Document:

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                                                                    EXHIBIT 10.9

                           ASSET PURCHASE AGREEMENT

                         Dated as of December 18, 1998

                                    Between

                         BAXTER HEALTHCARE CORPORATION

                                      and

                          OMNICELL TECHNOLOGIES INC.

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                               TABLE OF CONTENTS

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ARTICLE 1      PURCHASE OF ASSETS...............................................................      1
     1.1   Purchased Assets.....................................................................      1
     1.2   Excluded Assets......................................................................      3

ARTICLE 2      CONSIDERATION....................................................................      4
     2.1   Preliminary Purchase Price; Payment of Preliminary Purchase Price....................      4
     2.2   Purchase Price Adjustment............................................................      5
     2.3   Assumption of Liabilities............................................................      6
     2.4   Non-Assignable Contracts.............................................................      7
     2.5   Allocation of Purchase Price.........................................................      7

ARTICLE 3      REPRESENTATIONS AND WARRANTIES OF THE SELLER.....................................      8
     3.1   Organization, Qualification and Corporate Power......................................      8
     3.2   Authorization of Transaction.........................................................      8
     3.3   Noncontravention.....................................................................      8
     3.4   No Material Consents.................................................................      9
     3.5   Latest Balance Sheet.................................................................      9
     3.6   Recent Events........................................................................      9
     3.7   Tax Matters..........................................................................     10
     3.8   Title and Condition of Properties....................................................     10
     3.9   Intellectual Property................................................................     10
     3.10  Contracts............................................................................     11
     3.11  Inventory............................................................................     12
     3.12  Litigation...........................................................................     12
     3.13  Employment Matters...................................................................     13
     3.14  Employees and Executive Compensation.................................................     13
     3.15  Licenses, Permits and Approvals......................................................     13
     3.16  Compliance with Laws.................................................................     14
     3.17  Product Warranty.....................................................................     14
     3.18  Installation.........................................................................     14
     3.19  Brokers' Fees........................................................................     14
     3.20  Accounting for Returns...............................................................     14
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                                      i.

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                               TABLE OF CONTENTS

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     3.21  Year 2000 Compliance Obligations.....................................................     14

ARTICLE 4      REPRESENTATIONS AND WARRANTIES OF THE BUYER......................................     15
     4.1   Corporate Status.....................................................................     15
     4.2   Authority for Transaction............................................................     15
     4.3   No Breach or Default.................................................................     15
     4.4   Financial Statements; Books and Records..............................................     15
     4.5   Recent Events........................................................................     16
     4.6   Brokerage............................................................................     16
     4.7   Litigation...........................................................................     16

ARTICLE 5      COVENANTS PRIOR TO CLOSING.......................................................     16
     5.1   Conduct of Operations................................................................     16
     5.2   Buyer Access to Seller's Records and Premises........................................     16
     5.3   Seller Access to Buyer's Records and Premises........................................     17
     5.4   Buyer Confidentiality................................................................     17
     5.5   Seller Confidentiality...............................................................     17
     5.6   Cooperation..........................................................................     18
     5.7   HSR Approval.........................................................................     18
     5.8   Notice of Developments...............................................................     18
     5.9   Certain Employee and Employee Plan Matters...........................................     18
     5.10  Service and Installation.............................................................     21
     5.11  No Third-Party Beneficiaries.........................................................     21
     5.12  No Negotiation.......................................................................     21
     5.13  Use of Seller's Trademarks...........................................................     21
     5.14  Collection of Accounts Receivable....................................................     22
     5.15  Purchase of Leased Equipment.........................................................     22

ARTICLE 6      CONDITIONS PRECEDENT TO THE BUYER'S OBLIGATIONS..................................     23
     6.1   The Seller's Closing Documents.......................................................     23
     6.2   Representations and Warranties.......................................................     23
     6.3   Obligations..........................................................................     23
     6.4   No Injunction or Restraint...........................................................     23
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                                      ii.

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                               TABLE OF CONTENTS

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     6.5   Legal Opinion of Counsel for the Seller..............................................     23
     6.6   Consents from Third Parties..........................................................     23
     6.7   HSR Clearance........................................................................     23
     6.8   No Material Adverse Change...........................................................     23
     6.9   Audited Financials...................................................................     24
     6.10  Carve-Out Financials.................................................................     24

ARTICLE 7      CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE SELLER............................     24
     7.1   Buyer' Closing Documents.............................................................     24
     7.2   Representations and Warranties.......................................................     24
     7.3   Obligations..........................................................................     24
     7.4   No Injunction or Restraint...........................................................     24
     7.5   No Material Adverse Change...........................................................     24
     7.6   HSR Approval.........................................................................     25
     7.7   Legal Opinion........................................................................     25
     7.8   Consents and Approvals...............................................................     25
     7.9   Loan Agreement.......................................................................     25
     7.10  Companion Sale.......................................................................     25

ARTICLE 8      TERMINATION......................................................................     25
     8.1   Termination..........................................................................     25
     8.2   Effect of Termination................................................................     26

ARTICLE 9      CLOSING..........................................................................     26
     9.1   Time and Place of Closing............................................................     26
     9.2   Deliveries by the Seller.............................................................     26
     9.3   Deliveries by the Buyer..............................................................     27
     9.4   Termination of Distribution Agreement; Credit Against Reimburseable Expenses.........     28

ARTICLE 10     POST-CLOSING OBLIGATIONS OF THE PARTIES..........................................     29
     10.1  Further Obligations of the Parties...................................................     29
     10.2  Taxes................................................................................     29
     10.3  Sales Taxes..........................................................................     30
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                                     iii.

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                               TABLE OF CONTENTS

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     10.4  Delivery of 1998 Audited Financials..................................................     30
     10.5  Seller Covenant Not to Compete.......................................................     30

ARTICLE 11     SURVIVAL OF WARRANTIES AND INDEMNIFICATION.......................................     30
     11.1  Survival.............................................................................     30
     11.2  Indemnification by the Seller........................................................     31
     11.3  Limits on the Seller's Indemnification Obligation....................................     31
     11.4  Indemnification by Buyer.............................................................     32
     11.5  Limits on Buyer's Indemnification Obligations........................................     32
     11.6  Matters Involving Third Parties......................................................     32
     11.7  Additional Limitations...............................................................     33

ARTICLE 12     MISCELLANEOUS PROVISIONS.........................................................     34
     12.1  Certain Definitions..................................................................     34
     12.2  Notices..............................................................................     38
     12.3  Assignability; Binding Effect........................................................     39
     12.4  Governing Law; Venue.................................................................     39
     12.5  Counterparts.........................................................................     39
     12.6  Entire Agreement.....................................................................     39
     12.7  Confidentiality......................................................................     39
     12.8  Number/Gender........................................................................     39
     12.9  Captions.............................................................................     40
     12.10 Allocation of Fees and Expenses......................................................     40
     12.11 Severability.........................................................................     40
     12.12 Construction.........................................................................     40
     12.13 No Public Announcement...............................................................     40
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Exhibits

Exhibit A  Bill of Sale
Exhibit B  Loan Agreement
Exhibit C  Assumption Agreement
Exhibit D  Legal Opinion of Seller's Counsel
Exhibit E  Legal Opinion of Buyer's Counsel
Exhibit F  Transition Services Agreement
Exhibit G  Service and Installation Agreement

                                      iv.

<PAGE>

                           ASSET PURCHASE AGREEMENT

     This Asset Purchase Agreement (this "Agreement") is made as of this 18/th/
day of December, 1998, by and between Baxter Healthcare Corporation, a Delaware
corporation (the "Seller") and OmniCell Technologies Inc., a California
corporation (the "Buyer").

                                   Recitals

     A.   The Seller, through the Productivity Systems business unit of its I.V.
Systems Division, designs, develops, markets, distributes and sells the Sure-Med
System (the "Business").

     B.   The Buyer desires to acquire from the Seller, and the Seller desires
to sell to the Buyer, pursuant to the terms and conditions of this Agreement,
substantially all of the assets and rights owned or held by the Seller and used
primarily in the conduct of the Business, together with certain specified
liabilities and obligations of the Seller relating to the Business, all as more
specifically set forth herein.

     C.   Certain capitalized terms used in this Agreement are defined in
Section 12.1.

     Now Therefore, in consideration of the foregoing recitals, which are hereby
incorporated herein, and the mutual promises herein contained, the parties
hereby agree as follows:

                                   ARTICLE 1

                              PURCHASE OF ASSETS

     1.1  Purchased Assets. On the terms and subject to the conditions set forth
in this Agreement, on the Closing Date, the Buyer shall purchase from the Seller
and the Seller shall sell, transfer, assign and deliver to the Buyer, pursuant
to a Bill of Sale and Assignment (the "Bill of Sale") to be executed and
delivered at closing in the form attached hereto as Exhibit A, all of the
Seller's right, title and interest in and to the following assets of the Seller
to the extent used primarily in the conduct of the Business, wherever located
(collectively, the "Purchased Assets") in each case free and clear of any and
all Security Interests:

          (a)  all machinery, computer equipment and other equipment, together
with all parts, tools and accessories relating thereto, and other tangible
personal property, including but not limited to those specifically listed on
Schedule 1.1(a) attached hereto ("Equipment");
---------------

          (b)  all inventory and supplies reflected on the Latest Balance Sheet
(to the extent not sold, leased, consigned or otherwise disposed of in the
Ordinary Course of Business prior to Closing) and other inventory and supplies
acquired prior to Closing and reflected on the Closing Balance Sheet
("Inventory");

                                       1.

<PAGE>

          (c)  subject to Section 5.13, all packaging materials and other
supplies;

          (d)  all goodwill directly incident to or directly associated with the
Business, and only the Business, as a going concern, all customer lists and all
other information and data relating to the customers or suppliers, and, whether
or not registered, all design and product patents, trademarks, tradenames and
service marks (including, without limitation, the name "SureMed" and all
combinations with the foregoing), together with all goodwill associated
therewith, all copyrightable works and works of authorship, whether or not
registered, computer programs and software, (inclusive of all source code and
related source code documentation), URLs and domain names, computer software
documentation, trade secrets, and all processes, ideas, inventions and know how
whether or not patentable, engineering drawings, plans and product
specifications, promotional displays and materials, including all the
Intellectual Property embodied by or otherwise related to any of the foregoing,
and any registrations, applications, continuations and continuations-in-part
related to any of the foregoing ("Intangible Assets");

          (e)  all contracts, arrangements, purchase orders, commitments and
other agreements of the Seller ("Contracts") listed in Part 3.10 of the Seller
Disclosure Schedule attached hereto and all Contracts which, by virtue of the
provisions of Section 3.10, are not required to be disclosed in Part 3.10 of the
Seller Disclosure Schedule (collectively, the "Assigned Contracts"), except the
Excluded Leases (as defined in Section 1.2(c)), Foreign Customer Contracts, the
contract between Seller and Allegiance Healthcare Corporation dated as of
October 1, 1996 (the "Allegiance Contract") and other Contracts (the "Excluded
Contracts") which are identified on Schedule 1.1(e) attached hereto;
                                    ---------------

          (f)  all business and operating Permits (as defined in Section 3.15)
and product registrations, to the extent assignable;

          (g)  all data, books, files and records (provided that Seller may
retain copies thereof), other than the original records, files and other
information kept for financial reporting purposes, copies of which shall be
provided to Buyer and considered Purchased Assets, or income tax purposes, and
other than original records, files, invoices and other information related to
the product leases and the Foreign Customer Contracts, copies of which shall be
provided to Buyer and considered Purchased Assets, ("Business Records");

          (h)  all deposits, refunds, prepaid rentals, leases and licenses,
catalog, packaging, promotional, trade show, advertising and royalty
expenditures and unbilled charges and credits, and other prepaid assets to the
extent reflected on the Latest Balance Sheet (to the extent not exhausted or
realized prior to Closing) and other prepaid assets generated prior to Closing
as reflected on the Closing Balance Sheet;

          (i)  all claims, warranties, choses of action, causes of action,
rights of recovery and rights of set-off relating to the Purchased Assets or the
Assumed Liabilities or relating primarily to the Business;

          (j)  all rights to receive and retain mail and other communications
relating to the Purchased Assets, the Assumed Liabilities and/or the Business;

                                       2.

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          (k)  Seller's right, title and interest in and to all goods produced
by the Business that are returned by a customer after the Closing;

          (l)  all other properties and assets of every kind, character or
description except Excluded Assets.

     1.2  Excluded Assets. Notwithstanding anything in Section 1.1 to the
contrary, the Purchased Assets shall not include any of the following assets of
the Seller ("Excluded Assets"):

          (a)  all cash and all accounts, notes and loans receivable;

          (b)  all furniture and fixtures;

          (c)  all product leases in effect as of the Closing Date and
receivables outstanding thereunder (the "Excluded Leases");

          (d)  minute books and stock record books of the Seller;

          (e)  any rights under or with respect to any employee benefit plans of
the Seller, except to the extent otherwise provided in Section 5.9

          (f)  all amounts billable or collectible under customer Contracts with
respect to products shipped but not invoiced as of the Closing Date;

          (g)  contracts, agreements, understandings and arrangements with
customers outside the United States or Canada (the "Foreign Customer
Contracts");

          (h)  all rights, liabilities and obligations under the Excluded
Contracts;

          (i)  all claims, warranties, choses of action, causes of action,
rights of recovery and rights of set-off relating to the Excluded Assets or the
Liabilities Not Assumed;

          (j)  all consideration to be received by and the rights of the Seller
under this Agreement;

          (k)  original records, files and other information kept for financial
reporting purposes or information related to the product leases and the Foreign
Customer Contracts, provided however that copies of the foregoing shall be
provided to Buyer and considered Purchased Assets, and original records, files
and other information kept for income tax purposes;

          (l)  all Contracts of insurance and the proceeds thereof;

          (m)  Permits not relating exclusively to the Business or that are not
transferable to Buyer;

          (n)  non-transferable software listed on Schedule 1.2(n) hereto;
                                                   ---------------

          (o)  all equipment that is subject to any product lease;

                                       3.

<PAGE>

          (p)  trademarks, service marks and trade names not set forth in Part
3.9 of the Seller Disclosure Schedule, including the name "Baxter" or the words
"Productivity Systems," or any derivation thereof and other marks (other than
"SureMed" or any derivation thereof) which serve to identify Seller or Seller's
Productivity Systems business unit;

          (q)  all rights to claims, refunds and causes of action related to the
Excluded Assets or the Liabilities Not Assumed;

          (r)  all other assets, properties and rights of Seller not used
primarily in the conduct of the Business and assets or properties located
outside of the United States of America and Canada which are used in connection
with the Foreign Customer Contracts;

          (s)  in the event the software license agreement between Seller and
Sybase, Inc. dated as of August 29, 1996 (the "Sybase Agreement") is not
assigned to Buyer, the amount prepaid thereunder as reflected on the Latest
Balance Sheet under the account identified as "Software Licenses" included in
the "Other Assets" account shall be an "Excluded Asset"; and

          (t)  the Allegiance Contract.

                                   ARTICLE 2

                                 CONSIDERATION

     2.1  Preliminary Purchase Price; Payment of Preliminary Purchase Price.

          (a)  At the Closing, the Buyer shall pay an amount (the "Preliminary
Purchase Price") equal to the Value of the Business based on the Latest Balance
Sheet, less, if the Sybase Agreement is not assigned to Buyer, the amount
prepaid thereunder as reflected on the Latest Balance Sheet under the account
identified as "Software Licenses" included in the "Other Assets" account. The
Preliminary Purchase Price shall be payable by delivery of (a) Two Million One
Hundred Thousand Dollars ($2,100,000) in cash and (b) the Buyer's senior
promissory note, in the form attached to the Loan Agreement, in the principal
amount equal to the Preliminary Purchase Price less Two Million One Hundred
Thousand Dollars ($2,100,000) (the "Purchase Note"). In connection with the
issuance of the Purchase Note, the Buyer and the Seller shall also enter into a
Loan Agreement as of the Closing Date in the form attached as Exhibit B (the
"Loan Agreement"). The Preliminary Purchase Price (and therefore the principal
amount due under the Purchase Note) will be subject to post-Closing adjustment
pursuant to Section 2.2.

          (b)  For purposes of this Agreement,

               (i)  the term "Value of the Business" means the sum of (A) the
Net Tangible Asset Value of the Business and (B) the Intangible Asset Value of
the Business;

               (ii) the term "Net Tangible Asset Value" means the assets
(excluding the Intangible Assets) minus the liabilities as shown on the Latest
Balance Sheet or the Closing Balance Sheet, as the case may be, minus (or plus
if such amount is a negative number) the sum of the value shown on the
applicable balance sheet of following (to the extent such following

                                       4.

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items are collectively in excess of reserves already reflected on the applicable
balance sheet): (A) all used or damaged equipment or components held in
inventory by Seller that is not capable of being refurbished by Seller; and (B)
all equipment or components held in inventory by Seller that Seller does not
reasonably expect to be sold during calendar year 1999 based upon market demand
for such equipment or components during the twelve months preceding the date of
this Agreement;

               (iii) the term "Specified Intangible Assets" means the assets
included in the accounts identified as (A) "Assets Under Construction Associated
with Software Development" and included within the Property, Plant and Equipment
account, (B) "Capitalized Software License" and (C) "Capitalized Software
Development Costs" included with the "Other Assets" account; and

               (iv)  the term "Intangible Asset Value of the Business" means (A)
the Specified Intangible Assets as shown on the Latest Balance Sheet, plus (B)
capital expenditures for software development made by Seller consistent with its
past practices between September 30, 1998 and the Closing Date, minus (C)
$3,000,000.

          (c)  The service, warranty and installation obligations being assumed
by OmniCell pursuant to this Agreement shall be reflected on the Closing Balance
Sheet as accrued liabilities in accordance with the methodology set forth in
Schedule 2.1(c) hereto.
---------------

     2.2  Purchase Price Adjustment

          (a)  As soon as possible, but in any event on or before the 60/th/ day
following the Closing Date, the Seller and its independent accountants
("Seller's Accountants") shall prepare and distribute to the Buyer and Buyer's
independent accountants ("Buyer's Accountants") an unaudited statement of assets
and liabilities for the Business being acquired hereunder (which shall exclude
Excluded Assets and Liabilities Not Assumed) as of the close of business on the
Closing Date, including a calculation of Value of the Business (the "Draft
Closing Balance Sheet"). The Seller will prepare the Draft Closing Balance Sheet
on a basis consistent with the preparation of the Latest Balance Sheet. The
Draft Closing Balance Sheet shall also contain a reconciliation to the Audited
Carve-out Financial Statements for the year ended December 31, 1997.

          (b)  Within thirty (30) calendar days after receiving the Draft
Closing Balance Sheet, Buyer will deliver to the Seller and Seller's Accountants
a written statement specifying the amount in dispute and describing in
reasonable detail the basis for such dispute. The parties shall use reasonable
efforts to resolve any such objections in good faith, but if they do not obtain
a final resolution within thirty (30) calendar days after the Buyer has
delivered the statement of objections and if the items remaining in dispute are
such that the Purchase Price would be adjusted by more than $50,000, then an
independent accounting firm which shall be mutually acceptable to the parties
shall be retained to resolve any remaining objections (the "Arbitrating
Accountants") and shall within forty-five (45) calendar days after submission
determine and report to the parties upon such remaining disputed items. The
parties shall bear the fees and disbursements of the Arbitrating Accountants in
the same proportion that their respective positions are confirmed or rejected by
the Arbitrating Accountants. The determination of the

                                       5.

<PAGE>

Arbitrating Accountants will be conclusive and binding on the parties. The
statement setting forth the final determinations pursuant to this Section 2.2(b)
is referred to herein as the "Closing Balance Sheet." Notwithstanding anything
contained in this Section 2.2 to the contrary, if the items successfully
disputed by the Buyer are such that the Purchase Price would be adjusted by less
than $50,000, no adjustment to the Purchase Price shall be made and the amount
of any adjustment that would otherwise be made shall be counted towards the
$300,000 threshold of Buyer Indemnifiable Losses specified in Section 11.3(b).
Any item disputed by Buyer that is resolved pursuant to this Section 2.2 may not
be asserted as a basis for a claim for indemnity by Seller under Article 11.

          (c)  If the Value of the Business calculated from the Closing Balance
Sheet exceeds the Preliminary Purchase Price, then the principal amount of the
Purchase Note shall be increased by an amount equal to such excess. If the Value
of the Business calculated from the Closing Balance Sheet is less than the
Preliminary Purchase Price, then the principal amount of the Purchase Note shall
be reduced by an amount equal to such difference. In either case, the interest
due under the Purchase Note shall be adjusted retroactively to the Closing Date
based on the final Purchase Price. The Preliminary Purchase Price, as adjusted
pursuant to this Section 2.2, shall be referred to herein as the "Purchase
Price." Promptly following the determination of the Purchase Price pursuant to
this Section 2.2, Buyer shall execute and deliver to the Seller in exchange for
the return of the original Purchase Note an amended and restated Purchase Note
reflecting such increase or reduction, as the case may be.

     2.3  Assumption of Liabilities.

          (a)  As additional consideration for the Purchased Assets, the Buyer
shall, pursuant to an assumption agreement to be executed and delivered at
Closing in the form attached hereto as Exhibit C (the "Assumption Agreement"),
assume the following liabilities and obligations of the Seller relating to the
Business (the "Assumed Liabilities"):

               (i)   those obligations and Liabilities arising under the
Assigned Contracts;

               (ii)  all Liabilities arising out of the operation of the
Business after the Closing Date;

               (iii) all repair, maintenance and product warranty claims arising
with respect to products of the Business sold before, on or after the date of
the Closing, including without limitation, with respect to products leased under
the Excluded Leases;

               (iv)  the Liabilities of the Seller to the Business Employees (as
defined in Section 3.14) to the extent set forth in Section 5.9;

               (v)   all Liabilities of the Business that are reflected on the
face of the Latest Balance Sheet and Liabilities of the same type which arise
out of the operation of the Business through and including the Closing Date in
the Ordinary Course of Business and which are reflected on the Closing Balance
Sheet;

                                       6.

<PAGE>

               (vi)   all Liabilities, obligations and commitments related to
the Intellectual Property included as part of the Purchased Assets;

               (vii)  all Liabilities and obligations with respect to product
return claims arising with respect to products of the Business sold before, on
or after the Closing Date; and

               (viii) all Liabilities and obligations to continue Seller's
program for attaining Year 2000 compliance of the software and other systems
included as part of the Purchased Assets.

          (b)  Except for the Assumed Liabilities, the Buyer shall not assume
any other Liabilities of the Seller, whether due or to become due, absolute or
contingent, direct or indirect (the "Liabilities Not Assumed"), including but
not limited to the following:

               (i)   any liability or obligation arising from any third party
product liability claim which claim is based upon an occurrence on or prior to
the Closing Date;

               (ii)  any liability for Taxes arising from the operation of the
Business arising on or prior to the Closing Date; and

               (iii) any obligation or liability arising out of or relating to
any employee grievance relating to periods on or prior to the Closing Date.

     2.4  Non-Assignable Contracts.

               (i)  Contracts Not Assigned. To the extent that any rights under
any Assigned Contracts may not be assigned without the prior consent of any
other Person and such consent has not been obtained on or prior to the Closing
Date, and if the failure to obtain such consent or such assignment would
constitute a material breach of or cause a loss of material benefits under such
Contract or result in the imposition of any material liability upon the Buyer or
the Business, then, unless and until such consent has been obtained, such
Contract shall be deemed not to have been assigned to Buyer and, subject to
Section 2.4(b), neither this Agreement nor any document executed in connection
herewith shall constitute an assignment of such Contract.

          (b)  Further Assurances Concerning Contracts. The Seller and the Buyer
shall use reasonable efforts in good faith to obtain all required third-party
consents and approvals necessary to assign to the Buyer, and for the Buyer to
assume all of the benefits and Liabilities under, the Assigned Contracts.

     2.5  Allocation of Purchase Price. For Tax purposes with respect to the
sale of the Purchased Assets, the Seller and the Buyer shall each report that
the Purchase Price and the value of the Assumed Liabilities in accordance with
the Schedule of Asset Allocation set forth on Schedule 2.5 attached hereto.
                                              ------------

                                       7.

<PAGE>

                                   ARTICLE 3

                 REPRESENTATIONS AND WARRANTIES OF THE SELLER

     The Seller hereby represents and warrants to the Buyer that all of the
statements contained in this Article 3 are true and correct as of the date of
this Agreement, except as set forth in the disclosure schedule prepared by the
Seller and delivered herewith (the "Seller Disclosure Schedule"). The Seller
Disclosure Schedule will be organized in parts corresponding to the numbered and
lettered sections in this Article 3; provided, that an item disclosed on one
part of the Seller Disclosure Schedule as an exception to one particular
representation or warranty shall be deemed adequately disclosed on all other
parts of the Seller Disclosure Schedule as an exception to the representations
and warranties corresponding thereto to the extent that it is reasonably
apparent that such disclosure is also an exception to such other representations
and warranties.

     3.1  Organization, Qualification and Corporate Power. The Seller is a
corporation duly incorporated and organized, validly existing and in good
standing under the laws of the State of Delaware. The Seller has all requisite
corporate power and authority to carry on the Business and to own and use the
Purchased Assets. The Seller is qualified to conduct business and is in good
standing under the laws of each jurisdiction wherein the Seller's operation of
the Business or its ownership of the Purchased Assets requires the Seller to be
so qualified, except where the failure to be so qualified would not,
individually or in the aggregate, have a Material Adverse Effect.

     3.2  Authorization of Transaction. The Seller has all requisite corporate
power and authority to execute and deliver this Agreement and each of the other
agreements contemplated hereby to which it may become a party and to perform its
obligations hereunder and thereunder. Without limiting the generality of the
foregoing, the Board of Directors of the Seller has duly authorized the
execution, delivery and performance of this Agreement. This Agreement
constitutes the valid and legally binding obligation of the Seller enforceable
against it in accordance with its terms. Upon the execution of each of the other
agreements contemplated hereby at Closing, each of such other agreements to
which the Seller is a party will constitute the valid and legally binding
obligation of the Seller enforceable against it in accordance with its terms.

     3.3  Noncontravention. Except as set forth in Part 3.3 of the Seller
Disclosure Schedule, neither the execution and the delivery of this Agreement,
nor the consummation of the transactions contemplated hereby will (a) violate or
conflict with any statute, regulation, law, rule, ordinance or common law
doctrine to which the Seller is subject, the violation of which would result in
a Material Adverse Effect (but no representation is made hereby with respect to
the effect of any bulk sales laws or any Federal or State antitrust or similar
laws or regulations), (b) violate or conflict in any material respect with any
judgment, order, decree, stipulation, injunction, charge or other restriction of
any government, governmental agency or court to which the Seller is subject, in
connection with the Business, or any provision of the Certificate of
Incorporation or By-Laws of the Seller, or (c) conflict with, result in a breach
or default under or require any notice, consent or approval under, any contract,
agreement, license, franchise, permit, or other arrangement to which the Seller
is a party in connection with the Business or to

                                       8.

<PAGE>

which any of the Purchased Assets are subject, except for such violations,
conflicts, breaches, defaults or other events would not result in a Material
Adverse Effect or materially and adversely affect the consummation of the
transactions contemplated hereby.

     3.4  No Material Consents. Except for any consents which may need to be
obtained in connection with the assignment of the Assigned Contracts to the
Buyer and the other consents and approvals contemplated by this Agreement, no
authorization, consent or approval of, any government, governmental agency or
court, or any other Person is required to be made or obtained, in order for the
parties hereto to consummate the transactions contemplated hereby, except where
the failure to obtain any such consent or approval would not have a material
adverse effect upon the assets, business, financial condition or results of
operations of the Business.

     3.5  Latest Balance Sheet. Set forth in Part 3.5 of the Seller Disclosure
Schedule is a copy of the unaudited statement of assets and liabilities of the
Business being acquired hereunder (which shall exclude Excluded Assets and
Liabilities Not Assumed) as of September 30, 1998 (the "Latest Balance Sheet").
The Latest Balance Sheet was prepared in accordance with GAAP.

     3.6  Recent Events. Except as reflected on the unaudited Carve-out
Financial Statements or in Part 3.6 of the Seller Disclosure Schedule, since
September 30, 1998 the Seller has not, in connection with the Business:

          (a)  sold, leased, transferred or assigned any material Purchased
Asset, other than the sale of inventory in the Ordinary Course of Business;

          (b)  accelerated, terminated, modified, canceled, or committed any
material breach of any Assigned Contract involving more than $50,000.

          (c)  granted any license or sublicense of any rights under or with
respect to any Intellectual Property other than in the Ordinary Course of
Business;

          (d)  changed in any material and adverse respect the manner in which
the Business has been conducted;

          (e)  made or committed to make any capital expenditures or entered
into any other material transaction outside the Ordinary Course of Business and
involving any single expenditure in excess of $50,000;

          (f)  experienced any work interruptions, labor grievances or claims,
or any event or condition which would result in a Material Adverse Affect;

          (g)  consummated any material transaction or entered into any material
Assigned Contract outside of the Ordinary Course of Business;

          (h)  established, adopted or altered any employee benefit plan or
changed the compensation of any employee;

                                       9.

<PAGE>

          (i)  incurred, assumed or otherwise become subject to any liability,
other than accounts payable or other liabilities which are not material to the
Business incurred by the Seller in transactions entered into in the Ordinary
Course of Business except as reflected on the Latest Balance Sheet (or, solely
for purposes of determining whether this Section 3.6(i) is true and correct as
of the Closing Date pursuant to Section 6.2, as reflected on the Closing Balance
Sheet);

          (j)  the Seller has not, with respect to the Business, changed any of
its methods of accounting or accounting practices, or changed any of the prices
of any of its products or any of its pricing policies, in any respect; or

          (k)  committed (orally or in writing) to any of the foregoing.

     3.7  Tax Matters The Seller has withheld and paid when due all Taxes
required to have been withheld and paid in connection with amounts paid or owing
to any employee and independent contractor in connection with work and services
performed for the Business.

