  By:
                                     --------------------------------
                                     Title:

                                  CIBC INC.

                                  By:
                                     --------------------------------
                                     Title:

                                  CHASE BANK OF TEXAS, N.A.

                                  By:
                                     --------------------------------
                                     Title:

<PAGE>

                                  CREDIT SUISSE FIRST BOSTON

                                  By:
                                     --------------------------------
                                     Title:

                                  CREDIT LYONNAIS

                                  By:
                                     --------------------------------
                                     Title:

                                  FLEET BANK

                                  By:
                                     --------------------------------
                                     Title:

                                  FLEET NATIONAL BANK

                                  By:
                                     --------------------------------
                                     Title:

                                  FOOTHILL INCOME TRUST L.P.

                                  By:
                                     --------------------------------
                                     Title:

                                  THE FUJI BANK, LIMITED

                                  By:
                                     --------------------------------
                                     Title:

<PAGE>

                                  INDUSTRIAL BANK OF JAPAN (NEW YORK)

                                  By:
                                     --------------------------------
                                     Title:

                                  MERRILL LYNCH SENIOR FLOATING FUND

                                  By:
                                     --------------------------------
                                     Title:

                                  ML DEBT STRATEGIES FUND, INC.

                                  By:
                                     --------------------------------
                                     Title:

                                  METLIFE INVESTMENT

                                  By:
                                     --------------------------------
                                     Title:

                                  MITSUBISHI TRUST AND BANKING
                                  CORPORATION (USA)

                                  By:
                                     --------------------------------
                                     Title:

                                  ML CBO IV (CAYMAN) LTD.

                                  By:
                                     --------------------------------
                                     Title:

<PAGE>

                                  PNC CORPORATE BANKING

                                  By:
                                     --------------------------------
                                     Title:

                                  SENIOR DEBT PORTFOLIO (EATON VANCE)

                                  By:
                                     --------------------------------
                                     Title:

                                  SENIOR HIGH INCOME PORTFOLIO

                                  By:
                                     --------------------------------
                                     Title:

                                  SOCIETE GENERALE, (NEW YORK)

                                  By:
                                     --------------------------------
                                     Title:

                                  SUNTRUST BANK INC.

                                  By:
                                     --------------------------------
                                     Title:

                                  FIRST UNION NATIONAL BANK

                                  By:
                                     --------------------------------
                                     Title:

<PAGE>

                                  KZH SOLEIL LLC

                                  By:
                                     --------------------------------
                                     Title:

                                  CYPRESS TREE INVESTMENT
                                  MANAGEMENT COMPANY, INC.

                                  By:
                                     --------------------------------
                                     Title:

                                  CYPRESSTREE INVESTMENT PARTNERS I

                                  By:
                                     --------------------------------
                                     Title:

                                  CYPRESSTREE INSTITUTIONAL FUND, LLC

                                  By:
                                     --------------------------------
                                     Title:

                                  CYPRESSTREE SENIOR FLOATING RATE FUND

                                  By:
                                     --------------------------------
                                     Title:

                                  KZH PAMCO LLC

                                  By:
                                     --------------------------------
                                     Title:

<PAGE>

                                  KZH--CYPRESSTREE--1 LLC

                                  By:
                                     --------------------------------
                                     Title:

                                  KZH HIGHLAND-2 LLC

                                  By:
                                     --------------------------------
                                     Title:

                                  NATIONSBANC MONTGOMERY SECURITIES LLC

                                  By:
                                     --------------------------------
                                     Title:

                                  VAN KAMPEN  PRIME RATE INCOME TRUST

                                  By:
                                     --------------------------------
                                     Title:

                                  VAN KAMPEN SENIOR INCOME TRUST

                                  By:
                                     --------------------------------
                                     Title:

<PAGE>

                                  CONSENT

              The undersigned hereby acknowledges receipt of a copy of and
consents to the execution and delivery by Holdings and the Borrower of the
Fourth Amendment and Waiver to which this Consent is attached (the "AMENDMENT
AND WAIVER").  The undersigned further confirms and agrees that, after giving
effect to the Fourth Amendment and Waiver, each Loan Document to which it is
a party shall continue in full force and effect in accordance with its terms.

                                    DAL-TILE CORPORATION

                                    By:
                                       ---------------------------------

                                    Name:
                                         -------------------------------
                                    Title:
                                          ------------------------------

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