     3.8  Title and Condition of Properties

          (a)  No Real Property. The Seller does not lease any real property in
connection with the Business except for the office space located in Grayslake,
Illinois, and Seller does not own any real property which is used exclusively in
connection with the Business.

          (b)  Title to Assets. The Seller owns marketable title, free and clear
of Security Interests, to all of the Purchased Assets, except for (i) leased
assets which the Seller has the right to use under valid leases identified in
Part 3.8 of the Seller Disclosure Schedule, (ii) licensed assets which the
Seller has the right to use under valid licenses identified in Section 3.9 or
3.10 of the Seller Disclosure Schedule, (iii) Security Interests which secure
Liabilities set forth on the Latest Balance Sheet, (iv) imperfections of title
which are not material in character, amount or extent and which do not
materially detract from the value or materially interfere with the present use
of the assets affected thereby, and (v) Security Interests for current Taxes not
yet due and payable.

     3.9  Intellectual Property

          (a)  Part 3.9 of the Seller Disclosure Schedule contains a list and
brief description of the following: (i) registered and unregistered trademarks,
patents, patent applications, continuations or continuations in part and
registered copyrights that are owned by the Seller and used primarily in
connection with the conduct of the Business as conducted and (ii) each license
providing the Seller with the right to use the intellectual property of other
Persons used primarily in connection with the Business ("Licenses-In").

          (b)  Except as set forth in Part 3.9(b) of the Seller Disclosure
Schedule, none of the Intellectual Property is subject to any outstanding
judgment, order, decree, stipulation, injunction or charge. No charge,
complaint, action, suit, proceeding, hearing, investigation, claim, or demand is
pending or, to the knowledge of the Seller, threatened, which challenges the
legality, validity, enforceability, use or ownership of any of the Intellectual
Property. Except pursuant to customer agreements, the Seller has never agreed to
indemnify any Person for or

                                      10.

<PAGE>

against any interference, infringement, misappropriation, or other conflict with
respect to the Intellectual Property.

          (c)  No breach or default by the Seller exists or has occurred under
any License-In and the consummation of the transactions contemplated by this
Agreement will not violate or conflict with or constitute a default (or an event
which, with notice or lapse of time or both, would constitute a default) or
result in a forfeiture under, or constitute a basis for termination of, any such
License-In.

          (d)  The Seller has the unrestricted right to use, and is transferring
to the Buyer, all the Intellectual Property, subject in each case to the
Licenses-In; and the Intellectual Property covers all patents, trademarks, trade
names, service marks and copyrights which are necessary to operate the Business
as presently conducted.

          (e)  None of the Intellectual Property, and no product or service
licensed or sold by the Business, infringes any trademark, trade name,
copyright, trade secret, patent, or other intellectual property or proprietary
right of any Person or would give rise to an obligation to render an accounting
to any Person as a result of co-authorship, co-invention or an express or
implied contract for any use or transfer. The Seller has not received notice of
any adversely held patent, invention, trademark, copyright, service mark, trade
name or trade secret of any other Person alleging or threatening to assert that
the Seller's use of any of the Intellectual Property or conduct of the Business
infringes upon or is in conflict with any intellectual property or proprietary
rights of any third party.

          (f)  Seller has taken measures and precautions to protect and maintain
the confidentiality and secrecy of all the Intellectual Property (except
Intellectual Property whose value would be unimpaired by public disclosure) and
otherwise to maintain and protect the value of all the Intellectual Property
that are consistent with the measures and precautions taken by Seller to protect
its other similar Intellectual Property.

     3.10      Contracts

          (a)  Part 3.10 of the Seller Disclosure Schedule lists each of the
contracts, agreements, licenses, and other documents and instruments of the
following types to which the Seller is a party which relates primarily to the
Business:

               (i)    any written arrangement (or group of related written
arrangements) for the lease of personal property from or to third parties with
annual payments exceeding $50,000 or with a term exceeding one year (other than
the Excluded Leases);

               (ii)   any written arrangement concerning a partnership or joint
venture;

               (iii)  any written arrangement (or group of related written
arrangements) under which the Seller has granted a Security Interest on any of
the Purchased Assets;

               (iv)   any written arrangement imposing an obligation of
confidentiality or non-competition on the part of Seller;

                                      11.

<PAGE>

               (v)    any license or royalty agreement or other Contract
relating to the Intellectual Property (other than those disclosed in Part 3.9 of
the Seller Disclosure Schedule) involving annual payments to the Seller in
excess of $50,000;

               (vi)   any contract or group of related contracts with the same
Person (or group of related persons) for or relating to the purchase, sale or
lease of products or services, either (A) which differs in any material respect
from the Seller's standard forms of purchase and lease agreements which the
Seller has delivered to the Buyer and its counsel or (B) which has a term of
more than five years.

               (vii)  any contract or agreement relating to the acquisition or
disposal of assets outside of the Ordinary Course of Business;

               (viii) any manufacturer's or supplier's warranty or indemnity
relating to any fixed assets included in the Purchased Assets with a net book
value in excess of $5,000; and

               (ix)   any enforceable oral agreement which modifies any of the
foregoing.

          (b)  The Seller has delivered or otherwise made available to the Buyer
a copy of each written Contract listed in Part 3.10 of the Seller Disclosure
Schedule and a summary of the terms of any such Contract that is not written.
With respect to each Contract so listed: (i) to the knowledge of Seller, the
Contract is legal, valid, binding, enforceable, and in full force and effect;
(ii) neither the Seller nor, to the knowledge of the Seller, any other party to
such Contract, is in material breach or default under such Contract; (iii) the
Seller has not and, to the knowledge of Seller, no other party has repudiated
any material provision of any such Contract; and (iv) to the knowledge of
Seller, no event has occurred and no event has occurred, and no circumstance or
condition exists, that could reasonably be expected to (with or without notice
or lapse of time) (A) result in a violation or breach of any of the provisions
of any Contract by the Seller, (B) give any Person the right to declare a
default or exercise any remedy under any Contract, (C) give any Person the right
to accelerate the maturity or performance of any Contract, or (D) give any
Person the right to cancel, terminate or modify any Contract. Copies of the
general forms of customer invoices, contracts and license agreements used by the
Seller primarily in connection with the Business have been delivered to the
Buyer.

     3.11  Inventory. All inventory and supplies reflected on the Latest Balance
Sheet Inventory consists of (i) items of a quantity and quality useable and/or
saleable in all material respects in the Ordinary Course of Business and has a
commercial value at least equal to the value shown on the Latest Balance Sheet
net of reserves, or (ii) used, damaged or obsolete equipment and components that
are not capable of being refurbished and equipment and components that Seller
does not reasonably expect to be sold during calendar year 1999 based on market
demand for such equipment or components over the twelve months ended on the date
of this Agreement, all of which have been written down on the Latest Balance
Sheet to estimated realizable market value.

     3.12  Litigation.  The Seller is not, in connection with the Business, (a)
subject to any unsatisfied judgment, order, decree, stipulation, injunction, or
charge or (b) a party or, to the

                                      12.

<PAGE>

knowledge of the Seller, threatened to be made a party to, any charge,
complaint, action, suit, proceeding, hearing, or investigation.

     3.13  Employment Matters.

           (a) The Seller is not, in connection with the Business, a party to or
bound by any collective bargaining agreement, and the Seller has not experienced
any strikes, grievances, other collective bargaining disputes or, to the
knowledge of the Seller, material claims of unfair labor practices. The Seller
has no knowledge of any organizational effort presently being made or threatened
by or on behalf of any labor union with respect to employees of the Business.

           (b) The Seller, in connection with the Business, has complied in all
material respects with all applicable laws relating to labor and employment,
including any provisions thereof relating to wages, termination pay, vacation
pay, fringe benefits, collective bargaining and the payment and/or accrual of
the same and all Taxes, insurance and all other costs and expenses applicable
thereto; to the Seller's knowledge the Seller is not liable for any arrearage,
or has Taxes, costs or penalties for failure to comply with any of the
foregoing.

     3.14  Employees and Executive Compensation.

           (a) Part 3.14 of the Seller Disclosure Schedule sets forth a complete
list of all full-time and part-time employees of Seller conducting the Business
(the "Business Employees"), their salaries and wage rates, amounts payable under
the Seller's Management Incentive Compensation Plan bonus arrangement, vacation
pay schedule as of the date hereof, benefits, positions, and length of service.
Set forth in Part 3.14 of the Seller Disclosure Schedule is a description of the
Seller's vacation pay, sick pay and paid time off policies.

          (b)  Except as set forth in Part 3.14 of the Seller Disclosure
Schedule, no Business Employee has any agreement as to length of notice required
to terminate his or her employment, other than such as results by law from the
employment of an employee without agreement as to such notice or as to length of
employment.

          (c)  To the knowledge of the Seller, except as set forth in Part 3.14
of the Seller Disclosure Schedule, (i) no Business Employee is a party to or is
bound by any confidentiality agreement, noncompetition agreement or other
Contract (with any Person) that may have any material adverse effect on (A) the
performance by such employee of any of his duties or responsibilities as an
employee of the Seller or as an employee of the Buyer, or (B) the business of
the Seller or the Buyer and (ii) as of the date of this Agreement, no Business
Employee has tendered a resignation that will take effect after the date hereof.

           (d) The Seller does not contribute, and is not obligated to
contribute, to any multiemployer plan (within the meaning of section 4001 of
ERISA) with respect to the Business Employees.

     3.15  Licenses, Permits and Approvals.  Part 3.15 of the Seller Disclosure
Schedule lists all governmental and regulatory licenses, authorizations,
franchises, certificates, permits and approvals, and all quality, safety and
other industry group certifications necessary to the conduct of the Business and
as currently conducted ("Permits").  All such Permits are in full force and

                                      13.

<PAGE>

effect to the Seller's knowledge.  There are no violations by the Seller of, or
any claims or proceedings pending or, to the knowledge of the Seller,
threatened, challenging the validity of or seeking to discontinue, any such
Permits.  The Seller has conducted the Business in compliance in all material
respects with the requirements, standards, criteria and conditions set forth in
the Permits, and the Seller is not in violation of any of the foregoing where
such non-compliance or violation would result in the revocation of such Permit.

     3.16  Compliance with Laws.  The Seller, in connection with the Business,
is, and has been for the last three years, in compliance in all material
respects with all applicable laws, rules, regulations or orders (including,
without limitation, health and safety laws and consumer product safety laws),
and no notice, claim, charge, complaint, action, suit, proceeding, investigation
or hearing has been received by the Seller or, to the knowledge of the Seller,
threatened, against the Seller, alleging any such violation.

     3.17  Product Warranty.  Except as set forth in Part 3.17 of the Seller
Disclosure Schedule, each product sold, leased, or delivered by the Business has
been in material conformity with all applicable contractual commitments, and the
Seller has no Liability for replacement or repair thereof or other damages in
connection therewith beyond scope of the warranties set forth in the Assigned
Contracts.

     3.18  Installation.

           (a) Part 3.18(a) of the Seller Disclosure Schedule sets forth all
equipment which has been shipped but is unbilled and uninstalled as of the date
hereof. All equipment set forth in Part 3.18(a) of the Seller Disclosure
Schedule is capable of being installed using commercially reasonable efforts by
September 30, 1999.

           (b) Part 3.18(b) of the Seller Disclosure Schedule sets forth in
reasonable detail a list of products shipped prior to the date hereof and
products that the Seller reasonably expects to ship prior to January 15, 1999
that the Seller does not reasonably expect to have been delivered and installed
prior to January 15, 1999 and additionally sets forth the amount reserved on
Seller's balance sheet as of the Closing Date for such delivery and
installation.

     3.19  Brokers' Fees.  Except as set forth in Part 3.19 of the Seller
Disclosure Schedule, the Seller has no Liability or obligation to pay any fees
or commissions to any broker, finder, or agent with respect to the transactions
contemplated by this Agreement for which Buyer could become liable or otherwise
obligated.

     3.20  Accounting for Returns.  To the knowledge of Seller, there are no
liabilities and obligations with respect to product return claims arising with
respect to products of the Business sold prior to the date hereof for which the
Seller has not established adequate reserves in accordance with customary
accounting procedures.

     3.21  Year 2000 Compliance Obligations.  Part 3.21 of the Seller Disclosure
Schedule sets forth the Seller's program for attaining Year 2000 compliance of
the software and other systems included as part of the Purchased Assets and the
obligations of which Seller has knowledge to continue such program.

                                      14.

<PAGE>

                                   ARTICLE 4

                  REPRESENTATIONS AND WARRANTIES OF THE BUYER

     The Buyer hereby represents and warrants to the Seller that all of the
statements contained in this Article 4 are true and correct as of the date of
this Agreement.

     4.1  Corporate Status.  The Buyer is a corporation duly incorporated and
organized, validly existing and in good standing under the laws of State of
California.

     4.2  Authority for Transaction.  The Buyer has all requisite corporate
power and authority to enter into this Agreement and the other agreements
contemplated hereby (including without limitation the Purchase Note) and to
perform its obligations hereunder and thereunder.  The execution, delivery and
performance of this Agreement and the other agreements contemplated thereby have
been duly authorized by all necessary corporate action on the part of the Buyer.
This Agreement constitutes, and on the Closing Date the Purchase Note will
constitute, valid and legally binding agreements of the Buyer enforceable
against the Buyer in accordance with their respective terms.

     4.3  No Breach or Default.  Neither the execution and delivery of this
Agreement or the Purchase Note, nor the consummation of the transactions
contemplated hereby or thereby, will: (i) violate or conflict in any way with
any applicable statute, regulation, law, rule or common law doctrine, or with
any judgment, order, decree, stipulation, injunction, charge or other
restriction of any governmental body, governmental agency or court, to which the
Buyer is bound or affected, or with any provision of the Articles of
Incorporation or By-Laws of the Buyer, or (ii) conflict with, result in a breach
of, constitute a default under (with or without notice or lapse of time, or
both), result in the acceleration of, create in any party the right to
accelerate, terminate, modify or cancel, or require any notice or consent under
any contract, agreement, lease, sublease, license, sublicense, franchise,
permit, indenture, agreement for borrowed money, instrument of indebtedness,
Security Interest or other arrangement to which the Buyer is a party or by which
any of its property or assets are subject.  Except as disclosed in Part 4.3 of
the Buyer Disclosure Schedule, or as otherwise expressly contemplated hereby,
the Buyer is not required to give any notice to, make any filing with, or obtain
any authorization, consent, or approval of any government, governmental agency
or court, or any other Person in order for the parties to consummate the
transactions contemplated by this Agreement and in order that such transactions
not constitute a breach or violation of, or result in a right of termination or
acceleration or any encumbrance on any of the Buyer's assets pursuant to the
provisions of any of the agreements referenced in the preceding sentence.

     4.4  Financial Statements; Books and Records

          (a)  The Buyer has provided the Seller with the following financial
statements (collectively the "Buyer Financial Statements"), copies of which are
set forth as schedules to Part 4.4 of Buyer Disclosure Schedule: (A)  audited
balance sheets and related statements of income, changes in stockholders' equity
and cash flows for the Buyer as of and for the fiscal year ended December 31,
1997, and (B) unaudited balance sheets and related statements of income for the
nine-month period ended September 30,, 1998 (the "Most Recent Period End") (the

                                      15.

<PAGE>

"Buyer Balance Sheet").  The Buyer Financial Statements are correct and
complete, have been prepared in accordance with GAAP and fairly present the
financial condition and results of operations of the Buyer as of the times and
for the periods referred to therein, subject, in the case of the Buyer Balance
Sheet, to normal year-end adjustments (none of which will be materially adverse)
and the absence of certain footnote information.

     4.5  Recent Events.  Since the Most Recent Period End, the Buyer has
conducted its business only in the ordinary course of business and has not
experienced or suffered any material adverse impact upon its business, assets,
operations, financial condition or business prospects.

     4.6  Brokerage.  There are no claims for brokerage commissions, finder's
fees or similar compensation in connection with the transactions contemplated by
this Agreement or the Purchase Note based on any arrangement or agreement made
by or on behalf of the Buyer or any of its Affiliates for which the Seller may
be held liable.

     4.7  Litigation. There are no actions, suits, proceedings, orders or
investigations pending or, to the Buyer's knowledge, threatened against or
affecting Buyer, at law or in equity, or before or by any Federal, state,
municipal or other governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, which would prevent or otherwise adversely
affect the Buyer's performance under this Agreement or the Purchase Note or the
Purchase Note or the consummation of the transactions contemplated hereby and
thereby.

                                   ARTICLE 5

                          COVENANTS PRIOR TO CLOSING

     5.1  Conduct of Operations.  During the period from the date of this
Agreement through the Closing Date, the Seller shall operate the Business solely
in the Ordinary Course of Business and in compliance with the terms of this
Agreement, and all additions, substitutions and changes of form of the Purchased
Assets occurring from and after the date hereof shall be deemed to constitute
Purchased Assets hereunder.  Without limiting the generality of the foregoing,
the Seller will use commercially reasonable efforts from the date hereof through
the Closing Date, to (a) perform all of its material obligations under all
material agreements relating to or affecting the Business or the Purchased
Assets; (b) keep in full force and effect all permits, franchises and other
rights material to the Business; (c) maintain the books, accounts and records of
the Business in all material respects in accordance with past custom and
practice as used in connection with the preparation of the unaudited Carve-out
Financial Statements; and (d) maintain in full force and effect the existence of
all material Intellectual Property.

     5.2  Buyer Access to Seller's Records and Premises. From and after the date
hereof through the Closing Date, the Seller shall give to the Buyer and the
Buyer's counsel and accountants, all reasonable access during normal business
hours and upon reasonable notice to all documents, books, records, properties of
the Business, so that the Buyer may, at its sole expense, investigate and
inspect them, and the Seller will furnish to the Buyer copies of all such
documents and information concerning the Purchased Assets and the Business as
Buyer may reasonably request; provided, that Buyer shall have no access to the
Seller's employees, customers, suppliers or other third parties without Seller's
express prior consent, which shall not

                                      16.

<PAGE>

be unreasonably withheld. All information obtained or provided to the Buyer in
connection with its investigation of the Seller shall be held subject to Section
5.4.

     5.3  Seller Access to Buyer's Records and Premises.  From and after the
date hereof through the Closing Date, Seller shall have the right to discuss the
finances and accounts of the Buyer with its officers at reasonable times and as
often as may be reasonably required.

     5.4  Buyer Confidentiality.  Prior to the Closing, the Buyer will treat and
hold as confidential all of the confidential information relating to the
Business disclosed to the Buyer in the course of the Buyer's investigation of
the Business (the "Seller Confidential Information"), and shall refrain from
using or disclosing any of the Seller Confidential Information, except (a) to
authorized representatives of the Seller expressly in connection with the
transactions contemplated hereby, or (b) to counsel or other advisers for such
purpose (provided such advisers agree to comply with the confidentiality
provisions of this Section 5.4), unless disclosure is required by law or order
of any governmental authority under color of law.  In the event that, prior to
the Closing the Buyer is requested or required (by written request for
information or documents in any legal proceeding, interrogatory, subpoena, civil
investigative demand, or similar legal process) to disclose any Seller
Confidential Information, the Buyer will notify the Seller promptly of the
request or requirement so that the Seller may seek an appropriate protective
order or waive compliance with the provisions of this Section 5.4.  If, in the
absence of a protective order or the receipt of a waiver hereunder, the Buyer
is, based on an opinion of counsel, compelled to disclose any Seller
Confidential Information to any tribunal or else stand liable for contempt, the
Buyer may disclose the Seller Confidential Information to the tribunal;
provided, however, that the Buyer shall, upon the request of the Seller, exert
--------  -------
all reasonable efforts to obtain, at the reasonable request of the Seller, an
order or other assurance that confidential treatment will be accorded to such
portion of the Seller Confidential Information required to be disclosed as the
Seller shall reasonably designate.

     5.5  Seller Confidentiality.  Until the third anniversary of the Closing
(or, with respect to information relating to any Assigned Contract, until the
termination date of such contract, if later), the Seller will treat and hold as
confidential all of the confidential information relating to the Buyer disclosed
to the Seller in the course of the Seller's investigation of the Buyer and all
of the confidential information relating to the Purchased Assets previously
treated by Seller as confidential (the "Buyer Confidential Information"), and
shall refrain from using or disclosing any of the Buyer Confidential
Information, except (a) to authorized representatives of the Seller expressly in
connection with the transactions contemplated hereby, or (b) to counsel or other
advisers for such purpose (provided such advisers agree to comply with the
confidentiality provisions of this Section 5.5), unless disclosure is required
by law or order of any governmental authority under color of law.  In the event
that the Seller is requested or required (by written request for information or
documents in any legal proceeding, interrogatory, subpoena, civil investigative
demand, or similar legal process) to disclose any Buyer Confidential
Information, the Seller will notify the Buyer promptly of the request or
requirement so that the Buyer may seek an appropriate protective order or waive
compliance with the provisions of this Section 5.5.  If, in the absence of a
protective order or the receipt of a waiver hereunder, the Seller is, based on
an opinion of counsel, compelled to disclose any Buyer Confidential Information
to any tribunal or else stand liable for contempt, the Seller may disclose the
Buyer Confidential Information to the tribunal; provided, however, that the
                                                --------  -------
Seller shall, upon

                                      17.

<PAGE>

the request of the Buyer, exert all reasonable efforts to obtain, at the
reasonable request of the Buyer, an order or other assurance that confidential
treatment will be accorded to such portion of the Buyer Confidential Information
required to be disclosed as the Buyer shall reasonably designate.

     5.6  Cooperation.  Each party will use commercially reasonable efforts to
take all action and to do all things necessary, proper or advisable to
consummate and make effective the transactions contemplated by this Agreement,
including satisfying the closing conditions set forth in Articles 6 and 7.

     5.7  HSR Approval.  As promptly as practicable after the date hereof, Buyer
and Seller shall file with the Federal Trade Commission and the Antitrust
Division of the United States Department of Justice the notifications and other
information required to be filed under the HSR Act, or any rules and regulations
promulgated thereunder, with respect to the transactions contemplated hereby.
Each party warrants that all such filings by it will be, as of the date filed,
true and accurate in all material respects and in material compliance with the
requirements of the HSR Act and any such rules and regulations.  Each of Buyer
and Seller agrees to make available to the other such information as each of
them may reasonably request relative to its business, assets and property as may
be required of each of them to file any additional information requested by such
agencies under the HSR Act and any such rules and regulations.  Seller and Buyer
will supply each other with copies of all correspondence, filings or
communication (or memoranda setting forth the substance thereof) between either
of them or their respective representatives and the Federal Trade Commission,
the Antitrust Division of the United States Department of Justice or any other
governmental agency of authority or members of their respective staffs with
respect to this Agreement or the transactions contemplated hereby.  Without
limiting the generality of Section 5.6, each party will use all commercially
reasonable efforts to obtain a waiver from the waiting period under the HSR Act,
will respond to any governmental inquiries under the HSR Act, and will make any
further filings pursuant to the HSR Act that may be necessary, proper, or
advisable.

     5.8  Notice of Developments.  Prior to Closing, the Seller will give prompt
written notice to the Buyer upon learning of any material development affecting
the Purchased Assets or the financial condition of the Business taken as a
whole.  If, after such notice, the Buyer fails to terminate this Agreement
pursuant to Section 8.1(b), then such notice shall be deemed to have amended the
Seller Disclosure Schedule, to have qualified the representations and warranties
contained in Article 3, and to have cured any misrepresentation or breach of
warranty that otherwise might have existed hereunder by reason of such
development.

     5.9  Certain Employee and Employee Plan Matters.

          (a)  Offers of Employment.  The Buyer shall make offers of employment
               --------------------
on or prior to the Closing Date to the Business Employees on the list that Buyer
shall provide to Seller at least 10 days prior to the Closing Date. Any Business
Employee who accepts such an offer on or prior to the Closing Date
(collectively, the "Transferred Employees") shall be considered to be an
employee of the Buyer as of the Closing Date. The terms of employment offered to
Business Employees shall be based on the Buyer's existing employment practices
and policies and subject to applicable law, provided that it shall be a term of
such offer that each such Business Employee

                                      18.

<PAGE>

be entitled to receive (a) cash compensation (including bonus) which is no less
generous than that provided by the Seller to such employee immediately prior to
the Closing Date, (b) employee benefits consistent with the Buyer's plans,
programs and policies, and (c) severance benefits equivalent to, and subject to
the same terms and conditions as, those under the Seller's severance pay
policies in effect immediately prior to the Closing as set forth on the Seller
Disclosure Schedule (the "Severance Pay Policies"), which obligations with
respect to cash compensation (including bonus) and severance benefits shall
expire no sooner than one (1) year following the Closing Date.

          (b)  Remaining Employees; Reimbursement of Severance Payments.  The
               ---------------------------------------------------------
Buyer shall have no obligation to employ Business Employees other than the
Transferred Employees (Business Employees other than the Transferred Employees
being hereinafter referred to as the "Remaining Employees") following the
Closing Date. The eligibility of any Remaining Employee whose employment with
the Seller is terminated after the Closing Date to receive severance benefits
shall be determined under the terms of the Severance Pay Policies, if any, in
effect as of the date of such employee's termination. With respect to all
Transferred Employees who become entitled to severance benefits within one (1)
year following the Closing Date pursuant to subsection (a) above and all
Remaining Employees who become entitled to severance benefits on account of
termination of employment occurring on or after the Closing Date and on or
before the ninetieth (90/th/) day following the Closing Date, the Buyer and the
Seller shall share the costs of such benefits as follows: (i) the Buyer shall be
responsible for severance benefits in the amount of one (1) week's base salary
for each year of service with the Seller in the case of each Remaining Employee,
and, in the case of each Transferred Employee, one (1) week's base salary for
each year of such Transferred Employee's aggregate service with Seller and with
Buyer and (ii) the Seller and the Buyer shall each be responsible for 50% of the
cost of severance benefits payable in excess of the amount set forth in (i). For
purposes of the foregoing allocation of severance benefit costs, (i) "base
salary" shall have a meaning analogous to "Monthly Compensation," as defined in
the Baxter International Inc. and Subsidiaries Severance Pay Plan, but expressed
on an annual basis; and (ii) severance benefits which the Buyer and the Seller
are obligated to pay to Transferred Employees or Remaining Employees,
respectively, on account of the requirements of any state, local or foreign
country statute shall be considered as having been paid in accordance with the
Severance Pay Policies. The Seller shall make payment of the severance benefits
described above to the Remaining Employees eligible to receive such payments,
and the Buyer shall make payments of the severance benefits described above to
the Transferred Employees eligible to receive such payments. The Buyer or the
Seller, as applicable, shall make a reimbursement payment to the other in an
amount necessary to allocate the financial responsibility for such payment as
set forth above, on the one (1) year anniversary date of the Closing Date;
provided, however, that if the Buyer owes a reimbursement payment to the Seller
under this Section 5.9(b), the Buyer may set such reimbursement payment off
against the Distribution Payable and the Credit Amount pursuant to Section 9.4
hereof. Notwithstanding the foregoing, Seller shall pay the cost of any
increased amount of severance benefits attributable to the period of time
following the Closing Date during which a Remaining Employee remains in the
Seller's employ in order to comply with the Worker Adjustment and Retraining
Notification Act ("WARN").

          (c)  Buyer's Assumption of Employee Liability and Indemnity. The Buyer
               ------------------------------------------------------
shall assume responsibility for all accrued liabilities of the Seller relating
to accrued vacation pay

                                      19.

<PAGE>

and bonuses of Transferred Employees, including the responsibility to make
immediate cash payments for such accrued amounts at any time on or after the
Closing Date to the extent required under applicable law.

          (d)  Benefit Plans and Pension Plans.  Except to the extent otherwise
               -------------------------------
provided herein, the Buyer shall not assume any obligations arising under any
"employee benefit plan" (as such term is defined in Section 3(3) of ERISA) which
the Seller maintains relating to any Business Employee (collectively the
"Plans").  The active participation of the Transferred Employees in the Plans
shall terminate as of the Closing Date, in each case except to the extent that
any rights under the Plans shall have vested, or may vest upon fulfillment of
certain conditions, in accordance with the terms contained therein; provided,
however, that Transferred Employees shall be 100% vested in their account
balances under the Seller's Savings Plan and in their accrued benefits under the
Baxter International Inc. and Subsidiaries Pension Plan.

          (e)  Savings Plans. As soon as practicable after the Closing Date, the
               -------------
Seller shall take any action necessary to distribute to the Transferred
Employees their account balances (including loans) under the Seller's Savings
Plan, as permitted by Section 401(k)(2)(B)(i)(II) of the Code.

          (f)  Buyer's Plans.  The Buyer shall provide for the participation,
               -------------
commencing on the Closing Date, by such of the Transferred Employees who
participated in the Plans prior to the Closing Date in the Buyer's employee
benefit plans, provided that for purposes of eligibility to participate and
vesting under the Buyer's plans (but not for purposes of benefit accruals), the
Buyer shall take any and all action necessary (including amendment of the
Buyer's plans) to recognize each Transferred Employee's service with the Seller.
The Buyer shall recognize each Transferred Employee's years of service with the
Seller for all purposes under the Buyer's sick and disability pay plan.  No
Transferred Employee's participation in any of the Buyer's employee benefit
plans shall be limited or restricted due to a preexisting condition limitation
in any such plan.

          (g)  Continuation Coverage.  The Seller shall retain liability for
               ---------------------
employees (and their qualified beneficiaries) receiving or eligible to receive
continuation coverage under Part 6 of Title 1 of ERISA and Section 4980B of the
Code as of the Closing Date under the Seller's group health plans.  All group
health plans established or maintained by the Buyer or its Affiliates on or
after the Closing Date and for the benefit of Transferred Employees shall comply
with all obligations under Part 6 of Title I of ERISA and Section 4980B of the
Code applicable to those plans.

          (h)  WARN.  The Buyer shall comply with all notice and other
               -----
requirements under WARN and any similar state, local, or foreign country statute
with respect to all Transferred Employees and all other employees of the Buyer.
The Seller shall comply with all notice and any other requirements under WARN
and any similar state, local, or foreign country statute with respect to all
Remaining Employees and all other employees of the Seller. As soon as
administratively practicable following the date of this Agreement, Seller shall
provide WARN notice to all Business Employees and shall continue to employ all
Remaining Employees until the date that is at least 60 days following the date
of delivery of such notice to each such employee.

                                      20.

<PAGE>

          (i)   Conduct of the Seller Prior to Closing. From the date hereof to
                --------------------------------------
the Closing, the Seller shall not change the compensation or benefits provided
to any Business Employee other than in the Ordinary Course of Business. The
Seller shall promptly provide written notice to the Buyer of any change to the
compensation or benefits provided to any Business Employee regardless of whether
such change was made in the Ordinary Course of Business.

          (j)   Canadian Transferred Employees. Notwithstanding any other
                ------------------------------
provision herein to the contrary, the provisions of this Section 5.9(j) shall
apply in the case of all Transferred Employees who are persons employed in the
Business in Canada (the "Canadian Transferred Employees"). To the extent
required under applicable law, the Seller shall offer continued employment as of
and following the Closing Date to all Canadian Transferred Employees on
substantially the same terms and conditions of employment as in effect with
respect to such employees immediately prior to the Closing Date and shall credit
each such employee with such employee's prior service with the Seller for all
applicable purposes, including a later occurring termination of employment.
Subject to Section 5.9(b), the Buyer shall indemnify and save harmless the
Seller from any and all claims, liabilities and losses together with all
penalties, interest and reasonable legal fees, arising out of or relating to,
directly or indirectly, any matters pertaining to any Canadian Transferred
Employee for periods on and after the Closing Date.

     5.10  Service and Installation. The Buyer shall perform its service and
installation obligations under the Service and Installation Agreement attached
as Exhibit G hereto (the "Service and Installation Agreement"). If any equipment
is returned to the Seller due to the Buyer's failure to perform under the
Service and Installation Agreement, the Buyer agrees to purchase such equipment
from Seller at inventory book value, with a reduction for any damage or wear and
tear.

     5.11  No Third-Party Beneficiaries. This Agreement is between the parties
hereto only, and nothing herein shall establish any enforceable rights, legal or
equitable, in any person other than the Buyer and the Seller, including any
employee of the Business. Any claim, including claims for benefits asserted by
any Person with respect to his or her employment with the Buyer after the date
hereof, shall be governed solely by applicable employment policies and such
benefit plans which the Buyer shall maintain for its employees, construed under
applicable law.

     5.12  No Negotiation. The Seller shall ensure that prior to the Closing,
neither the Seller nor any of the Seller's representatives, directors, officers
or managers directly or indirectly (a) solicits or encourages the initiation of
any inquiry, proposal or offer from any Person (other than Buyer) relating to
the Business or the Purchased Assets; (b) participates in any discussions or
negotiations or provides any non-public information to, any Person (other than
the buyer) relating to the Business or the Purchased Assets; or (c) considers
the merits of any unsolicited inquiry, proposal or offer from any Person (other
than the Buyer) relating to the Business or the Purchased Assets.

     5.13  Use of Seller's Trademarks. Buyer agrees that neither it not any of
its Affiliates shall use any trademark, service mark or trade name of Seller or
any of its Affiliates. Buyer

                                      21.

<PAGE>

shall, promptly after the Closing Date, make such alterations to the Purchased
Assets as may be necessary to, at the Buyer's option, either (i) remove, or (ii)
permanently conceal, any markings (including, without limitation, trademarks,
service marks and trade names) which reference or suggest any association of the
Purchased Assets with Seller. Notwithstanding the inclusion of the packaging
materials in the Purchased Assets, Buyer shall be solely responsible for
labeling in accordance with all requirements of law, all products sold by it
following the Closing Date, and it will indicate on such packaging that it is
the manufacturer of such products.

     5.14  Collection of Accounts Receivable.

           (a)  Seller shall be entitled to control all collection actions
related to the accounts receivable retained by Seller pursuant to Section 1.2(a)
or (c), including the determination of what actions are necessary or appropriate
and when and how to take any such action. In furtherance thereof, Seller may, in
its discretion, bring any action to recover the equipment or other products that
are the subject of any such account receivable that may be overdue. In such
event, Seller shall be entitled to retain any such recovered equipment or other
products in full or partial satisfaction of the indebtedness to Seller
represented by such account receivable, and Buyer agrees to deliver to Seller,
upon request, Buyer's acknowledgement of Seller's right to retain such equipment
and other products or an assignment to Seller of any rights or claims that Buyer
may have in or to such equipment or products. In addition, upon request of
Seller, Buyer shall purchase any recovered equipment or other products from
Seller, on an "as is, where is" basis, at the lower of (i) cost less five year
straight line depreciation or (ii) fair market value. Notwithstanding anything
to the contrary in this Section 5.14(a) Seller and Buyer shall cooperate to
collect such accounts receivable and avoid the recovery of equipment or products
in satisfaction of receivables and subsequent required purchase of such
recovered equipment by Buyer.

           (b)  If, after the Closing Date, Buyer shall receive any remittance
from any account debtors with respect to the accounts receivable of Seller,
including any accounts receivable included in the Excluded Assets, Buyer shall
endorse such remittance to the order of Seller and forward it to Seller
immediately upon receipt thereof. In connection with payments received by Buyer,
if a payment is received from an account debtor who has not designated the
invoice being paid thereby, such payment shall be applied to the earliest
invoice outstanding with respect to indebtedness of such account debtor owing to
either Buyer or Seller.

     5.15  Purchase of Leased Equipment. In the event that the current term of
any Excluded Lease retained by Seller pursuant to Section 1.2(c) shall expire
without default by the lessee thereunder, Buyer shall upon request of Seller,
purchase from Seller all equipment and other products that were the subject of
such Excluded Lease. Such purchase shall be on an "as is, where is" basis,
without warranties other than as to defects in title arising through Seller, and
shall be for a purchase price of $1.00. Upon any such purchase, Seller shall
delivery to Buyer any and all instruments and other documents as Buyer may
reasonably request to evidence the transfer of such equipment and other products
from Seller to Buyer.

                                      22.

<PAGE>

                                   ARTICLE 6

                CONDITIONS PRECEDENT TO THE BUYER'S OBLIGATIONS

     The obligations of the Buyer to consummate the transactions contemplated by
this Agreement are subject to the satisfaction or waiver of each of the
following conditions precedent on or prior to the Closing Date:

     6.1  The Seller's Closing Documents. The Seller shall have executed and
delivered to the Buyer on or before the Closing Date all of the documents to be
provided by the Seller pursuant to Section 9.2 hereof.

     6.2  Representations and Warranties. All representations and warranties of
the Seller contained in this Agreement shall have been true and correct as of
the date hereof and shall be true and correct on the Closing Date as if made
again on the Closing Date (unless such representations and warranties expressly
speak as of a specific date other than the date hereof or thereof and in all
cases, without giving effect to any standard, qualification or exception with
respect to "materiality"), except as would not have a Material Adverse Effect
and except for changes therein specifically permitted or contemplated by this
Agreement or expressly consented to in writing by the Buyer or any transaction
permitted by Section 5.1.

     6.3  Obligations. The Seller shall have performed in all material respects
all covenants and obligations required by this Agreement to be performed by the
Seller prior to or on the Closing Date.

     6.4  No Injunction or Restraint. No injunction or restraining order shall
have been issued by any court of competent jurisdiction and be in effect which
restrains or prohibits any material transaction contemplated hereby and no
petition in bankruptcy, insolvency or similar proceeding shall have been
instituted against Seller and Seller shall not have made a general assignment
for the benefit of creditors.

     6.5  Legal Opinion of Counsel for the Seller. The Buyer shall have received
an opinion of counsel for the Seller, addressed to the Buyer and dated the
Closing Date, in substantially the form of Exhibit D attached hereto.

     6.6  Consents from Third Parties. All governmental consents, permissions
and approvals, if any, necessary to consummate the transactions contemplated
herein and to permit the continuation of the Business by the Buyer after the
Closing shall have been received by Buyer on or prior to the Closing Date,
except where the failure to obtain any such consent, permission or approval
would not have a Material Adverse Effect.

     6.7  HSR Clearance. All applicable waiting periods under the HSR Act shall
have expired or otherwise been terminated with respect to the transactions
contemplated hereby.

     6.8  No Material Adverse Change. Since the date hereof, there shall have
occurred no Material Adverse Effect.

                                      23.

<PAGE>

     6.9  Audited Financials. The Buyer shall have received from the Seller
financial statements relating to the Business for the years ended December 31,
1996 and 1997 meeting the requirements of Rules 3-01 and 3-02 of Regulation S-X
(the "Carve-out Financial Statements") which have been audited by
PricewaterhouseCoopers LLP, the Seller's independent auditors

     6.10 Carve-Out Financials. The Buyer shall have received from Seller by
January 25, 1999 a reconciliation of the Latest Balance Sheet to the unaudited
Carve-out Financial Statements, prepared in accordance with GAAP.

     Any conditions specified in this Article 6 may be waived only in writing by
the Buyer.

                                   ARTICLE 7

             CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE SELLER

     The obligations of the Seller to consummate the transactions contemplated
by this Agreement are subject to the satisfaction or waiver, on or prior to the
Closing Date, of each of the following conditions precedent:

     7.1  Buyer' Closing Documents. The Buyer shall have executed (as
appropriate) and delivered to the Seller on or before the Closing Date, all of
the documents which are to be delivered to the Seller pursuant to Section 9.3
hereof.

     7.2  Representations and Warranties. All representations and warranties of
the Buyer contained in this Agreement and the Loan Agreement shall be true and
correct as of the date hereof and on the Closing Date as if made again on and
with respect to the Closing Date (unless such representations and warranties
expressly speak as of a specific date other than the date hereof or thereof and
in all cases, without giving effect to any standard, qualification or exception
with respect to "materiality"), except as would not have a Material Adverse
Effect and except for changes therein specifically permitted or contemplated by
this Agreement or expressly consented to in writing by the Seller.

     7.3  Obligations. The Buyer shall have tendered the Purchase Note and shall
have performed in all material respects all covenants and obligations required
by this Agreement and the Loan Agreement to be performed by Buyer prior to or on
the Closing Date.

     7.4  No Injunction or Restraint. No injunction or restraining order shall
have been issued by any court of competent jurisdiction and be in effect which
restrains or prohibits any material transaction contemplated hereby and no
petition in bankruptcy, insolvency or similar proceeding shall have been
instituted against Buyer and Buyer shall not have made a general assignment for
the benefit of creditors.

     7.5  No Material Adverse Change. Since the date hereof, there shall have
been no material adverse effect or impact upon the assets, business, financial
condition or results of operations of the Buyer other than (a) the assumption of
debt in connection with the transactions contemplated hereby and by the Purchase
Note or the Loan Agreement, (b) changes (i) relating

                                      24.

<PAGE>

to generally applicable economic conditions or the industry of the Buyer in
general, (ii) resulting from the announcement by Buyer of its intention to
purchase the Purchased Assets or (iii) resulting from the execution of this
Agreement or the consummation of the transactions contemplated hereby.

     7.6   HSR Approval. All applicable waiting periods under the HSR Act shall
have expired or otherwise been terminated with respect to the transactions
contemplated hereby.

     7.7   Legal Opinion. The Seller shall have received an opinion of Cooley
Godward LLP, counsel for Buyer, addressed to the Seller and dated the Closing
Date, in substantially the form of Exhibit E

     7.8   Consents and Approvals. All governmental consents, permissions and
approvals, if any, necessary to consummate the transactions contemplated herein
shall have been received on or prior to the Closing Date except where the
failure to obtain any such consent, permission or approval would not have a
material adverse effect upon the assets, business, financial condition or
results of operations of the Seller.

     7.9   Loan Agreement. No Event of Default under the Loan Agreement shall
have occurred.

     7.10  Companion Sale. Seller shall have executed an agreement to sell the
assets of the Seller's ATC and Optifill businesses, on terms and conditions
acceptable to Seller at the time of such execution, on or before December 31,
1998 and such agreement shall be in full force and effect on December 31, 1998.

     Any conditions specified in this Article 7 may be waived only in writing by
the Seller.

                                   ARTICLE 8

                                  TERMINATION

     8.1   Termination.  This Agreement may be terminated any time prior to the
Closing:

           (a)  by the mutual written consent of Buyer and the Seller;

           (b)  by Buyer at any time after the close of business on December 31,
1998 if Seller shall not have delivered a written notice to Buyer by the close
of business on December 31, 1998 that Section 7.10 has been satisfied or waived;

           (c)  by Buyer upon written notice to the Seller within fifteen (15)
business days of the receipt by Buyer of any notice by Seller pursuant to
Section 5.8 if the development that is the subject of such notice has had or
will have a Material Adverse Effect;

           (d)  by Buyer, upon written notice to the Seller at any time prior to
the Closing, if (i) there has been a material misrepresentation, a material
breach of warranty or material breach of a covenant on the part of the Seller
which has not been cured to the Buyer's

                                      25.

<PAGE>

reasonable satisfaction within ten (10) business days after notice of such
breach has been received by the Seller or (ii) at any time after March 31, 1999;
or

           (e)  by the Seller upon written notice to the Buyer at any time prior
to the Closing, if (i) there has been a material misrepresentation, a material
breach of warranty or material breach of a covenant on the part of the Buyer
which has not been cured to the Seller's reasonable satisfaction within ten (10)
business days after notice of such breach has been received by the Buyer, or
(ii) at any time after March 31, 1999.

     8.2   Effect of Termination. In the event of termination of this Agreement
pursuant to Section 8.1, this Agreement will forthwith become void and there
will be no further liability on the part of Buyer or the Seller hereunder,
except liability of any party for breaches of this Agreement prior to the time
of such termination, and except that the covenants and agreements set forth in
Sections 5.4, 5.5, 12.7, 12.10, and this Section 8.2, shall survive such
termination indefinitely.

                                   ARTICLE 9

                                    CLOSING

     9.1   Time and Place of Closing. The consummation of the purchase and sale
of the Purchased Assets and the related transactions contemplated hereby
("Closing") shall take place at 10:00 a.m., local time on the later of January
29, 1999 or the business day immediately following the satisfaction or waiver of
the conditions set forth in Article 6 and Article 7, at the offices of Sidley &
Austin, One First National Plaza, Chicago, Illinois, 60603 or at such other
time, date or place as the parties hereto may mutually agree. The date and time
of Closing are referred to herein as the "Closing Date."

     9.2   Deliveries by the Seller. At the Closing the Seller shall deliver the
following instruments and documents to the Buyer or their designees:

           (a)  the Bill of Sale as provided in Section 1.1;

           (b)  copies of resolutions of the Seller's Board of Directors
authorizing the execution of this Agreement and the consummation of the
transactions and conveyance of Purchased Assets contemplated herein, which
resolutions shall have been certified as true, correct and in full force and
effect as of the Closing Date by the Secretary of the Seller;

           (c)  Deliver possession to Buyer at the Round Lake, Illinois,
location of the Business, all Seller's books, records, documents and other
written materials included as part of the Purchased Assets;

           (d)  the opinion of counsel provided for in Section 6.5;

           (e)  an executed counterpart to the Assumption Agreement as provided
in Section 2.3;

                                      26.

<PAGE>

          (f)  A certificate, dated as of the Closing Date ("Seller Closing
Certificate") and executed by an officer of the Seller, certifying that (i) all
representations and warranties of the Seller contained in this Agreement were
true and accurate as of the date of this Agreement (unless such representations
and warranties expressly speak as of a specific date other than the date hereof,
and in any case, without giving effect to any standard, qualification or
exception with respect to "materiality"), except as would not have a Material
Adverse Effect and except for changes therein specifically permitted or
contemplated by this Agreement or expressly consented to in writing by the
Buyer; (ii) all of said representations and warranties are, by the execution and
delivery of the Seller Closing Certificate, made again on and as of the Closing
Date and are then true and accurate as though then made (unless such
representations and warranties expressly speak as to a specific date other than
the date thereof and, in any case, without giving effect to any standard,
qualification or exception with respect to "materiality"), except as would not
have a Material Adverse Effect and except for changes therein specifically
permitted or contemplated by this Agreement or expressly consented to in writing
by the Buyer); and (iii) the Seller has performed and complied in all material
respects with all the covenants, agreements and conditions required by this
Agreement to be performed or complied with by the Seller prior to or on the
Closing Date;

          (g)  An executed counterpart to the Transition Services Agreement in
the form attached hereto as Exhibit F (the "Transition Services Agreement"); and

          (h)  An executed counterpart to the Service and Installation
Agreement.

     9.3  Deliveries by the Buyer. At the Closing, the Buyer shall deliver the
following instruments, documents and consideration:

          (a)  copies of resolutions of the Buyer's Board of Directors
authorizing the execution of this Agreement, the Loan Agreement, the Purchase
Note and the other agreements contemplated hereby and thereby and the
consummation of the transactions contemplated herein and therein which
resolutions are certified as true, correct and in full force and effect as of
the Closing Date by the Secretary of the Buyer;

          (b)  $2,000,000 by wire transfer of immediately available funds;

          (c)  the executed original Loan Agreement;

          (d)  the executed original Purchase Note;

          (e)  an executed counterpart of the Assumption Agreement as provided
in Section 2.3;

          (f)  the opinion of counsel provided for in Section 7.7;

          (g)  a certificate dated the Closing Date (the "Buyer's Closing
Certificate"), executed by an officer of the Buyer and certifying that (i) all
representations and warranties of the Buyer contained in this Agreement were
true and accurate as of the date of this Agreement (unless such representations
and warranties expressly speak as of a specific date other than the date hereof,
and in any case, without giving effect to any standard, qualification or
exception

                                      27.

<PAGE>

with respect to "materiality"), except as would not have a Material Adverse
Effect and except for changes therein specifically permitted or contemplated by
this Agreement or expressly consented to in writing by the Seller; (ii) all of
said representations and warranties are, by the execution and delivery of the
Buyer's Closing Certificate, made again on and as of the Closing Date and are
then true and accurate as though then made (unless such representations and
warranties expressly speaks as of a specific date other than the date thereof,
and in any case, without giving effect to any standard, qualification or
exception with respect to "materiality"), except as would not have a Material
Adverse Effect and except for changes therein specifically permitted or
contemplated by this Agreement or expressly consented to in writing by the
Seller; and (iii) the Buyer has performed and complied in all material respects
with all the covenants, agreements and conditions required by this Agreement to
be performed or complied with by the Buyer prior to or on the Closing Date;

          (h)  an executed counterpart to the Transition Services Agreement; and

          (i)  an executed counterpart to the Service and Installation
Agreement.

     9.4  Termination of Distribution Agreement; Credit Against Reimburseable
Expenses. Seller and Buyer hereby agree that the Distribution Agreement, dated
as of the 13/th/ day of August, 1996 between Seller and Buyer (the "Distribution
Agreement") shall automatically terminate as of the Closing notwithstanding any
terms to the contrary set forth in such Distribution Agreement. The parties
agree that $606,968 is due under the Distribution Agreement as of the date
hereof and that the sum of such amount and any amounts due from Seller to Buyer
pursuant to the Distribution Agreement which are incurred between the date
hereof and the Closing, (such sum the "Distribution Payable") shall not be due
and payable until the first anniversary of the Closing Date notwithstanding
anything to the contrary in the Distribution Agreement. In addition, in
consideration for $100,000 of the Purchase Price, Buyer shall also be entitled
to a credit in the amount of $100,000 (the "Credit Amount") against its
obligation to make a reimbursement payment under Section 5.9(b). To the extent
that on the first anniversary of the Closing Date the sum of the Distribution
Payable and the Credit Amount exceeds any amounts Buyer owes to Seller under
Section 5.9, Buyer may at its option set off any such excess amount (the "Setoff
Amount") against the Purchase Note (as hereinafter described) or require Seller
to pay in cash, such excess amount. Buyer shall provide notice to Seller, on the
first anniversary of the Closing Date, of its election to setoff the Setoff
Amount against the "Obligations" (as defined in the Loan Agreement) owed to
Seller. The Setoff Amount shall be applied against the amount due on the first
"Interest Payment Date" (as defined in the Loan Agreement) to occur after the
first anniversary of the Closing Date. In the event the Setoff Amount exceeds
the amount due on such Interest Payment Date, Buyer shall apply and Seller shall
accept such excess against each Interest Payment thereafter until the Setoff
Amount is reduced to $0. The Seller and Buyer hereby agree to amend such Loan
Agreement to allow for the setoff contemplated above in the event Buyer makes
such an election. Except as set forth herein, Seller and Buyer each release the
other from any and all liabilities and obligations under or arising from the
Distribution Agreement.

                                      28.

<PAGE>

                                  ARTICLE 10

                    POST-CLOSING OBLIGATIONS OF THE PARTIES

     10.1   Further Obligations of the Parties.  On and after the Closing Date:

            (a)  Each party shall execute all certificates, instruments and
other documents and take all actions reasonably requested by the other party to
effectuate the purposes of this Agreement and to consummate and evidence the
consummation of the transactions herein provided for including, without
limitation, such documents as may be required to effectuate the assignment and
transfer of the Intangible Assets, including the Intellectual Property. Without
limiting the generality of the foregoing, the Seller and the Buyer, agree to
cooperate with each other and to provide each other with all information and
documentation reasonably necessary to permit the preparation and filing of all
United States Federal, state, local, and other Tax returns and Tax elections
with respect to the Business.

            (b)  The Seller shall take all action reasonably necessary or
appropriate to put the Buyer in immediate actual possession and operating
control of all of the Purchased Assets.

            (c)  The Buyer and the Seller each agree to deliver to the other
party (or to such governmental or taxing authority as the other party reasonably
directs) any form of document that may be required or reasonably requested in
order to obtain an exemption with respect to any Federal, state municipal or
other, sales, use or other transfer Taxes that may otherwise be required to be
paid on the transfer of the Purchased Assets or that may otherwise be due with
respect to such transfer, promptly upon the earlier of (i) reasonable demand by
the other party or (ii) learning that such form or document is required.

            (d)  The Buyer shall preserve and keep the records of the Business
existing on the Closing Date for a period of ten (10) years from the Closing
Date, or for any longer period as may be required by any government agency or
ongoing litigation, and shall make such records available to the Seller as may
be reasonably required by the Seller in connection with any legal proceedings
against or governmental investigations of the Seller with respect to the
Business. The Buyer shall notify the Seller sixty days prior to destroying such
records and shall afford the Seller the opportunity to have such records sent to
the Seller at Seller's sole expense.

            (e)  The Buyer shall perform its obligations under the Services and
Installation Agreement.

     10.2   Taxes. The Buyer will assist the Seller with the preparation of the
portion of the Seller's 1998 and 1999 consolidated federal income tax returns
and state or local income tax returns relating to the operations of the Business
during the period beginning on January 1, 1998 and ending on the Closing Date in
a timely manner consistent with prior practices. The Buyer shall be responsible
for filing all federal, state and local income Tax returns and other state and
local Tax returns for the Business which are due (after taking into account any
applicable extensions of time to file) after the Closing Date for periods
beginning on or after the Closing Date and for making required payments due with
such returns. Without limiting the generality of Section 10.1(a), the Seller and
the Buyer agree to cooperate with each other in connection with

                                      29.

<PAGE>

any official Tax inquiry, Tax examination or Tax-related legal proceeding with
respect to the Business.

     10.3  Sales Taxes. The Seller shall bear and pay, and if assessed against
or paid by the Buyer, shall (after receipt of appropriate documentation from the
Buyer) reimburse the Buyer for sales taxes, use taxes, transfer taxes,
documentary changes, recording fees or similar taxes, charges or fees that may
properly become payable in connection with the sale of the Purchased Assets to
the Buyer. Buyer shall provide Seller with a reasonable opportunity to review
all tax returns relating to such taxes prior to filing such returns.

     10.4  Delivery of 1998 Audited Financials. On or before March 15, 1999 the
Seller shall deliver to Buyer financial statements relating to the Business for
the year ended December 31, 1998 meeting the requirements of Rules 3-01 and 3-02
of Regulation S-X which have been audited by PricewaterhouseCoopers LLP, the
Seller's independent auditors.

     10.5  Seller Covenant Not to Compete. Seller agrees that for a period of
three years after the Closing Date, neither it nor any of its Affiliates will,
directly or indirectly, own, manage, operate, join, control or participate in
the ownership, management, operation or control of, any business whether in
corporate, proprietorship or partnership form or other wise as more than a five
percent owner in such business where such business is engaged in the manufacture
or sale of storage and dispensing cabinets for medication that include hardware
and software designed to track the dispensing of medications ("Competitive
Products") provided, however, that the foregoing shall not prohibit Seller or
any of such Affiliates from acquiring an interest in an entity or business which
manufactures or sells Competitive Products so long as Seller or any such
Affiliate divests itself of the assets of such acquired entity or business which
manufactures or sells Competitive Products within twelve months of such
acquisition; and provided further that nothing in this Section 10.5 shall
prevent the Seller from acquiring a passive investment of less than 5% of the
outstanding shares of capital stock of such an entity or business so long as
Seller does not have rights to hold a seat on the Board of Directors or
otherwise have rights to exercise control over such an entity. The parties
hereto specifically acknowledge and agree that the remedy at law for any breach
of the foregoing will be inadequate and that Buyer, in addition to any other
relief available to it, shall be entitled to temporary and permanent injunctive
relief without the necessity of proving actual damage. In the event that the
provisions of this Section 10.5 should ever be deemed to exceed the limitation
provided by applicable law, then the parties hereto agree that such provisions
shall be reformed to set forth the maximum limitations permitted.

                                  ARTICLE 11

                  SURVIVAL OF WARRANTIES AND INDEMNIFICATION

     11.1   Survival.

            (a)  Subject to Section 11.1(b), all of the representations and
warranties of each party made in this Agreement shall survive (i) the Closing
and the sale of the Purchased Assets to the Buyer; (ii) any sale or other
disposition of any or all of the Purchased Assets by the Buyer, provided,
however, that such representations and warranties shall not survive the sale or

                                      30.

<PAGE>

other disposition of all or substantially all of the Purchased Assets by the
Buyer unless the Purchase Note shall have been paid in full; and (iii) the
dissolution of any party to this Agreement. The representations, warranties,
covenants and obligations of the Seller and the rights and remedies that may be
exercised by the Buyer, shall not be limited or otherwise affected by or as a
result of any information furnished to, or any investigation made by or any
knowledge of, the Buyer or any of its Representatives to the extent that such
knowledge was shared with the Seller.

           (b)  The representations and warranties set forth in Article 3 and
Article 4 shall expire on the second anniversary of the Closing; provided,
however, that if a Claim Notice relating to any such representation, warranty or
rights set forth in Article 3 or Article 4 is given to the party from which
indemnification is sought (the "Indemnifying Party") on or prior to the date
such representation or warranty would otherwise expire, then, notwithstanding
anything to the contrary contained in this Section 11.1(b), the indemnification
obligations of the Indemnifying Party arising pursuant to such representation,
warranty or rights shall not so expire with respect to matters relating to the
subject matter described in such Claim Notice, but rather shall remain in full
force and effect until such time as the liability of the Indemnifying Party with
respect to matters relating to the subject matter described in such Claim Notice
has been fully and finally resolved, either by means of a written settlement
agreement executed on behalf of the Indemnifying Party and the party seeking
indemnification, or by means of a final, non-appealable judgment issued by a
court of competent jurisdiction.

           (c)  For purposes of this Agreement, a "Claim Notice" relating to a
particular representation or warranty shall be deemed to have been given if the
party seeking indemnification, acting in good faith, delivers to the
Indemnifying Party a written notice stating that the party seeking
indemnification believes that there is or has been a breach of such
representation or warranty and containing a brief description of the
circumstances supporting the such party's belief that there is or has been such
a breach.

     11.2  Indemnification by the Seller. Subject to Section 11.3, the Seller
shall indemnify and hold the Buyer harmless from and against the entirety of any
Adverse Consequences the Buyer may suffer, sustain or become subject to ("Buyer
Indemnifiable Losses"), resulting from, arising out of or, relating to (i) any
breach or inaccuracy of the representations and warranties of the Seller set
forth in this Agreement other than the representation and warranties contained
in Section 3.11; (ii) any nonfulfillment or breach of any covenant or agreement
on the part of the Seller in this Agreement; (iii) any Liability relating to the
Business on or prior to the Closing Date that is not an Assumed Liability; (iv)
any claim made by any person who was an employee of Seller prior to Closing
which arose out of facts or circumstances occurring or existing prior to
Closing; and (v) any liability imposed under WARN with respect to Remaining
Employees.

     11.3  Limits on the Seller's Indemnification Obligation. The obligation of
the Seller to indemnify the Buyer under Sections 11.2(i) and (ii) above shall be
subject to the following limitations:

                                      31.

<PAGE>

           (a) The aggregate liability of the Seller hereunder with respect to
all Buyer Indemnifiable Losses under Sections 11.2(i) and (ii), other than in
connection with its obligations under Sections 5.9 and 9.4, shall not exceed
$7,000,000

           (b) The Seller will not have any obligation to indemnify the Buyer
with respect to any Buyer Indemnifiable Losses under Sections 11.2(i) and (ii)
other than in connection with its obligations under Sections 5.9 and 9.4 until
the Buyer shall first have suffered such aggregate Buyer Indemnifiable Losses in
excess of $300,000 (at which point the Seller will be obligated to indemnify the
Buyer only for Buyer Indemnifiable Losses exceeding such amount).

           (c) Buyer Indemnifiable Losses shall be calculated net of any
reserves set forth on the Closing Balance Sheet.

     11.4  Indemnification by Buyer. Buyer shall indemnify and hold the Seller
harmless from and against the entirety of any Adverse Consequences the Seller
may suffer, sustain or become subject to ("Seller Indemnifiable Losses"),
resulting from, arising out of or relating to (i) the Assumed Liabilities and
any Liability relating to the Business after the Closing Date, (ii) any breach
or inaccuracy of the representations and warranties of the Buyer set forth in
this Agreement; (iii) any nonfulfillment or breach of any covenant or agreement
on the part of Buyer in this Agreement; and (iv) any liability imposed under
WARN with respect to Transferred Employees.

     11.5  Limits on Buyer's Indemnification Obligations. The obligation of
Buyer to indemnify the Seller under Sections 11.4(ii) and (iii) above shall be
subject to the following limitations:

           (a) The aggregate liability of the Buyer hereunder with respect to
all Seller Indemnifiable Losses under Sections 11.4(ii) and (iii), other than in
connection with its obligations under Section 5.9 shall not exceed $7,000,000.

           (b) The Buyer will not have any obligation to indemnify the Seller
with respect to any Seller Indemnifiable Losses under Sections 11.4(ii) and
(iii) other than in connection with its obligations under Section 5.9 until the
Seller shall first have suffered such aggregate Seller Indemnifiable Losses in
excess of $300,000 (at which point the Buyer will be obligated to indemnify the
Seller only for Seller Indemnifiable Losses exceeding such amount).

     11.6  Matters Involving Third Parties.

           (a) If any third party shall notify any party to this Agreement (the
"Indemnified Party") with respect to any matter (a "Third Party Claim") which
may give rise to a claim for indemnification against any other party to this
Agreement under this Article 11, then the Indemnified Party shall promptly
notify each Indemnifying Party thereof in writing; and the failure to give such
timely notice shall relieve the Indemnifying Party of its indemnification
obligations under this Article 11 only to the extent such delay or failure
materially and adversely affects the defense of such claim.

                                      32.

<PAGE>

           (b) The Indemnifying Party will have the right, upon notification to
the Indemnified Party at any time within fifteen (15) days after the Indemnified
Party has given notice of the Third Party Claim, to assume the defense of the
Third Party Claim with counsel of its choice reasonably satisfactory to the
Indemnified Party; provided that the Indemnified Party may retain separate co-
                   --------
counsel at its own cost and expense and participate in the defense of the Third
Party Claim, provided further, that if the Indemnified Party reasonably
             -------- --------
determines that (i) a conflict of interest between it and the Indemnifying Party
will exist with respect to the Third Party Claim, or (ii) that the Third Party
Claim will adversely affect it other than as a result of monetary damages for
which it would be entitled to indemnification, it may, by notice to the
Indemnifying Party, assume the exclusive right to defend such Third Party Claim.
If the Indemnifying Party does not give such notice within 15 days, the
Indemnified Party may proceed with the defense of such claim or proceeding on
its own. If the Indemnified Party proceeds with the defense of such claim or
proceeding on its own, the Indemnifying Party shall make available to the
Indemnified Party any documents and materials in its control or possession that
may be necessary to the defense of such claim.

           (c) In connection with any Third Party Claim (i) the Indemnifying
Party will not consent to the entry of any judgment or enter into any settlement
with respect to the Third Party Claim without the prior written consent of the
Indemnified Party (not to be unreasonably withheld, conditioned or delayed)
unless the judgment or proposed settlement involves only the payment of money
damages which will be paid by the Indemnifying Party and contains a release of
the Indemnified Party from all Liability with respect to the matter and does not
impose an injunction or other equitable relief upon the Indemnified Party and
(ii) the Indemnified Party will not consent to the entry of any judgment or
enter into any settlement with respect to the Third Party Claim without the
prior written consent of the Indemnifying Party (provided that, if the
Indemnifying Party has not assumed and is not actively and diligently conducting
the defense of such Third Party Claim, then such consent shall not be
unreasonably withheld, conditioned or delayed).

     11.7  Additional Limitations.

           (a) In any case where an Indemnified Party recovers from third
Persons any amount which in the aggregate equals or exceeds such Indemnified
Party's Indemnifiable Losses in respect of a matter with respect to which an
Indemnifying Party has indemnified it pursuant to this Article 11 such
Indemnified Party shall promptly pay over to the Indemnifying Party the amount
so recovered (after deducting therefrom the full amount of the expenses incurred
by it in procuring such recovery), but not in excess of the sum of (i) any
amount previously so paid by the Indemnifying Party to or on behalf of the
Indemnified Party in respect of such matter and (ii) any amount expended by the
Indemnifying Party in pursuing or defending any claim arising out of such
matter.

           (b) Except for remedies that cannot be waived as a matter of law and
injunctive and provisional relief, if the Closing occurs, this Article 11 shall
be the exclusive remedy for breaches of this Agreement (including any covenant,
obligation, representation or warranty contained herein) or otherwise in respect
of the sale of the Purchased Assets contemplated hereby. In furtherance of the
foregoing, Buyer hereby waives, to the fullest extent permitted by law, any and
all rights, claims and causes of action it may have against Seller or its

                                      33.

<PAGE>

Affiliates arising under or based upon any law (including any such rights,
claims or causes of action arising under or based upon common law or otherwise);
provided, however, nothing contained in this Agreement shall preclude the
assertion by Buyer or its Affiliates of any cause of action that may exist, not
based upon breach of contract, for fraud.

           (c) Notwithstanding anything contained herein to the contrary, no
party shall have any liability hereunder for any lost profits or any special,
indirect, consequential, incidental, exemplary or punitive damages, each of
which is hereby excluded by agreement of the parties regardless of whether or
not any party has been advised of the possibility of such damages.

                                  ARTICLE 12

                           MISCELLANEOUS PROVISIONS

     12.1  Certain Definitions. Unless the context otherwise requires,
capitalized terms used in this Agreement and not otherwise defined herein shall
have the following meanings for all purposes of this Agreement:

     "Adverse Consequences" means all charges, complaints, actions, suits,
proceedings, hearings, investigations, claims, demands, judgments, orders,
decrees, stipulations, injunctions, damages (but not consequential or incidental
damages), dues, penalties, fines, costs, amounts paid in settlement,
Liabilities, obligations, Taxes, liens, losses, expenses, and fees, including
reasonable attorneys, consultants and experts fees and court costs.

     "Affiliate" means, with respect to any particular Person, any Person
controlling, controlled by or under common control with such Person.

     "Agreement" shall have the meaning set forth in the Recitals.

     "Arbitrating Accountants" has the meaning set forth in Section 2.2(b).

     "Assigned Contracts" shall have the meaning set forth in Section 1.1(e).

     "Assumed Liabilities" shall have the meaning set forth in Section 2.3(a).

     "Assumption Agreements" shall have the meaning set forth in Section 2.3(a).

     "Bill of Sale" shall have the meaning set forth in Section 1.1.

     "Business" shall have the meaning set forth in the Recitals.

     "Business Employees" shall have the meaning set forth in Section 3.14(a).

     "Business Records" shall have the meaning set forth in Section 1.1(g).

     "Buyer" shall have the meaning set forth in the Introduction.

     "Buyer's Accountants" shall have the meaning set forth in Section 2.2(a).

                                      34.

<PAGE>

     "Buyer Balance Sheet" shall have the meaning set forth in Section 4.4.

     "Buyer's Closing Certificate" shall have the meaning set forth in Section
9.3(g).

     "Buyer Confidential Information" shall have the meaning set forth in
Section 5.5.

     "Buyer Financial Statements" shall have the meaning set forth in Section
4.4.

     "Buyer Indemnifiable Losses" shall have the meaning set forth in Section
11.2.

     "Carve-out Financial Statements" shall have the meaning set forth in
Section 6.9.

     "Closing" shall have the meaning set forth in Section 9.1.

     "Closing Balance Sheet" shall have the meaning set forth in Section 2.2(b).

     "Closing Date" shall have the meaning set forth in Section 9.1.

     "Code" means the Internal Revenue Code of 1986, as amended.

     "Contracts" shall have the meaning set forth in Section 1.1(e).

     "Credit Amount" shall have the meaning set forth in Section 9.4.

     "Draft Closing Balance Sheet" shall have the meaning set forth in Section
2.2(a).

     "Distribution Agreement" shall have the meaning set forth in Section 9.4.

     "Distribution Payable" shall have the meaning set forth in Section 9.4.

     "Equipment" shall have the meaning set forth in Section 1.1(a).

     "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.

     "Excluded Assets" shall have the meaning set forth in Section 1.2.

     "Excluded Contract" shall have the meaning set forth in Section 1.1(e).

     "Excluded Leases" shall have the meaning set forth in Section 1.2(c).

     "Foreign Customer Contracts" shall have the meaning set forth in Section
1.2(g).

     "GAAP" means United States generally accepted accounting principles as in
effect from time to time, applied consistently with the principles used in
preparing the Financial Statements for the Most Recent Fiscal Year End.

     "HSR Act" shall mean the Hart-Scott-Rodino Antitrust Improvements Act of
1976 and the rules promulgated thereunder.

                                      35.

<PAGE>

     "Intellectual Property" means all of the following which is owned by,
licensed by, licensed to, used or held for use by the Seller primarily in
connection with the Business (including, without limitation, all intellectual
property and proprietary rights listed in Part 3.9 of the Seller Disclosure
Schedule): (i) all registered and unregistered trademarks, trade dress, service
marks, logos and trade names (including the name "SureMed") and all applications
to register the same (the "Trademarks"); (ii) all issued U.S. and foreign
jurisdiction patents and pending patent applications, patent disclosures and
improvements thereto (the "Patents"); (iii) all registered and unregistered
copyrights and all applications to register the same (the "Copyrights"); (iv)
all computer software and databases owned or used by the Seller (the
"Software"); (v) all licenses and agreements pursuant to which the Seller has
acquired rights in or to the Trademarks, Patents, Copyrights or Software
(excluding software and databases licensed to the Seller under nonexclusive
software licenses granted to end-user customers by third parties in the ordinary
course of such third parties' business) ("Licenses-In"); and (vi) trade secrets,
know-how, inventions (whether or not patentable and whether or not reduced to
practice), processes, procedures, drawings, specifications, designs, plans,
proposals, technical data and other, copyrightable works and proprietary
information.

     "Indemnified Party" shall have the meaning set forth in Section 11.6.

     "Indemnifying Party" shall have the meaning set forth in Section 11.1(b).

     "Intangible Assets" shall have the meaning set forth in Section 1.1(d).

     "Intangible Asset Value of the Business" shall have the meaning set forth
in Section 2.1(b)(iv).

     "Inventory" shall have the meaning set forth in Section 1.1(b).

     "Latest Balance Sheet" shall have the meaning set forth in Section 3.5.

     "Licenses-In" shall have the meaning set forth in Section 3.9(a).

     "Liabilities Not Assumed" shall have the meaning set forth in Section
2.3(b).

     "Liability" means any liability (whether known or unknown, whether absolute
or contingent, whether liquidated or unliquidated, and whether due or to become
due) or indebtedness, including any liability for Taxes.

     "Loan Agreement" shall have the meaning set forth in Section 2.1.

     "Material Adverse Effect" means a material adverse effect or impact upon
the assets, business, financial condition or results of operations of the
Business, other than changes (a) relating to generally applicable economic
conditions or the industry of the Business in general, (b) resulting from the
announcement by Seller of its intention to sell the Purchased Assets or (c)
resulting from the execution of this Agreement or the consummation of the
transactions contemplated hereby..

     "Most Recent Fiscal Year End" shall have the meaning set forth in Section
4.4.

                                      36.

<PAGE>

     "Net Tangible Asset Value" shall have the meaning set forth in Section
2.1(b)(ii).

     "Ordinary Course of Business" means the ordinary course of the day to day
operations of the Business consistent with past custom and practice of the
Business, and shall not include matters that must be specifically authorized by
Seller's I.V. Systems Division.

     "Permits" shall have the meaning set forth in Section 3.15.

     "Person" means any individual, trust, corporation, partnership, limited
liability company or other business association or entity, court, governmental
body or governmental agency.

     "Plans" shall have the meaning set forth in Section 5.9(d).

     "Preliminary Purchase Price" shall have the meaning set forth in Section
2.1(a).

     "Purchase Note" shall have the meaning set forth in Section 2.1(a).

     "Purchase Price" shall have the meaning set forth in Section 2.2(c).

     "Purchased Assets" shall have the meaning set forth in Section 1.1.

     "Security Interest" means any mortgage, pledge, priority, security
interest, charge, lien or other encumbrance, right or restriction of any kind,
nature and description, of any third party.

     "Seller" shall have the meaning set forth in the Introduction.

     "Seller Closing Certificate" shall have the meaning set forth in Section
9.2(f).

     "Seller Confidential Information" shall have the meaning set forth in
Section 5.4.

     "Seller Disclosure Schedule" shall have the meaning set forth in Article 3.

     "Seller Indemnifiable Losses" shall have the meaning set forth in Section
11.4.

     "Seller's Accountants" shall have the meaning set forth in Section 2.2(a).

     "Service and Installation Agreement" shall have the meaning set forth in
Section 5.10.

     "Setoff Amount" shall have the meaning set forth in Section 9.4.

     "Severance Pay Policies" shall have the meaning set forth in Section
5.9(a).

     "Specified Intangible Assets" shall have the meaning set forth in Section
2.1(b)(iii).

     "Subsidiary" means any corporation, limited liability company, or
partnership with respect to which another specified Person has the power to vote
or direct the voting of sufficient securities or interests to elect a majority
of the directors or management committee or similar governing body.

                                      37.

<PAGE>

     "Tax" or "Taxes" means any United States Federal, state, local, or foreign
income, gross receipts, sales, license, payroll, employment, excise, severance,
stamp, occupation, premium, windfall profits, environmental (including taxes
under Section 59A of the Code), customs duties, capital stock, franchise,
profits, withholding, social security (or similar), unemployment, disability,
real or immovable property, personal or movable property, sales, use, transfer,
value added, alternative or add-on minimum, goods and services, estimated, or
other tax of any kind whatsoever, including any interest, penalty, or addition
thereto, whether disputed or not.

     "Tax Return" means any return, declaration, report, claim for refund, or
information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.

     "Third Party Claim" shall have the meaning set forth in Section 11.6(a).

     "Transferred Employees" shall have the meaning set forth in Section 5.9(a).

     "Transition Services Agreement" shall have the meaning set forth in Section
9.2(g).

     "Value of the Business" shall have the meaning set forth in Section
2.1(b)(i).

     "WARN" shall have the meaning set forth in Section 5.9(b).

     12.2  Notices. All notices, requests, demands or other communications
hereunder (including notices of all asserted claims or liabilities) to be
effective shall be in writing and shall be either delivered personally, sent by
messenger service, sent by guaranteed over night delivery service, charges
prepaid sent by fax (with hard copy to follow) or mailed by U.S. mail, certified
or registered, with appropriate first class postage prepaid, to the addressees
and/or fax numbers herein designated or such other address as may be designated
in writing by notice given in the manner provided herein. Notices hereunder
shall be effective upon (a) personal delivery thereof, if delivered personally
or by messenger service, (b) one (1) business day after deposit for delivery by
the overnight delivery service, if delivered by overnight delivery service, (c)
when receipt is electronically confirmed, if sent by fax, or (d) three (3)
business days following deposit in the mail, if sent by mail as aforesaid,
whether or not delivery is accepted.

               If to the Buyer:    OmniCell Technologies, Inc.
                                   1101 E. Meadow Dr.
                                   Palo Alto, California 94303
                                   Attn:  Chief Financial Officer
                                   Facsimile: 650-843-6277

               with a copy to:     Cooley Godward LLP
                                   Five Palo Alto Square
                                   Palo Alto, CA
                                   94306-2155
                                   Attn:  Robert J. Brigham, Esq.
                                   Facsimile: 650-857-0663

                                      38.

<PAGE>

               If to Seller:       Baxter Healthcare Corporation
                                   One Baxter Parkway
                                   Deerfield, Illinois 60015
                                   Attn:  General Counsel
                                   Facsimile: 847-948-2025

               With a copy to:     Sidley & Austin
                                   One First National Plaza
                                   Suite 2900
                                   Chicago, Illinois 60603
                                   Attn:  John M. O'Hare, Esq.
                                   Facsimile: 312-853-7036

     12.3  Assignability; Binding Effect.  This Agreement shall be binding upon
and inure to the benefit of the parties and their respective permitted assigns.

     12.4  Governing Law; Venue. This Agreement shall be construed and governed
in accordance with the internal laws (and not the law of conflicts) of the State
of Illinois. The Buyer and the Seller hereby consent to service of process and
to the jurisdiction of any appropriate Federal or State court located in Cook or
Lake Counties, Illinois in any action to enforce the provisions of this
Agreement, and hereby waive any objections they may have as to proper venue or
forum non conveniens or similar claims with respect to the jurisdiction and
venue of such courts.

     12.5  Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same Agreement.

     12.6  Entire Agreement. Except as otherwise specifically provided herein,
this Agreement, including the Exhibits and Schedules hereto, the Seller
Disclosure Schedule and the Buyer Disclosure Schedule constitute the entire
agreement among the parties hereto with respect to the subject matter hereof and
supersedes all prior communications, writings and other documents with regard
thereto. No modification, amendment or waiver of any provision hereof shall be
binding upon any party hereto unless it is in writing and executed by all of the
parties hereto or, in the case of a waiver, by the party waiving compliance.

     12.7  Confidentiality. Prior to Closing, the terms and conditions of this
Agreement and the transactions contemplated herein shall remain confidential
shall and not be disclosed by any party except (a) to the extent that a party is
advised by counsel that disclosure is required by law ("Legally Required
Disclosure"), and (b) for disclosure to employees and agents of a party to the
extent necessary to perform due diligence and perform such party's obligations
hereunder (provided such employees and agents are made aware of and agree to
comply with this provision and that each party is responsible for the violation
of such party's employees and agents).

     12.8  Number/Gender. All words and personal pronouns relating thereto shall
be read and construed as the number and gender of the party or parties referred
to in each case requires and the verb shall be construed as agreeing with the
required word and/or pronoun.

                                      39.

<PAGE>

     12.9  Captions. The division of this Agreement into articles, sections,
subsections, Schedules and Exhibits is for convenience of reference only and
shall not affect the interpretation or construction of this Agreement.

     12.10 Allocation of Fees and Expenses. Except as otherwise expressly
provided in this Agreement, Buyer and the Seller shall each be responsible for
their own respective legal and accounting fees and other charges incurred in
connection with the purchase and sale of the Purchased Assets, the completion of
the transactions contemplated herein and any post-closing matters in connection
with the transactions contemplated herein, except for any fees for filings
related to the HSR Act which shall be borne by the Buyer.

     12.11 Severability. In the event that one or more of the provisions,
warranties, representations or covenants or any portion of them contained in
this Agreement are unenforceable or are declared invalid for any reason
whatsoever, such unenforceability or invalidity shall not affect the
enforceability or the validity of the remaining terms or portions of this
Agreement, and each such unenforceable or invalid provision, warranty,
representation or covenant or portion thereof shall be severed from the
remainder of this Agreement.

     12.12 Construction. The parties hereto acknowledge that Buyer and the
Seller and their counsel each have reviewed and revised this Agreement and that
the rule of construction to the effect that any ambiguities are to be resolved
against the drafting party, shall not be employed in the interpretation of this
Agreement or any documents executed in connection herewith.

     12.13 No Public Announcement. Neither Buyer nor Seller shall without the
approval of the other, make any press release or other public announcement
concerning the transactions contemplated by this Agreement, except as and to the
extent that any such party shall be so obligated by law, in which case the other
party shall be advised and the parties shall use their best efforts to cause a
mutually agreeable release or announcement to be issued; provided however, that
the foregoing shall not preclude communications or disclosures necessary to
implement the provisions of this Agreement or to comply with the accounting and
SEC disclosure obligations or the rules of any stock exchange.

                                  *  *  *  *

                                      40.

<PAGE>

     In Witness Whereof, the parties hereto have executed this Agreement as of
the date first above written.

                                        Baxter Healthcare Corporation

                                        By: /s/ Jack McGinley
                                           ----------------------------------
                                        Its:
                                            ---------------------------------
                                        OmniCell Technologies Inc.

                                        By: /s/ Randall Lipps
                                           ----------------------------------
                                        Its: Chairman
                                            ---------------------------------
                                      41.
<PAGE>

                           LOAN AND SECURITY AGREEMENT

                          DATED AS OF JANUARY 29, 1999

                                     BETWEEN

                          BAXTER HEALTHCARE CORPORATION

                                       AND

                           OMNICELL TECHNOLOGIES INC.

<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
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1.       DEFINITIONS AND TERMS....................................................................................1

         1.1      Definitions.....................................................................................1

         1.2      Accounting Terms................................................................................7

         1.3      Other Terms.....................................................................................7

         1.4      Computation of Time Periods.....................................................................7

2.       LOAN: GENERAL TERMS......................................................................................7

         2.1      The Loan........................................................................................7

         2.2      Interest Rate...................................................................................8

         2.3      Default Rate....................................................................................8

         2.4      Interest Payments...............................................................................8

         2.5      Computation of Interest.........................................................................8

         2.6      Maturity Date; Payment..........................................................................8

         2.7      Voluntary Prepayment Prior to Maturity Date.....................................................8

         2.8      Mandatory Principal Payments....................................................................8

         2.9      Method of Payment...............................................................................9

         2.10     Application of Payments and Collections.........................................................9

3.       COLLATERAL..............................................................................................10

         3.1      Grant of Security Interest; Agreement to Allow for Use of OmniCell Intellectual
                  Property.......................................................................................10

         3.2      Priority of Liens..............................................................................11

         3.3      Inspection of Collateral; Audit of Records.....................................................11

         3.4      Maintain Perfection; Supplemental Documentation................................................11

         3.5      Perfected Security Interest; Location of Collateral............................................12

         3.6      Payment of Claims..............................................................................12

4.       REPRESENTATIONS' WARRANTIES AND COVENANTS RELATING TO COLLATERAL........................................12

         4.1      Representations, Warranties and Covenants Relating to Inventory................................12

         4.2      Sale of Inventory by OmniCell..................................................................13

         4.3      Maintenance of Equipment.......................................................................13

         4.4      Liens on and Sale of Equipment.................................................................13

         4.5      Schedule of Equipment..........................................................................14

                                      i.
<PAGE>

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         4.6      Title to Equipment.............................................................................14

5.       GENERAL WARRANTIES, REPRESENTATIONS AND COVENANTS.......................................................14

         5.1      General Representations, Warranties and Covenants..............................................14

         5.2      Survival of Warranties and Representations.....................................................17

6.       COVENANTS AND CONTINUING AGREEMENTS.....................................................................17

         6.1      Affirmative Covenants..........................................................................17

         6.2      Negative Covenants.............................................................................19

         6.3      Required Notices...............................................................................21

7.       DEFAULT.................................................................................................22

         7.1      Events of Default..............................................................................22

         7.2      Acceleration...................................................................................23

         7.3      Remedies.......................................................................................23

         7.4      Assemble Collateral............................................................................24

         7.5      Notice of Sale.................................................................................24

         7.6      Postponement of Sale...........................................................................24

         7.7      Waiver of Bond.................................................................................24

         7.8      Appointment of Baxter As Attorney-In-Fact After Default........................................24

         7.9      Consent Does Not Create Custom.................................................................25

8.       CONDITIONS TO LOAN......................................................................................25

9.       GENERAL.................................................................................................25

         9.1      Attorneys' Fees and Expenses; Baxter's Expenses................................................25

         9.2      Modification...................................................................................25

         9.3      Strict Compliance..............................................................................25

         9.4      Severability...................................................................................26

         9.5      Successors and Assigns.........................................................................26

         9.6      Loan Agreement Controls........................................................................26

         9.7      Liability Prior to Termination.................................................................26

         9.8      Waiver.........................................................................................26

         9.9      Indemnification................................................................................27

         9.10     Notice.........................................................................................27

                                      ii.
<PAGE>

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         9.11     Section Titles, etc............................................................................28

         9.12     Waiver by OmniCell.............................................................................28

         9.13     Governing Law..................................................................................29

         9.14     Representation by Counsel......................................................................29

         9.15     Waiver of Trial by Jury........................................................................29

         9.16     Intercreditor Agreement........................................................................30
</TABLE>
                                      iii.
<PAGE>

                           LOAN AND SECURITY AGREEMENT

         THIS LOAN AND SECURITY AGREEMENT (this "AGREEMENT"), dated as of
January 29, 1999 by and between Baxter Healthcare Corporation, a Delaware
corporation ("BAXTER"), with its principal place of business at One Baxter
Parkway, Deerfield, Illinois 60015, and OmniCell Technologies Inc., a
California corporation ("OMNICELL"), with its principal place of business at
1101 East Meadow Drive, Palo Alto, California 94303.

                                    RECITALS:

         A. OmniCell has entered into an Asset Purchase Agreement, dated as
of December 18, 1998, as amended on January 25, 1999, between Baxter and
OmniCell (the "ASSET PURCHASE AGREEMENT") pursuant to which OmniCell will
purchase certain property of Baxter, comprising substantially all of the
assets of the SureMed System product line of the Productivity Systems
business unit of Baxter's I.V. Systems Division (the "SUREMED BUSINESS").

         B. Pursuant to the Asset Purchase Agreement, OmniCell is hereby
executing and delivering to Baxter a promissory note pursuant to the terms
and provisions of this Agreement and in the form attached as EXHIBIT A
hereto, in the original principal amount of $17,386,000 (the "NOTE").

         C. This Agreement, together with the Note, sets forth the agreement
of the parties with respect to the loan evidenced by the Note.

         NOW THEREFORE, in consideration of the transactions contemplated by
the Asset Purchase Agreement, and in consideration of the foregoing recitals,
which are hereby incorporated herein, and of the mutual promises set forth
herein, the parties hereto agree as follows:

1.       DEFINITIONS AND TERMS

         1.1 DEFINITIONS. Capitalized terms used herein and not otherwise
defined herein have the meaning given them in the Asset Purchase Agreement.
As used herein:

         "ACCOUNT DEBTOR" means the account debtor on any Account.

         "ACCOUNTS" means all of OmniCell's now owned or hereafter acquired
or arising accounts, contract rights, and any other rights to payment for the
sale or lease of goods or rendition of services, whether or not they have
been earned by performance.

         "AFFILIATE" means any Person which directly or indirectly through
one or more intermediaries controls or is controlled by, or is under common
control with OmniCell. For purposes of this definition, "CONTROL" shall mean
the possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a Person, whether through the
ownership of stock, by contract or otherwise.

                                     1.
<PAGE>

         "APPLICABLE RATE" has the meaning specified in SECTION 2.2.

         "BANKRUPTCY CODE" means Title 11 of the United States Code (11
U.S.C. Section 101 ET SEQ.).

         "BUSINESS DAY" means any day, other than a Saturday, Sunday, or any
other day on which lending institutions located in Chicago, Illinois are
authorized or required by law or other governmental action to close.

         "CAPITAL EXPENDITURE" means, for any period, the aggregate of all
expenditures (whether paid in cash or accrued as liabilities and including
capitalized leases and purchase money indebtedness) by OmniCell that are
required under generally accepted accounting principles to be included or
reflected in the property, plant, equipment, or similar fixed asset accounts
reflected in the balance sheet of the Borrower.

         "CHANGE OF CONTROL" means any of the following: (i) any Person or
group of Persons (within the meaning of Section 13 or 14 of the Securities
Exchange Act of 1934) who are not as of the date hereof stockholders of
OmniCell shall acquire at any time beneficial ownership of more than 35% of
the fully diluted common stock of OmniCell (other than as a result of a
registered underwritten public offering by OmniCell for cash); (ii)
individuals who as of the date hereof constitute OmniCell's Board of
Directors (together with any new director whose election by OmniCell's
stockholders was approved by a vote of at least two-thirds of the directors
then still in office who either were directors at the beginning of such
period or whose election or nomination for election was previously so
approved), for any reason, cease to constitute a majority of the directors at
any time then in office; or (iii) any two of the following individuals cease
to hold their current positions with OmniCell: Shelly Asher, chief executive
officer; Randy Lipps, chairman; Earl Fry, chief financial officer.

         "CHARGES" means all national, federal, state, county, city,
municipal and/or other governmental (or any instrumentality, division,
agency, body or department thereof, including without limitation the Pension
Benefit Guaranty Corporation) taxes, levies, assessments or charges.

         "CLOSING DATE" means the Closing Date under and as defined in the
Asset Purchase Agreement.

         "COLLATERAL" has the meaning specified in SECTION 3.1.

         "DEBT SERVICE RATIO" means, with respect to any period, the ratio of
(i) OmniCell's earnings before interest, taxes, depreciation and amortization
minus capital expenditures (net of increases in long term debt to finance
such capital expenditures) for such period, calculated in accordance with
GAAP, to (ii) the sum of all scheduled principal and interest payable on
Indebtedness during such period, plus all taxes and dividends to shareholders
payable or paid during such period.

         "DEFAULT" means any event or condition which, with the passage of
time or the giving of notice or both, would constitute an Event of Default.

         "DEFAULT RATE" means a rate of three percent (3%) per annum PLUS the
Applicable Rate.

                                     2.
<PAGE>

         "EQUIPMENT" means all of OmniCell's now owned and hereafter acquired
machinery, equipment, furniture, furnishings, fixtures, and other tangible
personal property (except Inventory), including, without limitation, motor
vehicles, aircraft, dies, tools, jigs, and office equipment as well as all of
such types of property leased by OmniCell and all of OmniCell's rights and
interests with respect thereto under such leases (including, without
limitation, options to purchase); together with all present and future
additions and accessions thereto, replacements therefor, component and
auxiliary parts and supplies used or to be used in connection therewith, and
all substitutes for any of the foregoing, and all manuals, drawings,
instructions, warranties and rights with respect thereto; wherever any of the
foregoing is located.

         "EVENT OF DEFAULT" has the meaning specified in SECTION 7.1.

         "FINANCIALS" means those financial statements of OmniCell delivered
by or on behalf of OmniCell to Baxter pursuant to SECTION 6.1(b).

         "GAAP" means generally accepted accounting principles, consistently
applied.

         "GENERAL INTANGIBLES" means all of OmniCell's now owned or hereafter
acquired general intangibles, choses in action and causes of action and all
other intangible personal property of OmniCell of every kind and nature
(other than Accounts), including, without limitation, all Intellectual
Property Rights, corporate or other business records, inventions, designs,
blueprints, plans, specifications, trade secrets, goodwill, computer
software, customer lists, registrations, licenses, franchises, tax refund
claims, any funds which may become due to OmniCell in connection with the
termination of any employee benefit plan or any rights thereto and any other
amounts payable to OmniCell from any employee benefit plan, rights and claims
against carriers and shippers, rights to indemnification, business
interruption insurance and proceeds thereof, property, casualty or any
similar type of insurance and any proceeds thereof, proceeds of insurance
covering the lives of key employees on which OmniCell is beneficiary, and any
letter of credit, guarantee, claim, security interest or other security held
by or granted to OmniCell to secure payment by an account debtor of any of
the Accounts.

         "INDEBTEDNESS" means with respect to any Person, (i) indebtedness
for borrowed money or for the deferred purchase price of property or services
in respect of which such Person is liable, contingently or otherwise, as
obligor, guarantor or otherwise or any commitment by which such Person
assures a creditor against loss, (ii) obligations under leases which shall
have been or should be, in accordance with GAAP, recorded as capital leases
in respect of which obligations such Person is liable, contingently or
otherwise, as obligor, guarantor or otherwise, or in respect of which
obligations such Person assures a creditor against loss, (iii) all
obligations and liabilities with respect to unfunded vested benefits under
any "EMPLOYEE BENEFIT PLAN" or with respect to withdrawal liabilities
incurred under ERISA by OmniCell or any ERISA affiliate of OmniCell to a
"MULTIEMPLOYER PLAN," as such terms are defined under the ERISA, and (iv) any
and all accounts payable, accruals and other items characterized as
Indebtedness in accordance with GAAP.

         "INTELLECTUAL PROPERTY RIGHTS" means all United States and foreign
patents, trademarks, tradenames, service marks, copyrights, applications, any
of the foregoing, now or hereafter owned and or used by OmniCell, including,
without limitation the Specified Rights, and all

                                     3.
<PAGE>

licenses that allow for the use any patents, trademarks, tradenames, service
marks, copyrights, or applications of others.

         "INVENTORY" means all of OmniCell's now owned and hereafter acquired
inventory, goods, and merchandise, wherever located, to be furnished under
any contract of service or held for sale or lease, all returned goods, raw
materials, other materials and supplies of any kind, nature or description
which are or might be consumed in OmniCell's business or used in connection
with the packing, shipping, advertising, selling or finishing of such goods,
merchandise and such other personal property, and all documents of title or
other documents representing them.

         "LIEN" means: (a) any interest in property securing an obligation
owed to, or a claim by, a Person other than the owner of the property,
whether such interest is based on the common law, statute, or contract, and
including without limitation, a security interest, charge, claim, or lien
arising from a mortgage, deed of trust, encumbrance, pledge, hypothecation,
assignment, deposit arrangement, agreement, security agreement, conditional
sale or trust receipt or a lease, consignment or bailment for security
purposes; and (b) to the extent not included under clause (a), any
reservation, exception, encroachment, easement, right-of-way, covenant,
condition, restriction, lease or other title exception or encumbrance
affecting property.

         "LOAN DOCUMENTS" means this Agreement and the Other Agreements.

         "MATURITY DATE" means December 31, 2003 or such earlier date as all
Obligations shall be due and payable by acceleration or otherwise.

         "OBLIGATIONS" means all obligations and liabilities of OmniCell to
Baxter (including, without limitation, all debts, claims and indebtedness)
whether primary, secondary, direct, contingent, fixed or otherwise, now and
from time to time hereafter owing, due or payable, however evidenced,
created, incurred, acquired or owing as arising under this Agreement or the
Other Agreements, including without limitation, all principal and interest
payable with respect to the Note.

         "OMNICELL INTELLECTUAL PROPERTY RIGHTS" means all Intellectual
Property Rights other than the SureMed Intellectual Property Rights.

         "OTHER AGREEMENTS" means all agreements, instruments and documents,
including, without limitation, pledges, powers of attorney, consents,
assignments, contracts, notices, leases, financing statements and all other
written matter now or from time to time hereafter executed by or on behalf of
OmniCell and delivered to Baxter in connection herewith, including, without
limitation, the Note, but excluding the Asset Purchase Agreement and any
documents executed in connection therewith.

         "NET EQUITY" means as of any date, the consolidated stockholders'
equity of OmniCell and its Subsidiaries as of such date determined in
accordance with GAAP.

         "NOTE" has the meaning specified in the Recitals.

         "PERMITTED LIENS" means:

                                     4.
<PAGE>

              (A) Liens for taxes not yet payable or statutory Liens for
taxes in an amount not to exceed $250,000 provided that the payment of such
taxes which are due and payable is being contested in good faith and by
proper proceedings diligently pursued, and that reserves or other appropriate
provision, if any, as shall be required by GAAP shall have been made therefor
and that a stay of enforcement of any such Lien is in effect;

              (B) Liens in favor of Baxter;

              (C) Liens upon Equipment granted in connection with the
acquisition of such Equipment by OmniCell after the Closing Date (including,
without limitation, pursuant to capital leases), PROVIDED that (i) the cost
of each such acquisition constitutes a capital expenditure permitted by this
Agreement and (ii) each such Lien attaches only to the Equipment acquired
with the Indebtedness secured thereby;

              (D) The interest or title of a lessor in property subject to an
operating lease entered into by OmniCell as lessee with such lessor in the
ordinary course of business;

              (E) deposits under worker's compensation, unemployment
insurance, social security and other similar laws, or to secure the
performance of bids, tenders or contracts (other than for the repayment of
borrowed money) or to secure indemnity, performance or other similar bonds
for the performance of bids, tenders or contracts (other than for the
repayment of borrowed money) or to secure statutory obligations (other than
liens arising under ERISA or under Environmental laws) or surety or appeal
bonds, or to secure indemnity, performance or other similar bonds in the
ordinary course of business;

              (F) Liens which arise by operation of law under Article 2 of
the UCC in favor of unpaid sellers of goods or prepaying buyers of goods, or
liens in items of any accompanying documents or proceeds of either arising by
operation of law under Article 4 of the UCC in favor of a collecting bank;

              (G) Liens securing the claims or demands of materialmen,
mechanics, carriers, warehousemen, landlords and other like Persons, PROVIDED
that if any such Lien arises from the nonpayment of such claims or demands
when due, such claims or demands do not exceed $100,000 in the aggregate;

              (H) Reservations, exceptions, encroachments, easements, rights
of way, covenants running with the land, and other similar title exceptions
or encumbrances affecting any real estate of OmniCell; PROVIDED that they do
not in the aggregate materially detract from the value of the real estate or
materially interfere with its use in the ordinary conduct of OmniCell's
business; and

              (I) Judgment Liens to the extent that the attachment or
enforcement of such liens would not result in an Event of Default hereunder;
and

              (J) Liens in existence on the Closing Date and reflected on
SCHEDULE 3.2.

         "PERMITTED SENIOR DEBT" means the Indebtedness of OmniCell in an
aggregate principal amount of not more than $10,000,000 outstanding at any
time pursuant to an agreement and

                                     5.
<PAGE>

terms reasonably acceptable to Baxter between OmniCell and a bank or other
financial institution; PROVIDED, that such bank or other financial
institution has entered into an intercreditor agreement with Baxter
reasonably acceptable to Baxter. Baxter agrees that the terms of the proposed
financing of OmniCell by Silicon Valley Bank ("SVB") set forth in the Letter
of Interest dated January 11, 1999, a copy of which is attached hereto as
EXHIBIT D, would be acceptable to Baxter provided that the representations,
warranties, covenants and defaults set forth in the definitive credit
agreement between SVB and OmniCell and any other documents executed in
connection therewith shall in no way impede or restrict OmniCell's ability to
perform and pay the Obligations required under this Agreement.

         "PERMITTED SENIOR LIENS" means liens on assets of OmniCell securing
any Permitted Senior Debt; provided, however, that any liens on SureMed
Assets securing Permitted Senior Debt shall be junior in priority to Baxter's
first priority perfected security interest in such SureMed Assets.

         "PERSON" means any individual, sole proprietorship, partnership,
joint venture, trust, unincorporated organization, association, corporation,
institution, entity, party or government (whether national, federal, state,
county, city, municipal or otherwise, including without limitation any
instrumentality, division, agency, body or department thereof).

         "PRELIMINARY PURCHASE PRICE" has the meaning specified in the Asset
Purchase Agreement.

         "PURCHASED ASSETS" has the meaning specified in the Asset Purchase
Agreement.

         "RECORDS" has the meaning specified in SECTION 3.1(g).

         "REPLACEMENT EQUIPMENT" means any Equipment which (i) is purchased
with the proceeds from a sale or disposition of existing Equipment, (ii)
replaces such sold or disposed of Equipment, and (iii) is used primarily by
the same business division as used such sold or disposed of Equipment.

         "REPORT" means any financial statement or report delivered to Baxter
in accordance with SECTION 6.1.

         "SPECIFIED RIGHTS" has the meaning set forth in SECTION 5.l(g).

         "SUBSIDIARY" means any Person at least a majority of whose issued
and outstanding stock or other ownership interests now or at any time
hereafter is owned by OmniCell and/or one or more Subsidiaries.

         "SUPPLEMENTAL DOCUMENTATION" means any and all financing statements,
notices, disclosures, agreements, instruments, documents or other written
matter, which Baxter may from time to time deem necessary or desirable to
maintain or create a valid and perfected security interest in the Collateral.

         "SUREMED ASSETS" means (a) all of the Purchased Assets and all
proceeds and products thereof, (b) all Accounts and/or General Intangibles
created by the sale or lease of any SureMed

                                     6.
<PAGE>

Product, (c) all Inventory consisting of SureMed Products or raw materials,
work in process or materials used or consumed in the production of SureMed
Products, and (d) all Equipment and General Intangibles and all other
properties and assets used primarily in connection with the manufacture,
distribution and sale of SureMed Products, but only to the extent used
therewith.

         "SUREMED BUSINESS" has the meaning specified in the Recitals.

         "SUREMED INTELLECTUAL PROPERTY RIGHTS" means all Intellectual
Property Rights which are part of the SureMed Assets.

         "SUREMED PRODUCTS" means those products consisting of the SureMed
System product line as it exists on the date hereof and any extensions of
such product line.

         "UCC" means the Uniform Commercial Code (or any successor statute)
of the State of Illinois or of any other state the laws of which are required
by Section 9-103 thereof to be applied in connection with the issue of
perfection of security interests.

         1.2 ACCOUNTING TERMS. Any accounting term used in this Agreement
shall have, unless otherwise specifically provided herein, the meaning
customarily given in accordance with GAAP, and all financial computations
hereunder shall be computed, unless otherwise specifically provided herein,
in accordance with GAAP as consistently applied and using the same method for
inventory valuation as used in the preparation of the Financial Statements
for the period ended December 31, 1997.

         1.3 OTHER TERMS. All other undefined terms contained in this
Agreement shall, unless the context indicates otherwise, have the meanings
provided for by the UCC to the extent the same are used or defined therein.
Any references herein to exhibits, schedules, sections or articles are
references to exhibits, schedules, sections or articles of this Agreement,
unless otherwise specified. Wherever appropriate in the context, terms used
herein in the singular also include the plural, and vice versa, and each
masculine, feminine, or neuter pronoun shall also include the other genders.

         1.4 COMPUTATION OF TIME PERIODS. In this Agreement, in the
computation of periods of time from a specified date to a later specified
date, the word "from" shall mean "from and including" and the words "to" and
"until" shall each mean "to but excluding". Periods of days referred to in
this Agreement shall be counted in calendar days unless Business Days are
expressly prescribed and references in this Agreement to months and years
shall be to calendar months and calendar years unless otherwise specified.

2.       LOAN: GENERAL TERMS

         2.1 THE LOAN. Subject to the satisfaction of the conditions
precedent set forth in ARTICLE VIII, on the Closing Date, Baxter shall loan
to OmniCell and OmniCell shall accept from Baxter a loan in the amount of
$17,386,000 (the Preliminary Purchase Price MINUS $2,000,000) (the "LOAN")
under the terms and conditions of this Agreement. To further evidence the
Loan, OmniCell shall execute and deliver the Note to Baxter on the Closing
Date. The principal amount of the Loan shall be adjusted upon determination
of the Purchase Price in accordance with Section 2.2 of the Asset Purchase
Agreement. Upon such adjustment of the principal

                                     7.
<PAGE>

amount of the Loan, if any, the interest due under the Note shall be
proportionately adjusted retroactively to the Closing Date based on the final
Purchase Price. Promptly following the determination of the Purchase Price
pursuant to Section 2.2 of the Asset Purchase Agreement, Baxter and OmniCell
shall execute and deliver an amendment to this Agreement, amending SECTIONS
2.6 hereof, if applicable, and OmniCell shall deliver to Baxter, in exchange
for return of the original Note, an amended and restated Note reflecting such
increase or reduction, as the case may be.

         2.2 INTEREST RATE. The unpaid principal balance of the Loan shall
bear interest the fixed rate of eight percent (8%) per annum from the Closing
Date through and including January 31, 2001 and thereafter at the fixed rate
of thirteen percent (13%) per annum until the Loan has been paid in full
(such rate as in effect from time to time being referred to herein as the
"APPLICABLE RATE").

         2.3 DEFAULT RATE. After the earlier of (i) the Maturity Date,
whether by acceleration or otherwise, or (ii) the occurrence of an Event of
Default, the Obligations shall bear interest at the Default Rate.

         2.4 INTEREST PAYMENTS. OmniCell shall make payments of interest
quarterly in arrears, on the last day each of March, June September and
December of each year, beginning on March 31, 1999, until such time as no
amounts are outstanding under this Agreement.

         2.5 COMPUTATION OF INTEREST. Interest shall be computed on the basis
of a 360 day year and charged for the actual number of days elapsed.

         2.6 MATURITY DATE; PAYMENT.

         Subject to the provisions relating to adjustment of the Note set
forth in SECTION 2.1, the principal balance of the Loan shall be payable in
twelve equal installments equal to one-twelfth of the original principal
amount of the Note, beginning on the last day of March, 2001 and on the last
day of each June, September, December and March thereafter. The unpaid
principal balance plus all accrued but unpaid interest, fees, charges and
costs shall be due and payable on the Maturity Date or on such earlier date
on which said amount shall become due and payable on account of acceleration
by Baxter.

         2.7 VOLUNTARY PREPAYMENT PRIOR TO MATURITY DATE. The Loan may be
prepaid in whole or in part, without premium or penalty.

         2.8 MANDATORY PRINCIPAL PAYMENTS. Upon the occurrence of any of the
following OmniCell shall repay to Baxter, to the extent required below, the
outstanding principal amount of the Loan along with any accrued and unpaid
interest or other amounts then due and owing in respect of the Loan (a
"MANDATORY PREPAYMENT"):

              (A) Upon the issuance or sale by OmniCell or any subsidiary of
OmniCell of any shares of capital stock or other equity securities of
OmniCell, or any obligations convertible into or exchangeable therefor, or
giving any Person a right, option or warrant to acquire such securities or
convertible or exchangeable obligations, including, without limitation, an
initial public offering or private placement of the capital stock (an "EQUITY
ISSUANCE"), OnmiCell shall

                                     8.
<PAGE>

make a Mandatory Prepayment to the extent of fifty percent (50%) of the net
proceeds of such Equity Issuance on the day of the closing of any such Equity
Issuance; PROVIDED that (x) sales or issuances of common stock or options,
which common stock and options, in the aggregate, shall not exceed two
million (2,000,000) shares, to employees, officers, directors or consultants
under OmniCell's employee stock option plan and stock purchase plans, or as
otherwise approved by OmniCell's Board of Directors or (y) private placements
in any single year of equity securities in an amount not exceeding 10% of
OmniCell's outstanding paid-in capital as of its most recently completed
fiscal year, shall not require any Mandatory Prepayment under this SECTION
2.8;

              (B) Upon (i) the sale of all or substantially all of the assets
of OmniCell in any single or series of related transactions; (ii) the sale of
all or substantially all of the assets comprising the SureMed Business in any
single or series of related transactions; or (iii) the occurrence of any
Change in Control, the entire principal balance plus all accrued interest on
the Note and other Obligations shall become immediately due and payable; or

              (C) OmniCell, pursuant to SECTION 4.4, shall make a Mandatory
Prepayment of 100% of any proceeds of a sale or other disposition of
Equipment unless such proceeds are used to acquire Replacement Equipment;
PROVIDED, HOWEVER, that OmniCell shall not be required to make a Mandatory
Prepayment as a result of any sale of Equipment consisting of non-SureMed
Assets unless the Permitted Senior Lender, if any, consents to such
prepayment.

         2.9 METHOD OF PAYMENT. All payments to Baxter hereunder and under
the Other Agreements shall be payable in lawful money of the United States of
America in same day funds at Baxter's principal place of business specified
at the beginning of this Agreement or at such other place or places as Baxter
may designate in writing to OmniCell.

         2.10 APPLICATION OF PAYMENTS AND COLLECTIONS.

              (A) Prior to an Event of Default, Baxter shall allocate any and
all payments received from OmniCell or any other Person with respect to the
Obligations, as follows: (i) to the payment of any costs and expenses
reasonably incurred by Baxter to enforce any rights hereunder or under the
Other Agreements or to preserve or protect the Collateral; (ii) to accrued
but unpaid interest, fees and expenses, including, but not limited to, legal
fees and expenses; and (iii) to principal. Upon the occurrence of an Event of
Default and during the continuation thereof, Baxter may apply any and all
payments received from OmniCell or any other Person with respect to the
Obligations in such order or priority to the Obligations as Baxter shall
elect, in its sole and exclusive discretion and OmniCell (y) irrevocably
waives the right to direct the application of payments and collections
received by Baxter from or on behalf of OmniCell, and (z) agrees that Baxter
shall have the continuing exclusive right to apply and reapply any and all
such payments and collections against the Obligations then due and payable in
such manner as Baxter may deem appropriate, notwithstanding any entry by
Baxter upon any of its books and records.

              (B) To the extent that Baxter receives any payment on account
of the Obligations or any proceeds of Collateral are applied on account of
the Obligations, and any such payment(s) and/or proceeds or any part thereof
are subsequently invalidated, declared to be fraudulent or preferential, set
aside, subordinated and/or required to be repaid to a trustee,

                                     9.
<PAGE>

receiver or any other Person under any bankruptcy act, state or federal law,
common law or equitable cause, then, to the extent of such payment(s) or
proceeds received, the Obligations or part thereof intended to be satisfied
shall be revived and continue in full force and effect, as if such payment(s)
and/or proceeds had not been received by Baxter and applied on account of the
Obligations.

3.       COLLATERAL

         3.1 GRANT OF SECURITY INTEREST; AGREEMENT TO ALLOW FOR USE OF
OMNICELL INTELLECTUAL PROPERTY. (i) To secure the prompt payment and
performance to Baxter of all Obligations, OmniCell hereby grants to Baxter a
security interest in and rights of set-off against, and hereby mortgages,
conveys, transfers, assigns and pledges to Baxter, all of OmniCell's now
existing and hereafter arising or acquired interest in and to the following:

              (A) Accounts;

              (B) General Intangibles, other than the OmniCell Intellectual
Property Rights;

              (C) Inventory;

              (D) Equipment;

              (E) all chattel paper, instruments, notes, documents, documents
of title and investment property;

              (F) all moneys, investment property, securities and other
property of any kind of OmniCell in the possession or under the control of
Baxter, any assignee of or participant in the Obligations, or a bailee of any
such party or such party's affiliates;

              (G) all books, records, computer records, ledger cards,
programs and other computer materials, customer and supplier lists, invoices,
orders and other property evidencing or relating to any of the foregoing
items ("RECORDS");

              (H) all accessions to any of the foregoing items and all
substitutions, renewals, improvements and replacements of and additions
thereto; and

              (I) all products and proceeds of the foregoing.

         All of the foregoing is referred to herein individually and
collectively as the "COLLATERAL." It is the intent of the parties that the
Collateral shall include all of the property of OmniCell, real, personal or
intangible, whether now existing or hereafter acquired or arising, whether
specifically enumerated herein or not, and that the broadest possible
interpretation should be given to the term Collateral, to the fullest extent
permitted by applicable law; provided, however, that in no event shall the
Collateral include any OmniCell Intellectual Property Rights.

              (II) For the purpose of enabling Baxter to exercise rights and
remedies under the Loan Documents (including, without limiting the terms and
conditions set forth herein, in order to take possession of, hold, preserve,
process, assemble, prepare for sale, market for sale,

                                     10.
<PAGE>

sell or otherwise dispose of Inventory) at such time as Baxter shall be
entitled to exercise such rights and remedies, OmniCell shall enter into on
the date hereof a license agreement, substantially in the form of EXHIBIT F;
such license agreement to grant to Baxter an irrevocable, non-exclusive, and
fully paid-up license (exercisable without payment of royalty or other
compensation to OmniCell) to use, license or sublicense any OmniCell
Intellectual Property Rights wherever the same may be located, and including
in such license access to all media in which any of the licensed items may be
recorded or stored and to all computer software and programs used for the
compilation or printout thereof; provided, however, that each customer for
the Inventory is made subject to a written agreement that is consistent with
and no less protective of the OmniCell Intellectual Property Rights than the
terms of OmniCell's standard forms of Master Purchase Agreement and Master
Rental Agreement.

         3.2 PRIORITY OF LIENS. OmniCell hereby covenants and agrees that the
Liens granted pursuant to SECTION 3.1 are and shall hereafter at all times be
(a) with respect to those items of Collateral consisting of SureMed Assets,
perfected, first priority liens and security interests, subject only to
Permitted Liens set forth on SCHEDULE 3.2, if any, and (b) with respect to
those items of Collateral that do not consist of SureMed Assets, perfected
liens and security interests, subject only to (i) Permitted Senior Liens, if
any, with respect to which Baxter agrees that its Liens against non-SureMed
Assets shall be second in priority, and (ii) Permitted Liens, if any. Baxter
hereby acknowledges that OmniCell may grant Permitted Senior Liens against
SureMed Assets so long as such Permitted Senior Liens are junior in priority
to Baxter's liens and security interests in SureMed Assets.

         3.3 INSPECTION OF COLLATERAL; AUDIT OF RECORDS.

              (A) Baxter (by any of its officers, accountants, employees
and/or agents) shall have the right, at any time or times during OmniCell's
usual business hours, after not less than two Business Days prior notice
during normal business hours (unless a Default or Event of Default then
exists, in which event no notice shall be required) to inspect the Collateral
(and the premises upon which it is located) and all related Records and to
verify the amount and condition of or any other matter relating to the
Collateral.

              (B) In addition to the right to inspect set forth herein,
Baxter (by any of its officers, accountants, employees and/or agents) shall
have the right to audit the books and Records of OmniCell. All reasonable
costs, fees and expenses incurred by Baxter, or for which Baxter becomes
obligated, in connection with such inspection, verification or audit shall
constitute part of the Obligations, payable by OmniCell to Baxter within five
(5) Business Days after demand therefor; PROVIDED, HOWEVER, that unless an
Event of Default is outstanding, OmniCell's annual responsibility for such
costs, fees and expenses shall be limited to the cost of no more than
round-trip coach class airline tickets and one (1) night's accommodations for
no more than two (2) auditors sent by Baxter on an inspection, verification
and audit.

         3.4 MAINTAIN PERFECTION; SUPPLEMENTAL DOCUMENTATION. OmniCell shall
perform all the acts requested by Baxter which are necessary or desirable to
maintain a valid, perfected security interest in the Collateral, including
but not limited to, executing and/or delivering to Baxter, at any time and
from time to time hereafter, any and all Supplemental Documentation that
Baxter may request, in form and substance reasonably acceptable to Baxter, to
perfect and

                                     11.
<PAGE>

maintain perfected Baxter's security interest, lien and/or encumbrance in
and/or assignment and pledge of the Collateral, and to consummate the
transactions contemplated in or by this Agreement and/or the Other
Agreements. OmniCell agrees that Baxter, to the extent permitted by then
prevailing applicable law, may execute, on behalf and in the name of
OmniCell, any supplemental documentation covering all or any of the
Collateral and file the same in each and every appropriate jurisdiction. To
the extent permitted by applicable law, Baxter may file, without OmniCell's
signature, one or more financing statements disclosing Baxter's Liens,
including, limitation, by electronic means with or without a signature as
permitted or required by applicable law or filing procedures. OmniCell agrees
that a carbon, photographic, photostatic, or other reproduction of this
Agreement or of a financing statement is sufficient as a financing statement.

         3.5 PERFECTED SECURITY INTEREST; LOCATION OF COLLATERAL. OmniCell
hereby warrants and represents to and covenants with Baxter that: (a)
Baxter's security interest in the Collateral is now and at all times
hereafter shall be perfected and, except as set forth in SECTION 3.2, shall
have a first priority; (b) the offices and/or locations where OmniCell keeps
the Collateral and the Records are at the locations specified on SCHEDULE
3.5. OmniCell has no other offices or locations and OmniCell shall not remove
such Records and/or the Collateral therefrom and shall not keep any such
Records and/or the Collateral at any other office or location unless OmniCell
gives Baxter notice thereof at least thirty (30) days prior thereto and the
same is within the continental United States of America. OmniCell, by written
notice delivered to Baxter at least thirty (30) days prior thereto, shall
advise Baxter of OmniCell's opening or acquisition of any new office, place
of business or place where any of the Collateral is to be stored or kept, or
its closing of any then existing office, place of business or place where any
of the Collateral is to be stored or kept and any new office or place of
business shall be within the continental United States of America.

         3.6 PAYMENT OF CLAIMS. Baxter, in its sole and absolute discretion,
without waiving or releasing any of the Obligations or any Event of Default,
may at any time or times hereafter, but shall be under no obligation to, pay,
acquire and/or accept an assignment of any security interest, lien,
encumbrance or claim asserted by any Person against the Collateral. All sums
paid by Baxter in respect thereof and all reasonable costs, fees and
expenses, including reasonable attorneys' fees, court costs, expenses and
other charges relating thereto incurred by Baxter or for which Baxter becomes
obligated on account thereof shall be part of the Obligations payable by
OmniCell to Baxter on demand.

4.       REPRESENTATIONS' WARRANTIES AND COVENANTS RELATING TO COLLATERAL

         4.1 REPRESENTATIONS, WARRANTIES AND COVENANTS RELATING TO INVENTORY.
OmniCell hereby represents, and warrants and covenants as follows:

              (A) OmniCell shall keep correct and accurate Records itemizing
and describing the kind, type, quality and quantity of Inventory, OmniCell's
cost therefor and selling price thereof and the withdrawals therefrom and
additions thereto, all of which Records shall be available (during OmniCell's
usual business hours), upon notice in accordance with the terms of SECTION
3.3, to any of Baxter's officers, employees or agents for inspection and
copying thereof.

                                     12.
<PAGE>

              (B) Inventory shall be kept only at the locations set forth on
SCHEDULE 4.l(b). Except as disclosed on SCHEDULE 4.l(b), Inventory is not now
and shall not at any time or times hereafter be stored with a prospective
purchaser, bailee, warehouseman or similar party without Baxter's prior
written consent. In the event any Inventory is so stored with a bailee,
warehouseman or similar party, OmniCell will concurrently therewith cause the
prospective purchaser, warehouseman, bailee or similar party to acknowledge
in writing OmniCell's ownership of and Baxter's security interest in such
Inventory and to cause its records to reflect such security interest, and, in
the case of a bailee, warehouseman or similar party, which issues warehouse
receipts covering bailed goods shall cause any such bailee, warehouseman or
similar party to issue and deliver non-negotiable warehouse receipts or
non-negotiable bills of lading in OmniCell's name, and in the case of a
prospective purchaser or a bailee or other third party other than a
warehouseman, shall cause such prospective purchaser, bailee or other third
party to execute a UCC-1 financing statement in favor of OmniCell, with such
financing statement assigned to Baxter.

              (C) Inventory is not now and shall not be at any time or times
hereafter be consigned to third parties, without Baxter's prior written
consent and, in any such event, OmniCell will cause such consignment to be
properly perfected to ensure the priority of Baxter's security interest in
such Inventory and will cause the consignee to issue and deliver, in form and
substance satisfactory to Baxter, a written agreement recognizing Baxter's
prior rights in the Inventory. All reasonable out of pocket costs, fees and
expenses incurred by Baxter in connection therewith (or which Baxter becomes
obligated to pay) shall be part of the Obligations, payable by OmniCell to
Baxter on demand.

         4.2 SALE OF INVENTORY BY OMNICELL. OmniCell may sell Inventory only
in the ordinary course of its business (which does not include a transfer in
partial or total satisfaction of Indebtedness, sales in bulk, sales on
consignment, sales on approval or sale on a return basis, except system
validation and approval arrangements with potential customers in the ordinary
course of business). Sales in the ordinary course do include sales of
Inventory consisting of system validations and demonstration materials for
less than cost.

         4.3 MAINTENANCE OF EQUIPMENT. OmniCell shall keep and maintain the
Equipment in good operating condition and repair in all material respects and
shall make all necessary replacements thereof and renewals thereto so that
the value and operating efficiency thereof shall at all times be maintained
and preserved in all material respects. OmniCell shall not permit any such
items to become a fixture to real estate or an accession to other personal
property.

         4.4 LIENS ON AND SALE OF EQUIPMENT. OmniCell shall not grant or
permit to exist a security interest in or other Lien upon the Equipment
(other than a Permitted Lien or, in the case of Equipment not consisting of
SureMed Assets, at any time that any Permitted Senior Debt is outstanding,
the Permitted Senior Lien). OmniCell will not sell, lease or otherwise
dispose of the Equipment or any part thereof to any Person, without Baxter's
prior written consent, which may be withheld in the sole discretion of
Baxter; PROVIDED THAT OmniCell may sell Equipment (i) reasonably determined
by OmniCell not to be necessary for the efficient and effective conduct of
its business in arms-length transactions for the fair market value thereof in
an amount not to exceed $50,000 in any single fiscal year or (ii) so long as
the proceeds of such sale are (a) used to purchase Replacement Equipment, (b)
used to prepay the Loan or (c) if such assets are non-

                                     13.
<PAGE>

SureMed Assets, used for such purposes as are permitted under the Permitted
Senior Debt. In the event any Equipment is sold, transferred or otherwise
disposed of as permitted in this SECTION 4.4, OmniCell shall notify Baxter of
such fact and deliver all of the cash proceeds of such sale, transfer or
disposition that are not used in accordance with clause (a) or (c) above to
Baxter, which proceeds shall be applied to the repayment of the Obligations
in accordance with SECTION 2.8.

         4.5 SCHEDULE OF EQUIPMENT. SCHEDULE 4.5 sets forth all material
Equipment owned by OmniCell as of the date hereof, including the location of
each item of Equipment listed thereon. For purposes of this SECTION 4.5 only,
material Equipment shall mean any single piece of Equipment (including all
component parts thereof) having a fair market value in excess of $50,000.
OmniCell shall deliver notice to Baxter amending SCHEDULE 4.5 on a quarterly
basis.

         4.6 TITLE TO EQUIPMENT. OmniCell, subject to Baxter's
representations and warranties in Section 3.8 (b) of the Asset Purchase
Agreement, represents and warrants to Baxter that OmniCell has good,
indefeasible, and merchantable title, free and clear of all liens, claims and
encumbrances (other than the Permitted Liens and Permitted Senior Liens,
provided that such Permitted Senior Liens are junior in priority to any lien
and security interest granted to Baxter hereunder), to and ownership of the
Equipment described and/or listed on SCHEDULE 4.5 and that all Equipment is
and shall be kept only at the locations set forth on SCHEDULE 3.5. OmniCell,
immediately on demand by Baxter, shall deliver to Baxter any and all evidence
of ownership of, including without limitation, certificates of title and any
applications for title to, any Equipment.

5.       GENERAL WARRANTIES, REPRESENTATIONS AND COVENANTS

         5.1 GENERAL REPRESENTATIONS, WARRANTIES AND COVENANTS. OmniCell
warrants and represents to and covenants with Baxter as follows:

              (A) OmniCell is and at all times hereafter shall be a
corporation duly organized and existing and in good standing under the laws
of the State of California and is qualified or licensed to do business and in
good standing in all states in which the failure to be so qualified or
licensed would have a material adverse effect upon OmniCell or its ability to
perform and pay its Obligations under this Agreement and the Other Agreements.

              (B) OmniCell has the right, power and capacity and is duly
authorized and empowered to enter into, execute, deliver and perform this
Agreement and the Other Agreements.

              (C) Each of the names, if any, used by OmniCell in the United
States during the five (5) year period preceding the date of this Agreement
are set forth on SCHEDULE 5.1(C) attached hereto and none of such names are
registered tradenames with the U.S. Patent and Trademark Office except as
disclosed on SCHEDULE 5.1(C).

              (D) The execution, delivery and/or performance by OmniCell of
this Agreement and the Other Agreements shall not, by the lapse of time, the
giving of notice or otherwise, constitute a violation of any applicable law
or a breach of any provision contained in OmniCell's Articles of
Incorporation or By-Laws, or contained in any agreement, instrument or
document to which OmniCell is now or hereafter a party or by which it or any
of its assets are or

                                     14.
<PAGE>

may become bound, or result in or require the creation of any lien, security
interest, charge or other encumbrance upon or with respect to any now-owned
or hereafter arising or acquired properties of OmniCell, except for the liens
contemplated by this Agreement and/or created hereby.

              (E) This Agreement and the Other Agreements are and will be the
legal, valid and binding agreements of OmniCell enforceable in accordance
with the their terms, except as enforcement thereof may be subject to the
effect of applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting creditors' rights generally, and to general principles
of equity (regardless of whether such enforcement is sought in a proceeding
in equity or at law).

              (F) OmniCell has and at all times hereafter shall have good and
valid title to and ownership of the Collateral, free and clear of all liens,
claims, security interests and encumbrances, except as, and to the extent
contemplated by SECTION 3.2.

              (G) Attached hereto as SCHEDULE 5.1(G) is a true, accurate and
complete list of all United States and foreign patents, registered
trademarks, tradenames and service marks, registered copyrights and
applications therefor owned or used by OmniCell as of the Closing Date (the
"SPECIFIED RIGHTS"). Except as set forth on SCHEDULE 5.1(G), the Specified
Rights are (or after the Closing Date) will be owned by OmniCell or OmniCell
will own or possess the licenses or other rights to use all Specified Rights.
To the best of OmniCell's knowledge, none of the products or processes of
OmniCell conflicts with or infringes or has infringed upon any United States
patents, registered trademarks, trade names or service marks or registered
copyrights of any other person or entity; and to the best of OmniCell's
knowledge, OmniCell has the full right to conduct its business as heretofore
conducted by OmniCell, as applicable, without incurring license fees or
royalty or other payment obligations to any person or entity in respect of
the Specified Rights, except as may be set forth in the agreement(s) pursuant
to which OmniCell has obtained its rights to such Specified Rights. This
paragraph shall not apply with respect to the SureMed Assets acquired by
OmniCell pursuant to the Asset Purchase Agreement as of the date hereof, but
will apply with respect to the effect of any changes arising out of the
conduct of the SureMed Business by OmniCell.

              (H) OmniCell is now, and at all times hereafter shall be,
solvent and generally able to pay its debts as they mature; OmniCell now
owns, and shall at all times hereafter own, property which, at a fair
valuation, is greater than the sum of its debts; and OmniCell now has, and
shall have at all times hereafter, capital sufficient to carry on its
business and transactions and all businesses and transactions in which it is
about to engage.

              (I) Except as disclosed on SCHEDULE 5.l(I), there are no
actions or proceedings which are pending or threatened against OmniCell which
might result in any material adverse change in its financial condition or
materially affect OmniCell's assets or the Collateral or OmniCell's ability
to fully perform the Obligations.

              (J) OmniCell has obtained and is in good standing with respect
to all material governmental permits, certificates, consents and franchises
necessary to continue to conduct its

                                     15.
<PAGE>

business as previously conducted prior to the date hereof and to own or lease
and operate its properties as now owned or leased by it.

              (K) No authorization, approval or other action by, and no
notice to or filing with, any governmental authority is or will be necessary
(a) for the grant by OmniCell of the security interest in the Collateral
hereunder or for the execution, delivery or performance of this Agreement by
OmniCell; (b) to ensure the validity, perfection or priority of the security
interest in the Collateral granted hereunder, or (c) for the exercise by
Baxter of any of its rights or remedies hereunder, except for the filing of
financing statements and continuation statements in the jurisdictions set
forth in SCHEDULE 5.1(K) pursuant to the UCC as in effect in such
jurisdictions.

              (L) OmniCell is not a party to any contract or agreement or
subject to any charge, restriction, judgment, decree or order materially and
adversely affecting its business, property, assets, operations or condition,
financial or otherwise.

              (M) OmniCell is not in violation of any applicable statute,
regulation or ordinance of the United States of America, of any state, city,
town, municipality, county or of any other jurisdiction, or of any agency
thereof (including, but not limited to any environmental law) in any respect
which might materially and adversely affect its business, property, assets,
operations or condition, financial or otherwise.

              (N) OmniCell has filed or caused to be filed all tax returns
which are required to be filed; and OmniCell has paid all Charges shown to be
due and payable on said returns or on any assessments made against it or any
of its property, and all other Charges imposed on it or any of its properties
by any governmental authority; PROVIDED, HOWEVER, that OmniCell need not if
it is contesting the foregoing in good faith and by proper proceedings
diligently pursued and that reserves or other appropriate provisions, if any,
as shall be required by GAAP shall have been made therefor, and any Lien
asserted in connection with such charges is a Permitted Lien.

              (O) Except as set forth on SCHEDULE 5.1(O), OmniCell has no
Indebtedness (except for trade payables arising in the ordinary course of its
business since September 30, 1998), has not guaranteed (other than as a
result of the endorsement of any instrument or items of payment for deposit
or collection in the ordinary course of business or as otherwise expressly
permitted pursuant to the terms hereof) the obligations of any Person, and
there are no actions or proceedings which are pending or, to OmniCell's
knowledge, threatened against OmniCell which, in any of the foregoing cases,
are reasonably likely to result in any material adverse change in its
financial condition or materially adversely affect its assets or the
Collateral or its ability to fully perform and satisfy the Obligations
hereunder.

              (P) OmniCell is not in default with respect to any indenture,
loan agreement, mortgage, deed or other similar agreement relating to the
borrowing of money to which it is a party, by which it or any of its property
is bound.

              (Q) The audited financial statements of OmniCell as of December
31, 1997 and for the fiscal year then ended, fairly and accurately present
the assets, liabilities and financial conditions and results of operations of
OmniCell as of and for the periods ending on such dates

                                     16.
<PAGE>

set forth therein and have been prepared in accordance with GAAP, applied on
a basis consistently followed in all material respects throughout the periods
involved.

              (R) There has been no material adverse change in the assets,
liabilities or financial condition of OmniCell since September 30, 1998,
other than changes resulting from the consummation of the transactions
contemplated hereby and by the Asset Purchase Agreement.

              (S) Attached hereto as SCHEDULE 5.l(S) is a true, accurate and
complete schedule of all Subsidiaries and Affiliates of OmniCell.

         5.2 SURVIVAL OF WARRANTIES AND REPRESENTATIONS. OmniCell covenants,
warrants and represents to Baxter that all representations and warranties of
OmniCell contained in this Agreement and the Other Agreements shall be true
at the time of date hereof, and shall survive the execution, delivery and
acceptance hereof and thereof by the parties thereto and the closing of the
transactions described herein and therein or related hereto or thereto.

6.       COVENANTS AND CONTINUING AGREEMENTS.

         6.1 AFFIRMATIVE COVENANTS. OmniCell shall, unless Baxter otherwise
consents thereto in writing, do all of the following during the term hereof:

              (A) INSURANCE. OmniCell will at all times maintain or cause to
be maintained insurance in such amounts, on such terms and conditions and
insuring against such risks as are ordinarily insured against by other
Persons in similar businesses similarly situated and in any event, including
property casualty insurance, comprehensive commercial general liability
insurance (including products liability coverage), worker's compensation
insurance and business interruption insurance.

         All policies of insurance on the Collateral or otherwise required
hereunder shall be in form, amount and terms, and shall be issued by
companies reasonably satisfactory to Baxter. OmniCell shall deliver to Baxter
a certificate of insurance and evidence of payment of all premiums therefor
and shall deliver renewals of all such policies to Baxter at least thirty
(30) days prior to their expiration dates. Such policies of insurance shall
contain an endorsement, in form and substance reasonably acceptable to
Baxter, showing all losses payable to Baxter or, in Baxter's reasonable
discretion, OmniCell shall execute a separate assignment thereof, in form and
substance reasonably acceptable to Baxter. Baxter shall be named as loss
payee, mortgagee and secured party in all policies of property insurance and
as an additional insured in all policies of liability insurance. Such
endorsement shall provide that the insurance companies will give Baxter at
least thirty (30) days' prior notice before any such policy shall be
materially modified or canceled and that no act or default of OmniCell or any
other Person (other than Baxter) shall affect the right of Baxter to recover
under such policy in case of loss or damage. OmniCell hereby directs all
insurers under such policies to pay all proceeds payable thereunder directly
to Baxter. During such times that an Event of Default has occurred and is
continuing, OmniCell irrevocably makes, constitutes and appoints Baxter (and
all officers, employees or agents designated by Baxter) as OmniCell's true
and lawful attorney and agent-in-fact for the purpose of making, settling and
adjusting claims under such policies, endorsing the name of OmniCell in
writing or by stamp on any check, draft, instrument or other item of payment
for the proceeds of

                                     17.
<PAGE>

such policies and for making all determinations and decisions with respect to
such policies, in each such case.

         (B) FINANCIAL REPORTS. OmniCell shall keep books of account and
prepare financial statements and furnish to Baxter the following (all of the
foregoing and following to be kept and prepared in accordance with GAAP, in
each case consistent with the audited financial statements for the fiscal
year ended December 31, 1997 previously delivered by OmniCell to Baxter,
unless OmniCell's independent certified public accountants concur in any
changes therein and such changes are disclosed in writing to Baxter):

              (I) ANNUAL. As soon as available, but not later than ninety
(90) days after the close of each fiscal year of OmniCell, financial
statements of OmniCell (including a balance sheet, statement of cash flow and
statement of changes in financial position, with supporting footnotes) as at
the end of such year and for the year then ended all in form and detail as
reasonably required by Baxter, prepared by a firm of independent certified
public accountants selected by OmniCell and reasonably acceptable to Baxter
and containing the unqualified opinion of such independent certified public
accountants with respect to the financial statements and accompanied by a
statement by such accountant that, as of the date thereof, there are no
Events of Default under this Agreement.

              (II) QUARTERLY REPORT. As soon as practicable, but in no event
later than forty-five (45) days after the end of each fiscal quarter,
financial statements of OmniCell (including a statement of cash flow, a
balance sheet and profit and loss statement with supporting footnotes) as at
the end of such quarter and for the prior quarters in such fiscal year, all
in form and detail as reasonably required by Baxter, prepared by the chief
financial officer of OmniCell.

              (III) OTHER INFORMATION. Such other data and information
(financial and otherwise) as Baxter, from time to time, may reasonably
request bearing upon or related to the Collateral, OmniCell's financial
condition and/or result of operations.

         (C) CERTIFICATE WITH ANNUAL AND QUARTERLY REPORT. Concurrently with
the delivery of the financial statements described in SECTION 6.1(B), a
certificate of the president or chief financial officer of OmniCell
certifying to Baxter that: (i) such officer is not aware of the occurrence or
existence of any Default or Event of Default or, if such officer is aware
thereof, the nature thereof and the steps OmniCell has proposed to cure the
same; and (ii) OmniCell is in compliance with the covenants set forth in
SECTION 6.1 and setting forth the detail required to determine OmniCell's
compliance with said covenants, in such form and detail as Baxter shall
reasonably require.

         (D) WAREHOUSE AGREEMENTS. OmniCell shall deliver to Baxter copies of
all agreements between OmniCell and any warehouse or other third party
location at which any Inventory may, from time to time, be kept and all
similar agreements between OmniCell and any Person relating thereto promptly
after entering into the same and shall take such actions as are necessary, in
Baxter's reasonable discretion, to insure the continuous perfection of
Baxter's security interest in Collateral stored in such warehouses.

                                     18.
<PAGE>

         (E) RECORDS. OmniCell shall keep accurate and complete records
relating to the Collateral and the operation of OmniCell's business which
records shall be made available to Baxter in accordance with SECTION 3.3 for
Baxter's inspection, copying, verification or otherwise. Upon the request of
Baxter, OmniCell shall furnish with respect to any Account identified on any
schedule, certificate or report provided pursuant to this Agreement (i) a
true and correct copy of the invoice evidencing such Account and (ii)
evidence of shipment or performance. OmniCell shall also deliver to Baxter,
upon demand, a copy of all documents, including, without limitation,
repayment histories, present status reports and shipment reports, relating to
the Accounts and such other matters and information relating to the status of
then existing Accounts as Baxter shall reasonably request.

         (F) PAY DEBTS. OmniCell shall pay or discharge or otherwise satisfy
all Indebtedness at or before maturity or before the same becomes delinquent,
PROVIDED THAT OmniCell shall not be required to pay any Indebtedness which is
unsecured while the same is being contested by it in good faith and by
appropriate proceedings so long as OmniCell shall have set aside on its books
reserves in accordance with GAAP with respect thereto.

         (G) PAYMENT OF CHARGES. OmniCell shall pay promptly when due all of
the Charges. Notwithstanding the foregoing, OmniCell may dispute, without
prior payment thereof, the Charges; PROVIDED that (A) OmniCell, in good
faith, shall be contesting the same in an appropriate proceeding, (B)
enforcement thereof against any assets of OmniCell shall be stayed and (C)
appropriate reserves therefor shall have been established on the Records of
OmniCell in accordance with GAAP. In the event OmniCell, at any time or times
hereafter, shall fail to pay the Charges required herein, OmniCell shall so
advise Baxter thereof in writing; Baxter may, without waiving or releasing
any of OmniCell's Obligations or any Event of Default hereunder, in its sole
and absolute discretion, at any time or times thereafter, make such payment,
or any part thereof, and take any other action with respect thereto which
Baxter deems advisable. All sums so paid by Baxter and any expenses,
including reasonable attorneys' fees, court costs, expenses and other charges
relating thereto, shall be part of the Obligations, payable by OmniCell to
Baxter on demand.

         (H) COMPLIANCE WITH LAWS. OmniCell shall comply in all material
respects with all laws, rules, regulations and governmental orders (federal,
state and local), including all environmental laws, having applicability to
it or to the business or businesses at any time conducted by it.

6.2      NEGATIVE COVENANTS.  OmniCell shall not do any of the following:

         (A) ATTACHMENT. Permit or suffer any levy, attachment or restraint
to be made affecting any of its assets or the Collateral.

         (B) SUBSIDIARIES. Create or acquire any subsidiaries unless (i) such
subsidiary shall have executed and filed UCC financing statements or
amendments, substantially in the form of EXHIBIT E, granting Baxter a first
priority (except as otherwise provided under SECTION 3.2) perfected security
interest in the Collateral, and (ii) such subsidiary shall have guaranteed,
in a manner reasonably acceptable to Baxter, the repayment of all of the
Obligations hereunder.

                                     19.
<PAGE>

         (C) RECEIVERS. Permit or suffer any receiver, trustee or assignee
for the benefit of creditors, or any other custodian to be appointed to take
possession of all or any of OmniCell's assets or any of the Collateral.

         (D) ADVERSE TRANSACTIONS. Enter into any transaction not in the
ordinary course of business which materially and adversely affects OmniCell's
ability to repay the Obligations, or materially and adversely affects the
Collateral.

         (E) GUARANTY DEBT. Guaranty or otherwise, in any way, become liable
with respect to the obligations or liabilities of any other Person,
including, without limitation, by any agreement to (i) maintain net worth or
working capital, other than pursuant to any Permitted Senior Debt, (ii)
purchase the obligations or property of any such Person, or to furnish funds
to any such Person, directly or indirectly, through the purchase of goods,
supplies or services, in any such case with the intent to provide such a
guaranty or otherwise become so liable, other than the making of loans to
employees, so long as the aggregate amount of such loans does not exceed
$100,000 per employee or $500,000 in the aggregate outstanding at any time,
or (iii) obtain upon its credit the issuance of any letter or letters of
credit for the obligations of any such Person; PROVIDED THAT the foregoing
limitations shall not apply to (x) endorsement of instruments or items of
payment for deposit or collection in the ordinary course of business or (y)
guaranties outside the ordinary course of business in an aggregate amount not
to exceed $2,000,000 outstanding at any time MINUS the amount of Indebtedness
outstanding under SECTION 6.2(G)(VI) at such time.

         (F) TRANSACTIONS WITH AFFILIATES. Enter into any transactions with
any Affiliate, except a transaction which is in the ordinary course of
business, is otherwise permitted by this Agreement and is upon fair and
reasonable terms, consistent with prior practices, no less favorable than
would be obtained in a comparable arms-length transaction with a Person not
an Affiliate.

         (G) INCUR INDEBTEDNESS. Incur or become liable in respect of any
Indebtedness, other than (i) the Obligations; (ii) Permitted Senior Debt;
(iii) obligations or liabilities created or arising under trade payables
arising in the ordinary course of business; (iv) obligations as a lessee
under operating leases; (v) Indebtedness to fund Capital Expenditures so long
as such Capital Expenditures do not exceed $5,000,000 in the aggregate in any
calendar year, and (vi) other Indebtedness in the aggregate principal amount
outstanding at any time not to exceed $2,000,000 MINUS the dollar amount of
any obligation guaranteed outside the ordinary course pursuant to clause (y)
of the proviso set forth in SECTION 6.2(E).

         (H) SALE OF ASSETS. Sell, lease or otherwise dispose of or transfer,
whether by sale, merger, consolidation or otherwise, any of OmniCell's assets
or the Collateral, except (i) sales or leases of inventory in the ordinary
course of business; (ii) sale or disposal of unused or obsolete assets in the
ordinary course of business pursuant to SECTION 4.4.

         (I) DIVIDENDS; PAYMENT OF FEES, ETC. Any time during the term hereof
(i) make any distributions or pay any dividends or make any distributions of
property or assets with respect to its capital stock, (ii) redeem or
repurchase any of its capital stock, other than redemptions of (x) Series J
Preferred Stock according to the terms of such Series J Preferred

                                     20.
<PAGE>

Stock in existence on December 16, 1998 and (y) the stock of terminated
employees pursuant to the terms of the agreements under which such stock was
issued, and (iii) pay any director's fees or any salaries to any director or
shareholder unless such shareholder or director is directly and actively
employed by OmniCell, and (iv) make any loans, advances and/or extensions of
credit to any Affiliate, except as permitted in SECTION 6.2(E) or (F).

         (J) ENCUMBRANCES. Create or suffer to exist any lien, mortgage or
encumbrance or security interest to exist with respect to any of the
Collateral, except (i) Permitted Liens, (ii) second priority Permitted Senior
Liens on Collateral consisting of SureMed Assets and first priority Permitted
Senior Liens on Collateral consisting of non-SureMed Assets, and (iii) liens
securing purchase money Indebtedness.

         (K) ACQUISITIONS. Purchase any assets outside of the ordinary course
of business, or acquire any business (whether by purchase of stock, merger or
purchase of assets or otherwise) unless (i) no Indebtedness shall be assumed
in connection therewith which would not be permitted by SECTION 6.2(G); (ii)
no Default or Event of Default shall have occurred and be continuing or shall
result from such acquisition; (iii) OmniCell shall have first delivered to
Baxter a PRO FORMA compliance certificate dated as of the last day of the
most recent fiscal quarter for which Baxter has delivered to the Agent the
Financial Statements pursuant to Section 6.1, demonstrating that if such
acquisition had occurred on the last day of such fiscal quarter, no Default
or Event of Default would have resulted therefrom; and (iv) in connection
with the acquisition of a future subsidiary, OmniCell has complied with
SECTION 6.2(B).

         6.3 REQUIRED NOTICES. In addition to those notices required
elsewhere in this Agreement, OmniCell shall notify Baxter promptly after
obtaining knowledge of:

         (A) except as otherwise previously disclosed, any event or
occurrence which OmniCell has determined has caused a material loss or
decline in value of the Collateral due to casualty or any other adverse
occurrence and the estimated (or actual, if available) amount of such loss or
decline;

         (B) the institution of any suit or administrative proceeding which,
if determined adversely to OmniCell, could reasonably be expected to
materially and adversely affect the operations, financial condition or
business of OmniCell or which is reasonably likely to materially and
adversely affect Baxter's security interest in the Collateral;

         (C) OmniCell's becoming subject to any Charge, restriction,
judgment, decree or order which materially and adversely affects its business
operations, property, assets or financial condition;

         (D) the commencement of any lockout, strike or walkout relating to
any labor contract to which OmniCell is a party;

         (E) any material default under any material lease or other contract
or the occurrence of any event which constitutes or, with the giving of
notice of the passage of time, or both, would constitute an event of default
under the terms of any such lease or other contract; and

                                     21.
<PAGE>

         (F) the occurrence of a Default or Event of Default, such notice to
include the written statement of the chief financial officer of OmniCell
setting forth the details of such event and the action which OmniCell
proposes to take with respect thereto.

7.       DEFAULT

         7.1 EVENTS OF DEFAULT. The occurrence of any one of the following
events shall constitute a default ("EVENT OF DEFAULT") under this Agreement:

         (A) if OmniCell fails to pay the Obligations, or any part thereof,
on the due date thereof.

         (B) OmniCell breaches any of the covenants set forth in SECTIONS
6.1(F) through 6.1(H), inclusive, or 6.2.

         (C) OmniCell shall default in the performance or observance of any
other of OmniCell's covenants or agreements in this Agreement or any of the
Other Agreements and such default shall continue unremedied for a period of
thirty (30) days after the first to occur of (i) Baxter having delivered
written notice of such default to OmniCell; or (ii) OmniCell obtaining actual
knowledge of such default.

         (D) any representation or warranty on the part of OmniCell contained
in this Agreement or any of the Other Agreements shall have been incorrect in
any material respect when made or deemed made.

         (E) all of the Collateral, or a material portion thereof, is
attached, seized, subjected to a writ of distress, warrant, or is levied
upon, or comes within the possession of any receiver, trustee, custodian or
assignee for the benefit of creditors.

         (F) a petition under the Bankruptcy Code, or any similar law or
regulation shall be filed by OmniCell or OmniCell shall make an assignment
for the benefit of its creditors, or any case or proceeding is filed by
OmniCell for its dissolution or liquidation, or OmniCell shall take any
corporate action to authorize or effect any of the foregoing.

         (G) OmniCell is enjoined, restrained or in any way prevented by
court order from conducting all or any material part of its business affairs,
or a petition under the Bankruptcy Code, or any similar law or regulation is
filed against OmniCell, or any case or proceeding is filed against OmniCell
for its dissolution or liquidation, and such injunction, restraint or
petition is not dismissed or stayed within sixty (60) days after the entry or
filing thereof, or an order for relief is entered in any case commenced
against OmniCell under the Bankruptcy Code or any similar law.

         (H) a proceeding is commenced for the appointment of a receiver,
trustee, or custodian for any material portion of OmniCell's assets and such
proceeding is not dismissed or stayed within sixty (60) days after its
commencement.

         (I) one or more judgments or decrees shall be entered against
OmniCell, involving, individually, or in the aggregate, a liability of
$250,000 or more and either (i)

                                     22.
<PAGE>

enforcement action shall have been commenced by any creditor upon any such
judgment or decree, or (ii) such judgment or decree shall not have been
vacated, discharged or stayed pending appeal within thirty (30) days after
the entry thereof.

         (J) this Agreement or any of the Other Agreements shall cease for
any reason to be in full force and effect (other than by reason of the
payment in full of all of the Obligations or voluntary release by Baxter of
any Other Agreement) or OmniCell or any other Person (other than Baxter)
shall disavow its obligations thereunder, or shall contest the validity or
enforceability of any thereof.

         (K) Baxter's lien or security interest in any Collateral, the value
of which exceeds $250,000 in the aggregate shall for any reason cease to be a
legal, valid, perfected or enforceable lien on and security interest in such
Collateral, in the respective priorities contemplated by this Agreement
(other than by reason of the payment in full of all of the Obligations or
voluntary release by Baxter of such Collateral).

         (L) OmniCell is in default in the payment of any Indebtedness for
borrowed money in an aggregate principal amount outstanding in excess of
$250,000 (other than the Obligations), or is in breach of any agreement
evidencing such Indebtedness (other than any Loan Document), and the effect
of such default or breach, as the case may be, is to enable the holder
thereof then to accelerate the maturity of such Indebtedness, unless the same
is waived or otherwise ceases to exist.

         7.2 ACCELERATION. Upon an Event of Default, Baxter may declare all
of the Obligations be immediately due and payable; PROVIDED, HOWEVER, that
upon the occurrence of an Event of Default described in SECTIONS 7.1(F) or
7.l(G), all Obligations shall automatically become due and payable, without
notice or demand of any kind.

         7.3 REMEDIES. Upon the occurrence of an Event of Default and the
continuation thereof, Baxter, in its sole and absolute discretion may:

         (A) exercise any one or more of the rights and remedies of a secured
party under the UCC of the relevant state or states and any other applicable
law upon default by a debtor;

         (B) enter, with or without process of law and without breach of the
peace, any premises where the Collateral is or may be located, and without
charge or liability to Baxter therefor seize and remove the Collateral from
said premises and/or remain upon said premises and use the same for the
purpose of collecting, preparing and disposing of the Collateral;

         (C) sell or otherwise dispose of the Collateral at public or private
sale for cash or credit, PROVIDED, HOWEVER, that OmniCell shall be credited
with the net proceeds of such sale only when such proceeds are actually
received by Baxter; and

         (D) exercise any or all rights or remedies under any of the Other
Agreements.

         All of Baxter's rights and remedies under this Agreement and the
Other Agreements are cumulative and non-exclusive.

                                     23.
<PAGE>

         7.4 ASSEMBLE COLLATERAL. Upon the occurrence of an Event of Default
and the continuation thereof, OmniCell, immediately upon demand by Baxter,
shall assemble the Collateral and make it available to Baxter at a place or
places to be designated by Baxter which are reasonably convenient to Baxter
and OmniCell.

         7.5 NOTICE OF SALE. Any notice required to be given by Baxter of a
sale, lease, other disposition of the Collateral or any other intended action
by Baxter, deposited in the United States mail, postage prepaid and duly
addressed to OmniCell at its principal place of business specified in SECTION
8.10 not less than ten (10) days prior to such proposed action, shall
constitute commercially reasonable and fair notice to OmniCell thereof.

         7.6 POSTPONEMENT OF SALE. Upon the occurrence of an Event of Default
and the continuation thereof, OmniCell agrees that Baxter may, if Baxter
deems it reasonable, postpone or adjourn any such sale of the Collateral from
time to time by an announcement at the time and place of sale or by
announcement at the time and place of such postponed or adjourned sale,
without being required to give a new notice of sale. OmniCell agrees that
Baxter has no obligation to preserve rights against prior parties to the
Collateral. Further, OmniCell waives and releases any cause of action and
claim against Baxter as a result of Baxter's possession, collection or sale
of the Collateral, any liability or penalty for failure of Baxter to comply
with any requirement imposed on Baxter relating to notice of sale, holding of
sale or reporting of sale of the Collateral, and, to the extent permitted by
law, any right of redemption from such sale.

         7.7 WAIVER OF BOND. In the event Baxter seeks possession of the
Collateral through replevin or other court process, OmniCell hereby
irrevocably waives (a) any bond, surety or security required as an incident
to such possession, and (b) any demand for possession of the Collateral prior
to commencement of any suit or action to recover possession thereof.

         7.8 APPOINTMENT OF BAXTER AS ATTORNEY-IN-FACT AFTER DEFAULT.
OmniCell, hereby irrevocably designates, makes, constitutes and appoints
Baxter (and all Persons designated by Baxter) as OmniCell's true and lawful
agent and attorney-in-fact from and after an Event of Default and during the
continuation thereof, with power, without notice to OmniCell and at such time
or times hereafter as Baxter, in its sole and absolute discretion, may
determine, in OmniCell's or Baxter's name: (a) to demand payment of the
Accounts; (b) to enforce payment of the Accounts by legal proceedings or
otherwise; (c) to exercise all of OmniCell's rights and remedies with respect
to the collection of the Accounts; (d) to settle, adjust, compromise, extend
or renew the Accounts; (e) to settle, adjust or compromise any legal
proceedings brought to collect the Accounts; (f) to sell or assign the
Accounts upon such terms, for such amounts and at such time or times as
Baxter deems advisable; (g) to discharge and release the Accounts; (h) to
take control, in any manner, of any item of payment related to or proceeds
of, any Account; (i) to prepare, file and sign OmniCell's name on any notice
of lien, assignment or satisfaction of lien or similar document in connection
with the Accounts; (j) to prepare, file and sign OmniCell's name on any proof
of claim in bankruptcy or similar document against any account debtor; (k) to
do all acts and things necessary, in Baxter's sole discretion, to fulfill
OmniCell's Obligations under this Agreement; and (I) to prepare, file and
sign OmniCell's name on any notice of lien, assignment or satisfaction of
lien or similar document in connection with the Accounts.

                                     24.
<PAGE>

         7.9 CONSENT DOES NOT CREATE CUSTOM. No authorization given by Baxter
pursuant to this Agreement or the Other Agreements to sell any specified
portion of Collateral or any items thereof, and no waiver by Baxter in
connection therewith shall establish a custom or constitute a waiver of the
prohibition contained in this Agreement against such sales, with respect to
any portion of the Collateral or any item thereof not covered by said
authorization.

8.       CONDITIONS TO LOAN

         The obligation of Baxter to make the Loan hereunder shall be subject
to the satisfaction of the following conditions precedent:

         (A) The conditions precedent to the Closing under the Asset Purchase
Agreement shall have been satisfied and Closing under the Asset Purchase
Agreement shall have taken place, or the shall take place simultaneously with
the making of the Loan; and

         (B) Baxter shall have received all items on the List of Closing
Documents attached hereto as EXHIBIT B, such items to be in form and
substance satisfactory to Baxter and to be executed by all parties thereto
when the nature of the item so requires.

9.       GENERAL

         9.1 ATTORNEYS' FEES AND EXPENSES; BAXTER'S EXPENSES. OmniCell hereby
agrees that it shall reimburse Baxter, as part of the Obligations, for any
and all costs and expenses (including, without limitation, the reasonable
fees and expenses of any counsel, accountants, appraisers or other
professionals) reasonably incurred by Baxter at any time, in connection with:
(a) the preparation, negotiation and execution of any amendment of or
modification of this Agreement or the Other Agreements; (b) any intercreditor
agreement with a Permitted Senior Lender, other than the initial
intercreditor agreement to be negotiated between Baxter, OmniCell and the
initial Permitted Senior Lender, and any litigation, contest, dispute, suit,
proceeding or action (whether instituted by Baxter, OmniCell or any other
Person) in any way relating to the Collateral, this Agreement, or the Other
Agreements; (c) any attempt to enforce any rights of Baxter against OmniCell
or any other Person which may be obligated to Baxter by virtue of this
Agreement or the Other Agreements, including, without limitation, the Account
Debtors; (d) subject to the terms of SECTION 3.3(b), any inspection,
verification or audit of any of the Collateral in accordance with this
Agreement; (e) any action to protect, collect, sell, liquidate or otherwise
dispose of the Collateral; and (f) performing any of the obligations relating
to or payment of the Obligations hereunder in accordance with the terms
hereof.

         9.2 MODIFICATION. This Agreement and the Other Agreements may not be
modified, altered or amended except by an agreement in writing signed by
OmniCell and Baxter.

         9.3 STRICT COMPLIANCE. Baxter's failure at any time or times
hereafter to require strict performance by OmniCell of any provision of this
Agreement shall not waive, affect or diminish any right of Baxter thereafter
to demand strict compliance and performance therewith. Any suspension or
waiver by Baxter of a Default or Event of Default under this Agreement or the
Other Agreements shall not suspend, waive or affect any other Default or
Event of Default under this Agreement or the Other Agreements, whether the
same is prior or subsequent thereto and whether of the same or of a different
type. None of the undertakings, agreements, warranties,

                                     25.
<PAGE>

covenants and representations of OmniCell contained in this Agreement or the
Other Agreements and no Default or Event of Default by under this Agreement
or the Other Agreements shall be deemed to have been suspended or waived by
Baxter unless such suspension or waiver is by an instrument in writing signed
by an officer of Baxter and directed to OmniCell specifying such suspension
or waiver.

         9.4 SEVERABILITY. If any provision of this Agreement or the Other
Agreements or the application thereof to any Person or circumstance is held
invalid or unenforceable, the remainder of this Agreement and the Other
Agreements and the application of such provision to other Persons or
circumstances will not be affected thereby and the provisions of this
Agreement and the Other Agreements shall be severable in any such instance.

         9.5 SUCCESSORS AND ASSIGNS. This Agreement and the Other Agreements
shall be binding upon and inure to the benefit of the successors and assigns
of OmniCell and Baxter; PROVIDED that this Agreement and any interest or
right hereunder may not be assigned by OmniCell without prior written consent
which may be withheld in Baxter's sole and exclusive discretion. OmniCell
hereby consents to the flee and unrestricted sale, assignment, transfer or
other disposition by Baxter, at any time and from time to time hereafter, of
this Agreement or the Other Agreements, or of any portion thereof, including,
without limitation, Baxter's rights, titles, interests, remedies, powers
and/or duties thereunder and hereunder; PROVIDED, HOWEVER, that Baxter shall
not sell, assign, transfer or dispose of its rights, titles, interests,
remedies, powers and/or duties hereunder to any Person engaged in the same
line of business as OmniCell's business.

         9.6 LOAN AGREEMENT CONTROLS. The provisions of the Other Agreements
are incorporated in this Agreement by this reference thereto. Except as
otherwise provided in this Agreement and except as otherwise provided in the
Other Agreements by specific reference to the applicable provision of this
Agreement, if any provision contained in this Agreement is in conflict with,
or inconsistent with, any provision in the Other Agreements, the provision
contained in this Agreement shall govern and control.

         9.7 LIABILITY PRIOR TO TERMINATION. Except to the extent provided to
the contrary in this Agreement and in the Other Agreements, no termination or
cancellation (regardless of cause or procedure) of this Agreement or any of
the Other Agreements shall in any way affect or impair the powers,
obligations, duties, rights and liabilities of OnmiCell or Baxter in any way
or respect relating to any transaction or event occurring prior to such
termination or cancellation with respect to Collateral and/or any of the
undertakings, agreements, covenants, warranties and representations of
OmniCell or Baxter contained in this Agreement or any of the Other Agreements.

         9.8 WAIVER.

         (A) OmniCell, for itself and for its successors, transferees and
assigns hereby irrevocably (i) waives diligence, presentment and demand for
payment, protest, notice, notice of protest and nonpayment, dishonor and
notice of dishonor and all other demands or notices of any and every kind
whatsoever; (ii) agrees that this Agreement and the Note and any or all
payments coming due hereunder or under any of the Other Agreements may be
extended from time to time

                                     26.
<PAGE>

in the sole discretion of Baxter without in any way affecting or diminishing
OmniCell's liability hereunder; and (iii) waives any rights, remedies or
defenses arising at law or in equity relating to guarantees or suretyships.

         (B) No extension of the time for any payment due hereunder or under
any of the Other Agreements made by agreement with any Person now or
hereafter liable for payment hereunder or under the Note or any of the Other
Agreements shall operate to release, discharge, modify, change or affect the
original liability under this Loan or the Note or any Other Agreement, either
in whole or in part.

         (C) No delay in the exercise of any right or remedy hereunder by
Baxter shall be deemed to be a waiver of such right or remedy, nor shall the
exercise of any right or remedy hereunder by Baxter be deemed an election of
remedies or a waiver of any other right or remedy. Without limiting the
generality of the foregoing, the failure of Baxter promptly after the
occurrence of any default hereunder to exercise its right to declare the
indebtedness remaining unmatured hereunder to be immediately due and payable
shall not constitute a waiver of such right while such default continues nor
a waiver of such right in connection with any future default.

         (D) No waiver or limitation of any right or remedy hereunder by
Baxter shall be effective unless (and any such waiver or limitation shall be
effective only to the extent) expressly set forth in a writing, signed and
delivered by Baxter to OmniCell. No notice to or demand on OmniCell in any
case shall entitle OmniCell to any other notice or demand in similar or other
circumstances, nor shall such notice or demand constitute a waiver of any
rights or remedy of Baxter to any other or further actions. In its sole
discretion, Baxter may, at any time and from time to time, waive any one or
more of the rights or remedies contained herein, but such waiver in any
instance or under any particular circumstance shall not be deemed to be a
waiver of such rights or remedies in any other instance or under any other
circumstance.

         9.9 INDEMNIFICATION. OmniCell shall indemnify, defend, and hold
Baxter harmless from and against any and all losses, costs, liabilities,
damages, and expenses (including legal and other expenses incident thereto)
of every kind, nature and description, other than those caused by Baxter's
gross negligence or willful misconduct, that result from or arise out of (a)
the breach of any representation or warranty of OmniCell set forth in this
Agreement or in any certificate, schedule, or other instrument by OmniCell
pursuant hereto, (b) the breach of any of the covenants of OmniCell contained
in or arising out of this Agreement or the transactions contemplated hereby,
or (c) any third party claims relating to Baxter's capacity as a lender under
this Agreement.

         9.10 NOTICE. Any and all notices given in connection with this
Agreement shall be deemed adequately given only if in writing and addressed
to the party for whom such notices are intended at the address set forth
below. All notices shall be sent by personal delivery, Federal Express or
other overnight messenger service, or by telecopy. A written notice shall be
deemed to have been given to the recipient party on the earlier of (a) the
date it shall be delivered to the address required by this Agreement; (b) the
date delivery shall have been refused at the address required by this
Agreement; or (c) with respect to notices sent by mail, the date as of which
the

                                     27.
<PAGE>

postal service shall have indicated such notice to be undeliverable at
the address required by this Agreement. Any and all notices referred to in
this Agreement, or which either party desires to give to the other, shall be
addressed as follows:

         (A) If to Baxter, at:

                                   Baxter Healthcare Corporation
                                   One Baxter Parkway
                                   Deerfield, Illinois 60015
                                   Attn: General Counsel and Treasurer
                                   Facsimile: 847/948-2025

                with a copy to:    Sidley & Austin
                                   One First National Plaza
                                   Chicago, Illinois 60603
                                   Attn: John M. O'Hare
                                   Facsimile: 312/853-7036

         (B) If to OmniCell, at:

                                   OmniCell Technologies, Inc.
                                   1101 East Meadow Drive
                                   Palo Alto, California 94303
                                   Attn: Chief Financial Officer
                                   Facsimile: 650/843-6277

                 with a copy to:   Cooley Godward LLP
                                   Five Palo Alto Square
                                   Palo Alto, California 94306-2155
                                   Attn: Robert J. Brigham, Esq.
                                   Facsimile: 650/857-0663

The above addresses may be changed by notice of such change, mailed as
provided herein, to the last address designated.

         9.11 SECTION TITLES, ETC. The Section titles and table of contents,
if any, contained in this Agreement are and shall be without substantive
meaning or content of any kind whatsoever and are not a part of the agreement
between the parties hereto.

         9.12 WAIVER BY OMNICELL. EXCEPT AS OTHERWISE PROVIDED FOR IN THIS
AGREEMENT OR REQUIRED BY LAW, OMNICELL WAIVES (a) PRESENTMENT, DEMAND AND
PROTEST, NOTICE OF PROTEST, NOTICE OF PRESENTMENT, DEFAULT, NON-PAYMENT,
MATURITY, RELEASE, COMPROMISE, SETTLEMENT, EXTENSION OR RENEWAL OF ANY OR ALL
COMMERCIAL PAPER, ACCOUNTS, CONTRACT RIGHTS, DOCUMENTS, INSTRUMENTS, CHATTEL
PAPER AND GUARANTIES AT ANY TIME HELD BY BAXTER ON WHICH OMNICELL MAY IN ANY
WAY BE LIABLE AND HEREBY RATIFIES AND CONFIRMS WHATEVER BAXTER MAY DO IN THIS
REGARD; (b) ALL RIGHTS TO NOTICE AND A HEARING PRIOR TO

                                     28.
<PAGE>

BAXTER'S TAKING POSSESSION OR CONTROL OF, OR TO BAXTER'S REPLEVY, ATTACHMENT
OR LEVY UPON THE COLLATERAL OR ANY BOND OR SECURITY WHICH MIGHT BE REQUIRED
BY ANY COURT PRIOR TO ALLOWING BAXTER TO EXERCISE ANY OF BAXTER'S REMEDIES;
AND (c) THE BENEFIT OF ALL VALUATION, APPRAISEMENT, EXTENSION AND EXEMPTION
LAWS.

         9.13 GOVERNING LAW. THIS AGREEMENT HAS BEEN DELIVERED FOR ACCEPTANCE
BY BAXTER IN CHICAGO, ILLINOIS AND SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS (AS OPPOSED TO THE CONFLICTS OF LAW
PROVISIONS) OF THE STATE OF ILLINOIS. OMNICELL HEREBY (a) IRREVOCABLY
SUBMITS, TO THE EXTENT PERMITTED BY APPLICABLE LAW, TO THE JURISDICTION OF
ANY STATE OR FEDERAL COURT LOCATED IN CHICAGO, ILLINOIS, OVER ANY ACTION OR
PROCEEDING TO ENFORCE OR DEFEND ANY MATTER ARISING FROM OR RELATED TO THIS
AGREEMENT; (b) IRREVOCABLY WAIVES, TO THE FULLEST EXTENT OMNICELL MAY
EFFECTIVELY DO SO, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF
ANY SUCH ACTION OR PROCEEDING IN ANY SUCH COURT; (c) AGREES THAT, TO THE
EXTENT PERMITTED BY APPLICABLE LAW, A FINAL JUDGMENT IN ANY SUCH ACTION OR
PROCEEDING IN ANY SUCH COURT SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN ANY
OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED
BY LAW; AND (d) TO THE EXTENT PERMITTED BY APPLICABLE LAW, AGREES NOT TO
INSTITUTE ANY LEGAL ACTION OR PROCEEDING AGAINST BAXTER OR ANY OF BAXTER'S
DIRECTORS, OFFICERS, EMPLOYEES, AGENTS OR PROPERTY, CONCERNING ANY MATTER
ARISING OUT OF OR RELATING TO THIS AGREEMENT IN ANY COURT OTHER THAN ONE
LOCATED IN COOK COUNTY, ILLINOIS. NOTHING IN THIS SECTION SHALL AFFECT OR
IMPAIR BAXTER'S RIGHT TO SERVE LEGAL PROCESS IN ANY MANNER PERMITTED BY LAW
OR BAXTER'S RIGHT TO BRING ANY ACTION OR PROCEEDING AGAINST OMNICELL OR
OMNICELL'S PROPERTY IN THE COURTS OF ANY OTHER JURISDICTION.

         9.14 REPRESENTATION BY COUNSEL. OmniCell hereby represents that it
has been represented by competent counsel of its choice in the negotiation
and execution of this Agreement and the Other Agreements; that it has read
and fully understood the terms hereof, OmniCell and its counsel have been
afforded an opportunity to review, negotiate and modify, the terms of this
Agreement, and that it intends to be bound hereby. In accordance with the
foregoing, the general rule of construction to the effect that any
ambiguities in a contract are to be resolved against the party drafting the
contract shall not be employed in the construction and interpretation of this
Agreement.

         9.15 WAIVER OF TRIAL BY JURY. TO THE EXTENT PERMITTED BY LAW,
OMNICELL AND BAXTER EACH HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY
WAIVES THE RIGHT TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED
HEREON, ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR THE
OTHER AGREEMENTS OR ANY COURSE OF CONDUCT, COURSE OF DEALINGS, STATEMENTS
(WHETHER ORAL OR WRITTEN) OR ACTIONS OF EITHER PARTY IN CONNECTION HEREWITH.
OMNICELL HEREBY

                                     29.
<PAGE>

EXPRESSLY ACKNOWLEDGES THAT THIS WAIVER IS A MATERIAL INDUCEMENT FOR BAXTER
TO MAKE THE LOAN.

         9.16 INTERCREDITOR AGREEMENT. Baxter hereby agrees that it shall act
reasonably and cooperate with OmniCell and the Person who proposes to extend
Permitted Senior Debt to negotiate and enter into an intercreditor agreement
on terms reasonably satisfactory to Baxter and such Person.

                              * * * * * * * *

                                     30.
<PAGE>

         IN WITNESS WHEREOF, this Agreement has been duly executed as of the
day and year specified at the beginning hereof.

                                       OMNICELL TECHNOLOGIES INC.

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

                                       BAXTER HEALTHCARE CORPORATION

                                       By:      /s/ John F. Gaither, Jr.
                                          ------------------------------------
                                       Name:    John F. Gaither, Jr.
                                       Title:   Vice President

                                     31.
<PAGE>

                   OMNICELL TECHNOLOGIES INC. PROMISSORY NOTE

$17,386,000                                             Dated:  January 29, 1999
Chicago, Illinois

         FOR VALUE RECEIVED, OMNICELL TECHNOLOGIES INC., a California
corporation ("BORROWER"), hereby promises to pay to the order of BAXTER
HEALTHCARE CORPORATION, a Delaware corporation ("PAYEE"), the principal sum
of SEVENTEEN MILLION, THREE-HUNDRED EIGHTY-SIX THOUSAND DOLLARS ($17,386,000)
in installments on the dates set forth below, together with interest on the
unpaid principal balance hereof at the rates set forth below.

         This Note is the "Note" referred to in and was executed and
delivered pursuant to that certain Loan and Security Agreement dated as of
January 29, 1999 (as amended from time to time, the "LOAN AGREEMENT") between
the Borrower and the Payee, to which reference is hereby made for a more
complete statement of the terms and conditions under which the Loan evidenced
hereby is made and is to be repaid. The Loan Agreement, among other things,
contains certain provisions for acceleration of the maturity hereof, the
prepayment of the principal balance hereof, and for changes in the interest
rates hereof upon the terms and conditions specified therein. Capitalized
terms used herein and otherwise undefined shall have the meanings given them
in the Loan Agreement.

         The Borrower shall the amount hereof in twelve (12) quarterly
installments. Each repay principal installment shall be in an amount equal to
$___________ and shall be payable on the last day of each March, June,
September and December, commencing on March 31, 2001 and ending on December
31, 2003.

         All amounts evidenced hereby shall bear interest at a rate of eight
percent (8.00%) per annum from the date hereof through and including January
31, 2001, and thereafter at a rate of thirteen percent (13.00%) per annum;
PROVIDED, HOWEVER, if any amounts evidenced hereby are not paid when due
(whether by acceleration or otherwise), or after the occurrence of an Event
of Default, then all amounts evidenced hereby shall bear interest at the
Default Rate applicable thereto until so paid. Interest shall be calculated
on the basis of a year of 360 days and actual days elapsed. Interest shall be
payable quarterly in arrears on the last day of each March, June, September
and December, commencing on March 31, 1999.

         All payments of principal and interest in respect of this Note shall
be made in lawful money of the United States of America in same day funds as
set forth in Section 2.9 of the Loan Agreement. Until notified in writing of
the transfer or assignment of this Note in accordance with the terms of the
Loan Agreement, Borrower shall be entitled to deem Payee or any subsequent
assignee of this Note as the owners and holder of this Note. Payee and any
subsequent assignee of this Note agrees, by its acceptance hereof, that
before disposing of this Note or any part hereof it will make a notation
hereon of all principal payments previously made hereunder and of the date to
which interest hereon has been paid; PROVIDED HOWEVER, that the failure to
make a notation of any payment made on this Note shall not limit or otherwise
affect

                                     32.
<PAGE>

the obligations of Borrower hereunder with respect to payments of principal
or interest on this Note.

         Whenever any payment on this Note shall be stated to be due on a day
which is not a Business Day, such payment shall be made on the next
succeeding Business Day and such extension of time shall be included in the
computation of the payment of interest on this Note.

         THIS NOTE SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED
IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF ILLINOIS, WITHOUT
REGARD TO CONFLICTS OF LAWS PRINCIPLES.

         This Note is assignable by the Payee as provided in Section 9.5 of
the Loan Agreement.

         Borrower promises to pay all reasonable costs and expenses,
including reasonable attorneys' fees, incurred in the collection and
enforcement of this Note. Borrower and any endorser of this Note hereby
consent to renewals and extensions of time at or after the maturity hereof,
without notice, and hereby waive diligence, presentment, protest, demand and
notice of every kind and, to the full extent permitted by law, the right to
plead any statute of limitations as a defense to any demand hereunder.

         The payment of this Note is secured as described in the Loan
Agreement.

         IN WITNESS WHEREOF, Borrower has caused this Note to be duly
executed and delivered by its officer thereunto duly authorized as of the
date and at the place first written above.

                                       OMNICELL TECHNOLOGIES INC.

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

                                     33.

<PAGE>

                          TRANSITION SERVICES AGREEMENT

         TRANSITION SERVICES AGREEMENT, dated as of January 29, 1999 (this
"Agreement"), by and between Baxter Healthcare Corporation, a Delaware
corporation, ("Baxter"), and OmniCell Technologies Inc., a California
corporation, (the "Purchaser").

         WHEREAS, Baxter and the Purchaser have entered into an Asset Purchase
Agreement, dated as of December 18, 1998, as amended January 25, 1999 (the
"Purchase Agreement"; all capitalized terms used but not defined herein shall
have the meanings ascribed to such terms in the Purchase Agreement), pursuant to
which Baxter agreed to sell and the Purchaser agreed to purchase certain assets
of Baxter relating to the Business (as defined in the Purchase Agreement), all
as more particularly set forth in the Purchase Agreement;

         WHEREAS, it is contemplated under the Purchase Agreement that following
the Closing Date, Baxter will provide, or will cause to be provided, to the
Purchaser, certain services set forth on Schedule A attached hereto which are
currently provided by Baxter in connection with the operation of the Business;
and

         WHEREAS, Baxter is willing to provide, or cause to be provided, such
services to the Purchaser, upon the terms and subject to the conditions set
forth herein.

         NOW, THEREFORE, in consideration of the premises and the mutual
agreements and covenants set forth herein and in the Purchase Agreement, Baxter
and the Purchaser hereby agree as follows:

1. PROVISION OF SERVICES; REIMBURSEMENT OF EXPENSES. (a) Baxter agrees to
provide, or cause to be provided, to the Purchaser the services set forth on
Schedule A hereto (the "Services"), for the period of time following the Closing
set forth on Schedule A hereto with respect to each such Service (the "Term").

         (B) Baxter shall cause the Services to be provided pursuant to this
Agreement in a manner generally consistent with the manner and level of care
with which such services were previously provided by Baxter in connection with
the operation of the Business. Baxter shall use all reasonable efforts to assist
the Purchaser in the transfer of responsibility for Services to the Purchaser.

         (C) The Purchaser, shall promptly upon written request, pay to Baxter
the fees for the Services set forth in Schedule A. Any payments pursuant to this
Agreement shall be made in U.S. Dollars within thirty business days after the
date of receipt by the Purchaser of Baxter's invoice. Baxter reserves the right
to suspend performance under this Agreement upon failure of the Purchaser to
make any payment pursuant to this Agreement when due except to the extent that
such payment is being disposed of in good faith. Any payment required to be made
under this Agreement that is not paid when due shall bear interest at an
interest rate equal to the London Interbank Offered Rate for three-month
Eurodollar deposits plus 5%.

         (D) The Purchaser agrees to indemnify Baxter and its officers,
directors, shareholders, employees, agents or other representatives, successors
assigns and for and hold them harmless from any and all liabilities, losses,
damages, costs and expenses (including

<PAGE>

attorney's fees) incurred by them arising out of the provision by or on behalf
of Baxter of the Services (except for any such liabilities, losses, damages,
costs and expenses arising out of their gross negligence or willful misconduct
in the performance of the Services).

2. FORCE MAJEURE. The obligations of Baxter to perform Services shall be
suspended during the period and to the extent that Baxter or any of its
Affiliates is prevented or hindered from complying therewith by any Requirements
of Law or Court Order or by any cause beyond its control, including, without
limitation, acts of God, strikes, lock outs and other labor and industrial
disputes and disturbances, civil disturbances, accidents, acts of war or
conditions arising out of or attributable to war (whether declared or
undeclared), shortage of necessary equipment, materials or labor, or
restrictions thereon or limitations upon the use thereof, and delays in
transportation. In such event, Baxter shall give notice of suspension as soon as
reasonably practicable to the Purchaser stating the date and extent of such
suspension and the cause thereof, and Baxter shall resume the performance of
such obligations as soon as reasonably practicable after the removal of the
cause.

3. CONFIDENTIALITY. During the term of this Agreement and for one (1) year
following termination each of Baxter and the Purchaser agrees to keep
confidential the information which is disclosed to it by the other party
hereto. The confidentiality obligations of this Agreement shall not apply to
information which: (a) at the time of disclosure is reasonably available to
the public; (b) becomes reasonably available to the public through no fault
of the party required to keep information confidential; (c) is possessed by
the party required to keep information confidential, as evidenced by written
or other tangible evidence, prior to receipt of the information from the
party providing information; or (d) becomes known to the party required to
keep information confidential from a third party who has no obligation of
confidentiality to the party providing information.

4. LIMITATION ON LIABILITY, ETC. Baxter shall not have any duties or
responsibilities hereunder other than those specifically set forth herein and
no implied obligations shall be read into this Agreement. Neither Baxter nor
any of its Affiliates nor any of their respective officers, directors,
shareholders, employees, agents or other representatives, successors or
assigns shall be liable for any action taken or omitted to be taken by Baxter
under or in connection with this Agreement, except for losses incurred by the
Purchaser arising out of the gross negligence or willful misconduct of Baxter
in the performance of the Services.

5. NOTICES. All notices, requests, demands, claims and other communications
hereunder shall be in writing and shall be given or made (and shall be deemed
to have been duly given or made upon receipt) by delivery in person, by
courier service, by telecopy or by registered or certified mail (postage
prepaid, return receipt requested) to the parties at the following addresses
(or at such other address for a party as shall be specified by like notice):

         (A) if to Baxter:

                           Baxter Healthcare Corporation
                           1 Baxter Parkway
                           Deerfield, Illinois 60015-4633
                           Attention: General Counsel

<PAGE>

                           Telecopy: 847-948-2450

                           with copy to:

                           Sidley & Austin
                           One First National Plaza
                           Chicago, Illinois 60603
                           Attention: John M. O'Hare, Esq.
                           Telecopy: 312-853-7036

         (B) if to the Purchaser:

                           OmniCell Technologies Inc.
                           1101 E. Meadow Dr.
                           Palo Alto, California 94303
                           Attention: Chief Financial Officer
                           Telecopy: 650-843-6277

                           with a copy to:

                           Cooley Godward LLP
                           Five Palo Alto Square
                           Palo Alto, California 94306-2155
                           Attention: Robert J. Brigham, Esq.
                           Telecopy: 650-857-0663

6. HEADINGS. The headings contained in this Agreement are for reference
purposes and shall not affect in any way the meaning of interpretation of
this Agreement.

7. SEVERABILITY. If any term or other provision of this Agreement is invalid,
illegal, or incapable of being enforced by any rule of law or public policy,
all other conditions and provisions of this Agreement shall nevertheless
remain in full force and effect so long as the economic or legal substance of
the transactions contemplated hereby is not affected in any manner adverse to
any party. Upon such determination that any term or other provision is
invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in a mutually acceptable manner
in order that the transactions contemplated hereby be consummated as
originally contemplated to the greatest extent possible.

8. ENTIRE AGREEMENT. This Agreement and the Purchase Agreement constitute the
entire agreement of the parties hereto with respect to the subject matter
hereof and supersede all prior agreements and undertakings, both written and
oral, with respect to the subject matter hereof.

9. ASSIGNMENT. This Agreement shall not be assigned without the express
written consent of Baxter and the Purchaser (which consent may be granted or
withheld in the sole discretion of Baxter and the Purchaser).

<PAGE>

10. AMENDMENT. This Agreement may not be amended or modified except by an
instrument in writing signed by Baxter and the Purchaser.

11. GOVERNING LAW; SUBMISSION TO JURISDICTION. This Agreement shall be
construed and governed in accordance with the internal laws (and not the law
of conflicts) of the State of Illinois. Baxter and Purchaser hereby consent
to service of process and to the jurisdiction of any appropriate Federal or
State court located in Cook or Lake Counties, Illinois in any action to
enforce the provisions of this Agreement, and hereby waive any objections
they may have as to proper venue or forum non conveniens or similar claims
with respect to the jurisdiction and venue of such courts.

12. COUNTERPARTS. This Agreement may be executed in one or more counterparts,
and by the different parties hereto in separate counterparts, each of which when
executed shall be deemed to be an original but all of which taken together shall
constitute one and the same agreement.

<PAGE>

         IN WITNESS WHEREOF, Baxter and the Purchaser have caused this Agreement
to be executed as of the date first written above by their respective officers
thereunto duly authorized.

                               BAXTER HEALTHCARE CORPORATION

                               By:      /s/ John F. Gaither, Jr.
                                  -------------------------------
                                        John F. Gaither, Jr.
                                        Vice President

                               OMNICELL TECHNOLOGIES INC.

                               By:      /s/ Earl E. Fry
                                  -------------------------------
                                        Name:    Earl E. Fry
                                        Title:   VP & CFO

<PAGE>

                                                                     SCHEDULE A

                                    SERVICES

DESCRIPTION OF SERVICES

1.         Facilities and facilities management
2.         Telephones and telephone services (excluding 800 and long distance
           service)
3.         Computer
4.         LAN access
5.         Internet access
6.         Postal service (excluding federal express and courier services)
7.         Cafeteria access
8.         Facsimile
9.         Office supplies (excluding supplies exceeding $500 per item)
10.        Copy machines and service
11.        800 telephone service
12.        Long distance telephone service
13.        Federal express and other courier services
14.        Office supplies exceeding $500 per item
15.        Batch/large volume copy services

In addition, Baxter will provide Purchaser such other corporate support services
as may be requested by Purchaser (at Baxter's internally allocated costs),
provided that Baxter is able and willing to perform such services at the time of
the applicable request.

COSTS

Baxter shall be reimbursed for all of the above-referenced Services in
accordance with the following:

         1.       With respect to the Services described in numbers 1 through 10
                  above, Baxter shall be reimbursed by Purchaser $32,500 per
                  month, plus (if and to the extent there are more than 50
                  Transferred Employees) an amount equal to $650 per each
                  Transferred Employee (over 50 Transferred Employees) per
                  month.

         2.       With respect to Services described in numbers 11 through 15
                  above, Baxter shall be reimbursed by Purchaser Baxter's
                  out-of-pocket expenses associated with providing such
                  Services.

TERM

This Agreement shall commence on the date hereof and shall remain in full force
and effect for a period of 90 days. This Agreement may be extended by Purchaser
for up to 3 additional consecutive 30 day periods upon 30 days prior written
notice to Baxter.

<PAGE>

                       SERVICE AND INSTALLATION AGREEMENT

         THIS SERVICE AND INSTALLATION AGREEMENT (this "Agreement"), made and
entered into as of January 29, 1999, is by and between Baxter Healthcare
Corporation, a Delaware corporation ("Baxter"), and OmniCell Technologies Inc.,
a California corporation ("OmniCell").

         WHEREAS, concurrently with the execution of this Agreement, Baxter
and OmniCell have entered into an Asset Purchase Agreement, dated as of
December 18, 1998, as amended on January 25, 1999 (the "Purchase Agreement"),
pursuant to which Baxter agreed to sell to OmniCell and OmniCell agreed to
purchase from Baxter certain of the assets of Baxter associated with the
Business, together with certain liabilities related thereto, all as more
particularly set forth in the Purchase Agreement; all capitalized terms used
but not defined herein shall have the meanings ascribed to such terms in the
Purchase Agreement; and

         WHEREAS, pursuant to the terms of the Purchase Agreement, Baxter has
agreed to retain, among other things, (a) the leases between Baxter, or an
Affiliate (as hereinafter defined) of Baxter, and a customer of the Business
covering one or more products of the Business (the "Product Leases") and (b)
all amounts billable or collectible under customer Contracts with respect to
Products (as hereinafter defined) shipped but not invoiced as of the Closing
Date (the "Shipped but Unbilled Accounts"); and

         WHEREAS, as an inducement for Baxter to enter into the Purchase
Agreement, OmniCell has agreed to enter into this Agreement to provide, or
cause to be provided, certain services set forth on Exhibit A attached hereto
with respect to the Product Leases and the Shipped but Unbilled Accounts, all
on the terms and subject to the conditions contained herein;

         NOW, THEREFORE, in consideration of the mutual covenants and
agreements contained herein and for other good and valuable consideration,
the receipt and sufficiency of which is hereby acknowledged, Baxter and
OmniCell hereby agree as follows:

                                   ARTICLE I

                                   ENGAGEMENT

         SECTION 1.1 GENERAL. OmniCell agrees to Service (as defined in
SECTION 3.1) the products, equipment, apparatus and instruments subject to
the Product Leases or the Shipped but Unbilled Accounts ("Products") and all
accessories for all Products, and Baxter agrees to retain OmniCell to Provide
Service, or cause Service to be provided, with respect to the Products.
OmniCell agrees to use commercially reasonable efforts in the performance of
its service obligations and agrees to do so with the same degree of care,
skill and prudence customarily exercised when engaged in similar activities
for itself, its Affiliates and its other customers. In performing its
obligations under this Agreement, OmniCell will accord Baxter the same
priority under comparable circumstances as it provides itself and its
Affiliates. Without limiting the generality of the foregoing, OmniCell will
not discriminate against Baxter. Baxter and OmniCell will cooperate in
planning the scope and timing of services provided hereunder in order to
minimize or eliminate interference with the conduct of OmniCell's business
activities.

                                      1.

<PAGE>

Notwithstanding any contrary indication herein, if such interference is
unavoidable, OmniCell will apportion the available services in a fair and
reasonable manner.

         SECTION 1.2 "AFFILIATE" DEFINED. As used in this Agreement, the term
"Affiliate" means any individual, corporation, partnership, joint venture,
limited liability company, association, joint-stock company, trust,
unincorporated organization or governmental authority which directly or
indirectly controls, is controlled by or is under common control with a
party. OmniCell agrees that its affiliates will, and that it will cause its
affiliates to, observe, perform and refrain from taking action where the
nonobservance, failure to perform or action, if by OmniCell, would result in
a breach hereunder.

                                   ARTICLE II

                                    TRAINING

         SECTION 2.1 OMNICELL TRAINING. OmniCell will be responsible for
training its employees and any third party with whom OmniCell subcontracts or
otherwise delegates any obligation of performance hereunder on how to
service, repair, refurbish and conduct preventive maintenance on all
Products, on all other matters and skills needed or appropriate for OmniCell
to fulfill its obligations hereunder. OmniCell will maintain, or cause to -be
maintained, records of such training sufficient for compliance with
applicable laws and governmental regulations.

                                  ARTICLE III

                             SERVICE TO BE PROVIDED

         SECTION 3.1 "SERVICE" DEFINED. As used in this Agreement, the term
"Service," when used in connection with the Products, means OmniCell's duty
to Baxter to perform such in-warranty and out-of-warranty repair work with
respect to the Products requested by a customer as Baxter may have agreed to
provide, or cause to be provided, to a customer, such installation work as
may be required by the complex nature of the Products, as listed on Exhibit B
attached hereto, including but not limited to installing the Products listed
in Part 3.18(a) of the Seller Disclosure Schedule by December 31, 1999, such
preventive maintenance work as Baxter or any of its affiliates may have
agreed to provide, or cause to be provided, to a customer and such
refurbishment work as Baxter may request on a Product for its own account.

         SECTION 3.2 SERVICE LOCATIONS. OmniCell will provide refurbishment
work at a repair depot specified by Baxter. All other work will typically be
provided at the site of the Product. In some cases it may be necessary to
return a Product to OmniCell for Service.

         SECTION 3.3 SERVICE LEVELS. OmniCell will provide Service in
accordance with the service levels provided on Exhibit A attached hereto.

         SECTION 3.4 BAXTER WARRANTIES TO CUSTOMERS. Baxter has provided the
following information concerning such warranties including, without
limitation, (a) the name, address and telephone number of each customer with
a Product under warranty, showing as to each such customer the identity of
each such Product and as to each such warranty the expiration date therefor
and (b) a copy of each such warranty identified to each such Product.

                                      2.

<PAGE>

         SECTION 3.5 BAXTER SERVICE AGREEMENTS WITH CUSTOMERS. Baxter has
provided the following information concerning such service agreements
including, without limitation, the name, address and telephone number of each
customer with a Product for which Baxter or any of its affiliates has agreed
to provide, or cause to be provided, out-of-warranty repair or preventive
maintenance work, showing as to each such customer the identity of each such
Product and a complete description or copy of each such agreement including,
without limitation, the term and duration thereof and the nature and scope of
the work to be provided; provided, however, that such description and such
copy need not show the amount, if any, to be paid by such customer to Baxter
for such work.

         SECTION 3.6 TERM OF PRODUCT LEASES AND SERVICE AGREEMENTS. Baxter
hereby agrees not to extend or renew the term of any of the Product Leases or
service agreements covered by this Agreement (or allow for any extension or
renewal thereof).

                                   ARTICLE IV

                              PAYMENT FOR SERVICES

         SECTION 4.1 PAYMENT RATES. OmniCell agrees to provide the Services
performed hereunder for no charge, it being recognized that OmniCell is
undertaking its obligations hereunder in consideration of the transaction
contemplated by the Purchase Agreement.

                                   ARTICLE V

                            MISCELLANEOUS PROVISIONS

         SECTION 5.1 RETROFITS. The parties agree that changes, upgrades,
retrofits, exchanges, recalls and similar events with respect to any Product
are beyond the scope of this Agreement. Nonetheless, OmniCell agrees to
advise Baxter, by notice, of each such matter and provide Baxter with full
particulars and information with such advice.

         SECTION 5.2 PARTS. OmniCell agrees to supply for the benefit of
Baxter all parts necessary to ensure the commercially reasonable operation of
any Product.

         SECTION 5.3 EXHIBITS. Attached and incorporated herein by this
reference are Exhibits A & B hereto which specify matters concerning (a)
Products, (b) Services including, without limitation, additional services, if
any, (c) Service Levels and (d) Utilized Parts.

         SECTION 5.4 FAILURE TO PROVIDE SERVICE. In the event that OmniCell
fails to provide Service to Baxter in accordance with the terms and conditions
contained in this Agreement for any reason (other than an event of Force Majeure
as described in Section 7.3 of this Agreement) , OmniCell shall reimburse Baxter
the cost of obtaining substitute services from an alternative source, as
described below:

         (I)               Baxter shall take all commercially reasonable steps
                           to obtain services with respect to the Product from
                           an alternative service provider at the lowest price
                           available during any period in which OmniCell is
                           unable to provide Service.

                                      3.

<PAGE>

         (II)              Along with any request for reimbursement by Baxter
                           pursuant to this Section 5.5, Baxter will supply
                           OmniCell with the invoice relating to services
                           obtained pursuant to clause (i) above. OmniCell shall
                           reimburse Baxter for the cost of obtaining alternate
                           services within thirty (30) days of the date of
                           receiving a copy of the invoice for services.

Nothing contained in this Section 5.5 shall preclude Baxter from enforcing
its rights under this Agreement in a court of law or equity.

         SECTION 5.5 INDEMNIFICATION. Each party agrees to protect, defend,
hold harmless and indemnify the other party from and against any and all
damages, claims, losses, liabilities ("Losses") , and to reimburse the other
party for all expenses (including, without limitation, all fees and expenses
of counsel, travel costs and other out-of-pocket costs) to the extent such
Losses or expenses result from or are caused by any fault or negligence of
the indemnifying party or any breach by such party hereunder.

         SECTION 5.6 LIMITATION OF LIABILITY. NEITHER PARTY SHALL BE LIABLE
TO THE OTHER PARTY, THE OTHER PARTY'S CUSTOMERS, OR ANY OTHER ENTITY CLAIMING
THROUGH OR UNDER THE OTHER PARTY FOR ANY LOSS OF PROFITS, LOSS OF DATA OR FOR
ANY OTHER CONSEQUENTIAL, INCIDENTAL, SPECIAL, PUNITIVE OR INDIRECT DAMAGES
INCURRED BY SUCH PARTY (WHETHER IN AN ACTION IN CONTRACT OR TORT OR BASED ON
A WARRANTY, OR UNDER ANY OTHER THEORY OF LIABILITY), EVEN IF SUCH PARTY HAS
BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES, ARISING OUT OF OR IN
CONNECTION WITH THIS AGREEMENT. The foregoing limitations on liability for
damages shall apply notwithstanding any failure of essential purpose of any
limited remedy.

         SECTION 5.7 BASIS OF BARGAIN. The foregoing limitations on liability
and limited remedies set forth in this Agreement, along with the execution of
the Purchase Agreement form the essential part of the bargain between the
parties, without which OmniCell would not enter into this Agreement.

                                   ARTICLE VI

                  TERM, TERMINATION, WIND-UP, PRODUCT DELETION

         SECTION 6.1 TERM . Except as otherwise provided herein, the term of
this Agreement shall commence on the date hereof and, unless sooner
terminated as provided herein, shall continue until November 30, 2004.

         SECTION 6.2 BREACH. In the event either party materially breaches
this Agreement and fails to cure such breach within ninety (90) days after
notice thereof, the other party may, at any time within ninety (90) days
thereafter, terminate this Agreement upon at least thirty (30) days prior
written notice.

         SECTION 6.3 INACCURATE REPRESENTATION. Either party may terminate
this Agreement at any time upon at least thirty (30) days prior notice to the
other party if a representation or warranty of the other party is or becomes
materially inaccurate, false or misleading.

                                      4.

<PAGE>

         SECTION 6.4 INSOLVENCY, ETC.. Either party may terminate this
Agreement immediately upon notice to the other party (a) if the other party
ceases to do business or otherwise terminates its business operations; (b) if
the other party becomes insolvent or seeks protection under any insolvency,
bankruptcy, receivership, creditors arrangement or reorganization,
composition or comparable proceeding; or (c) if any such proceeding is
instituted against the other party and is not dismissed or withdrawn within
sixty (60) days.

                                  ARTICLE VII

                               GENERAL PROVISIONS

         SECTION 7.1 EFFECT OF TERMINATION. The termination of this Agreement
shall not relieve the parties hereto of any rights or obligations
respectively accrued by or vested in them hereunder prior to such
termination, or as expressly provided herein.

         SECTION 7.2 EXPENSES. The parties have considered the possibility
that one or both of them will incur expenses in preparing for performance of
this Agreement and that one or both of them will incur expenses and suffer
losses as a result of termination, and the parties have nevertheless agreed
that neither party shall be liable for any damages by reason of the
termination of this Agreement pursuant to its terms.

         SECTION 7.3 FORCE MAJEURE. Neither party shall be liable to the
other party for failure or delay in the performance of any obligation under
this Agreement during the time and to the extent such failure or delay is
caused by reason of acts of God or other cause beyond its reasonable control,
including but not limited to, acts of government, riots, war, interruption of
transportation, strikes or other labor trouble, shortages of labor, fire,
storm, flood, earthquake, inability to obtain suitable raw materials,
products, parts, components, fuel or power or extraordinary price increases.
The performance of obligations hereunder shall be suspended during the
existence of such cause, and upon cessation of such cause, shall again be
required.

         SECTION 7.4 NONWAIVER. The failure of any party hereto to enforce at
any time any provision of this Agreement, in case of breach by the other
party of any provision of this Agreement, shall not constitute a waiver of
any other provision of this Agreement nor of any subsequent breach of the
same provision.

         SECTION 7.5 ASSIGNMENT. This Agreement shall not be assigned by
either of the parties to any third party without the prior written consent of
the other party; provided, however, that OmniCell may subcontract or
otherwise delegate to any third party any obligation or performance
hereunder, in which case OmniCell shall remain primarily responsible
hereunder for any such obligation or performance; provided further that
Baxter may assign its rights hereunder to any party to which it assigns all
or substantially all of the Product Leases.

         SECTION 7.6 NOTICES. All notices, requests, demands or other
communications hereunder (including notices of all asserted claims or
liabilities) to be effective shall be in writing and shall be either
delivered personally, sent by messenger service, sent by guaranteed overnight
delivery service, charges prepaid, sent by fax (with hard copy to follow) or
mailed by U.S. mail, certified or registered, with appropriate first class
postage prepaid, to the addresses and/or fax

                                      5.

<PAGE>

numbers herein designated or such other address as may be designated in
writing by notice given in the manner provided herein. Notices hereunder
shall be effective upon (a) personal delivery thereof, if delivered
personally or by messenger service, (b) one (1) business day after deposit
for delivery by the overnight delivery service, if delivered by overnight
delivery service, (c) when receipt is electronically confirmed, if sent by
fax, or (d) three (3) business days following deposit in the mail, if sent by
mail as aforesaid, whether or not delivery is accepted.

         If to the Buyer:                OmniCell Technologies Inc.
                                         1101 E. Meadow Drive
                                         Palo Alto, California 94303
                                         Attn: Chief Financial Officer
                                         Facsimile: 650-843-6277

         with a copy to:                 Cooley Godward LLP
                                         Five Palo Alto Square
                                         Palo Alto, California 94306-2155
                                         Attn:  Robert J. Brigham, Esq.
                                         Facsimile:  650-857-0663

         If to Baxter:                   Baxter Healthcare Corporation
                                         One Baxter Parkway
                                         Deerfield, Illinois 60015-4633
                                         Attn: General Counsel
                                         Facsimile:  847-948-2450

         with a copy to:                 Sidley & Austin
                                         One First National Plaza
                                         Chicago, IL 60603
                                         Attn: John M. O'Hare, Esq.
                                         Facsimile: 312-853-7036

         SECTION 7.7 ENTIRE AGREEMENT. This Agreement, including the Exhibits
hereto, and the Purchase Agreement constitute the entire understanding of the
parties hereto with respect to the subject matter hereof and supersedes all
prior communications, writings or other documents between the parties hereto,
and neither party shall be bound by any condition, definition, warranty or
representation otherwise than as expressly provided for in this Agreement or
the Purchase Agreement.

         SECTION 7.8 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the internal laws (as opposed to the conflicts
of law provisions) of the State of Illinois.

         SECTION 7.9 AMENDMENT. This Agreement shall not be amended, modified
or supplemented except by a written instrument signed by an authorized
representative of each of the parties hereto.

         SECTION 7.10 SEVERABILITY. In the event that one or more provisions
contained in this Agreement are unenforceable or are declared invalid for any
reason whatsoever, such

                                      6.

<PAGE>

unenforceability or invalidity shall not affect the enforceability or the
validity of the remaining terms or portions of this Agreement, and each such
unenforceable or invalid provision shall be severed from the remainder of
this Agreement.

         SECTION 7.11 CONSTRUCTION. The parties hereto acknowledge that
OmniCell and Baxter and their counsel have reviewed and revised this
Agreement, and that the rule of construction to the effect that any
ambiguities are to be resolved against the drafting party shall not be
employed in the interpretation of this Agreement or any documents executed in
connection herewith.

         SECTION 7.12 COUNTERPARTS. This Agreement may be executed in any
number of counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same Agreement.

         SECTION 7.13 CONFIDENTIALITY. During the term of this Agreement and
for one (1) year following termination OmniCell agrees to keep confidential
the information which is disclosed to it by Baxter pursuant to this Agreement
and Baxter agrees to keep confidential information contained in reports
provided by OmniCell to Baxter pursuant to this Agreement. OmniCell's use of
Baxter's confidential information will be solely for the purpose of
performing its obligations under this Agreement. The confidentiality
obligations of this Agreement shall not apply to information which: (a) at
the time of disclosure is reasonably available to the public; (b) becomes
reasonably available to the public through no fault of the party required to
keep information confidential; (c) is possessed by the party required to keep
information confidential, as evidenced by written or other tangible evidence,
prior to receipt of the information from the party providing information; or
(d) becomes known to the party required to keep information confidential from
a third party who has no obligation of confidentiality to the party providing
information. Each of OmniCell and Baxter hereby agrees to keep confidential
the terms and conditions of this Agreement.

                                      7.

<PAGE>

         IN WITNESS WHEREOF, the parties hereto have, by their duly
authorized representatives, executed and delivered this Agreement as of the
date first above written.

Baxter Healthcare Corporation                      OmniCell Technologies Inc.

By:      /s/ John F. Gaither, Jr.                  By:
    ------------------------------                     -----------------------
         John F. Gaither, Jr.                      Name:
         Vice President                            Title:

                                      8.

<PAGE>

         IN WITNESS WHEREOF, the parties hereto have, by their duly
authorized representatives, executed and delivered this Agreement as of the
date first above written.

Baxter Healthcare Corporation                        OmniCell Technologies Inc.
IV Systems Division

By:                                                  By:      /s/ Earl E. Fry
    ------------------------------                     -----------------------
                                                     Name:    Earl E. Fry
                                                     Title:   VP & CFP

                                      9.

<PAGE>

                                    EXHIBIT A

PRODUCTS

The Products are limited to the products, equipment, apparatus and
instruments that are subject to the Product Leases and the Shipped but
Unbilled Accounts.

TERRITORY

The Territory is the 50 states of the United States and the District of
Columbia.

SERVICES

In addition to Product Service, OmniCell will provide a number of services at
no additional charge to Baxter. A listing of these services is as follows.

     -    Call management center for the receiving of service requests and
          dispatching to Field Service Representatives
     -    Accumulation of mutually agreed upon failure data
     -    Generation of service bulletins, where and when appropriate
     -    Issuance of service repair bulletins within 45 days of issuance by
          Baxter
     -    Customer technical assistance hot lines
     -    Performance of any activities per part 820 of 21 CFR and the IV
          Systems Quality Manual
     -    Customer technical training (requested by customer)
     -    Parts order entry for purchasing customers
     -    Customer satisfaction surveying in coordination with Baxter, annual
          review of results and methods
     -    Marketing liaison
     -    Monthly listing of all significant component shortages and estimated
          dates to eliminate back orders
     -    Maintain inventory management to enhance customer satisfaction
     -    Maintain inventory segregation and control as required by GMPs
     -    Management of self-service customers
     -    Provide access to same level of information as exists prior to date of
          contract execution
     -    Provide customers with upgrades for the software and other systems
          related to the Products consistent with OmniCell's provision of such
          upgrades to itself, its Affiliates and its other customers pursuant to
          its obligations under the Purchase Agreement to continue Baxter's
          program for attaining year 2000 compliance

                                      1.

<PAGE>

OmniCell agrees to provide additional special services on an as needed basis
for which Baxter agrees to pay a mutually agreed upon fee. Examples of these
special services are listed below.

-        Installations as requested by Baxter
-        Inventory rework, inspection or reprocessing
-        Out-of-box failure and PAL analysis/evaluation
-        Off-site storage
-        Product upgrades, only as requested
-        Baxter-requested customer training
-        Trade show or product evaluation set-up/take down
-        Special projects outside the scope of this agreement

                                      2.

<PAGE>

LEVEL OF SERVICE/SERVICE COMMITMENT

PRODUCTIVITY SYSTEMS

Telephone response by the FSR within 2 hours.
On-site by the FSR within 6 hours ("All calls) or 12 hours ("B" calls). Repair
completed within 24 hours.

If OmniCell should fail to meet these service commitments, Baxter will be
reimbursed according to the following schedule.

<TABLE>
<CAPTION>
------------------------------- ---------------------------- ---------------------------- ----------------------------
      Telephone Response             On-site Response             Repair Completion            Quarterly Penalty
------------------------------- ---------------------------- ---------------------------- ----------------------------
<S>                             <C>                          <C>                          <C>
       98.00 - 100.00%                95.00 - 100.00%              95.00 - 100.00%                   $     0
------------------------------- ---------------------------- ---------------------------- ----------------------------
        97.50 - 97.99%                94.50 - 94.99%               94.50 - 94.99%                     $  500
------------------------------- ---------------------------- ---------------------------- ----------------------------
        97.00 - 97.49%                94.00 - 94.49%               94.00 - 94.49%                     $1,000
------------------------------- ---------------------------- ---------------------------- ----------------------------
        96.50 - 96.99%                93.50 - 93.99%               93.50 - 93.99%                     $1,500
------------------------------- ---------------------------- ---------------------------- ----------------------------
        96.00 - 9.49%                 93.00 - 93.49%               93.00 - 93.49%                     $2,000
------------------------------- ---------------------------- ---------------------------- ----------------------------
        95.50 - 95.99%                92.50 - 92.99%               93.50 - 92.99%                     $2,500
------------------------------- ---------------------------- ---------------------------- ----------------------------
    Each additional -0.5%          Each additional -0.5%        Each additional -0.5%                 $  250
------------------------------- ---------------------------- ---------------------------- ----------------------------
</TABLE>

PAYMENT FOR SERVICES

None

FREIGHT

Baxter shall be responsible for all transportation costs related to returning
a repaired product from an OmniCell repair facility to the customer except in
those instances where OmniCell has failed to meet the six (6) calendar day
turnaround commitment. In those instances OmniCell will be responsible for
return transportation costs.

PRICING

FLAT RATE LABOR CHARGE PER MONTH

Any service calls that are the result of problems generated by the customer's
computer network will be billed to Baxter at an hourly rate and parts at cost
plus 10%. Parts prices are firm for year 1 of the contract and will be
reviewed in November of each year for the upcoming year.

                                      3.

<PAGE>

                                    EXHIBIT B

See attached.

                                      1.

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Index Description

 PRODUCTIVITY SYSTEMS INSTALLATION PROCEDURE FOR SURE-MED-Registered Trademark-
-------------------------------------------------------------------------------
                                  CURRENT ISSUE
-------------------------------------------------------------------------------
DOCUMENT LIST
-------------------------------------------------------------------------------
                  N/A
-------------------------------------------------------------------------------
EFFECTIVE DATE
-------------------------------------------------------------------------------
                             DESCRIPTION OF CHANGE
--------------------------------------- ---------------------------------------
FROM                                    TO
--------------------------------------- ---------------------------------------
                                         NEW DOCUMENT
-------------------------------------------------------------------------------
                              REASON FOR CHANGE
-------------------------------------------------------------------------------
New Document.

-------------------------------------------------------------------------------
INITIATOR NO.              FIRST OF CODE           PQA FILE NO.
---------------------------------------------------------------
N/A                        YES                     N/A
-------------------------------------------------------------------------------
                           APPROVALS ON FILE IN IVS
-------------------------------------------------------------------------------
TECH APPR                  REQ                     IVS
-------------------------------------------------------------------------------
G. Young                   C. Buhner               T. Werenski
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                              CHANGE HISTORY
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   CHANGE                          INITIATION
   NUMBER        ISSUE DATE          NUMBER                 REASON RO CHANGE
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
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1.0      PURPOSE

         To establish the process to be followed by Productivity Systems
         business of the IV Systems Division of Baxter Healthcare, in the
         installation and implementation of the Sure-Med-Registered Trademark-
         product.

2.0      SCOPE AND APPLICABILITY

         This procedure applies to all employees or consultants contracted by
         Productivity Systems who are involved in the implementation process
         of the Sure-Med-Registered Trademark- product. This document is the
         standard procedure for a new installation of the Sure-Med-Registered
         Trademark- System, therefore some sections of this document may not
         apply to an add on of additional Sure-Med-Registered Trademark-
         equipment to an existing Sure-Med-Registered Trademark- account.

3.0      APPLICABLE DOCUMENTS

         3.1    ?????? Sure-Med-Registered Trademark- Pre-Implementation Manual
------------------------------------------------------------------------------
        For Use Only By Affiliates of Baxter Healthcare Corporation
   THIS DOCUMENT CONTAINS PROPRIETARY INFORMATION-IT MUST NOT BE REPRODUCED
            OR DISCLOSED TO OTHERS WITHOUT PRIOR WRITTEN APPROVAL
        THE USER IS RESPONSIBLE FOR CHECKING THE CURRENT ISSUE DATE
                      BEFORE USING THIS DOCUMENT
SPECFORM/N                                                            Rev A

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         3.2      ??????   Sure-Med-Registered Trademark- Field Service manual

         3.3      PHG-133 Sure-Med-Registered Trademark- PA Process

         3.4      07-19-03-525 Sure-Med-Registered Trademark- Version 5.2.1
                  Install/Upgrade Manual

4.0      ATTACHMENTS

         4.1      Sure-Med-Registered Trademark- Account Information Sheet

         4.2      Sure-Med-Registered Trademark- System Order/Return Form

         4.3      Productivity Systems Training Form

         4.4      Sure-Med-Registered Trademark- Security Configuration Form

         4.5      Clinical Request Form (CRF)

         4.6      FACE Document

         4.7      Sure-Med-Registered Trademark- Dispenser Location Grid Form

         4.8      Sure-Med-Registered Trademark- Inservice Information Form

         4.9      Sure-Med-Registered Trademark- Equipment Checklists:
                           Unit Dose/Expansion Cabinet Stack
                           Dispensing Center Cabinet
                           Supply Center Cabinet
                           Supply Cabinet
                           Refrigerated Supply Cabinet
                           Expansion Cabinet
                           Pharmacy Workstation (Host)

         4.10     Sure-Med-Registered Trademark- Exit Interview Form

         4.11     Sure-Med-Registered Trademark- Installation Report

         4.12     Sure-Med-Registered Trademark- Account Installation Report

5.0      DEFINITIONS:

         5.1 Chicago Trainees: Sure-Med-Registered Trademark- Customers
attending off site training session in Chicago.

<PAGE>

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         5.2      Pre-Implementation: A process that occurs prior to
                  installation of the Sure-Med-Registered Trademark- equipment.

         5.3      Consultant: A Productivity Systems business unit employee or
                  consultant contracted by Productivity Systems who leads the
                  implementation and installation process of the
                  Sure-Med-Registered Trademark- product for each account.

         5.4      Field Application Engineer (FAE) : A Productivity Systems
                  business unit employee or consultant contracted by
                  Productivity Systems who is responsible for all technical
                  aspects of the installation process for the
                  Sure-Med-Registered Trademark- product.

         5.5      Nurse Consultant: A Productivity Systems business unit
                  employee who supports the Consultant during the installation
                  and implementation process as related to nursing, resolves
                  nursing issues, develops nursing procedures, the training of
                  account nursing staff and management of Network nurses.

         5.6      Project Leader: A project leader is a account designated
                  employee who has the ultimate responsibility for organizing
                  and overseeing the implementation process and continued
                  eternal maintenance support of the
                  Sure-Med-Registered Trademark- system.

         5.7      Information systems (IS) : A department within the account
                  that is responsible for the accounts computer system(s).

         5.8      Field Interface Engineer (FIE): A Productivity Systems
                  business unit employee who supports the Consultant with field
                  interface issues relating to each specific account.

         5.9      Interface: An interface is a communication link between two
                  or more computer systems.

         5.10     Security Configuration Form: A form that the Consultant will
                  complete as described in this document and utilize to identify
                  and program levels of users end allowable functions with the
                  Sure-Med-Registered Trademark- System.

         5.11     Clinical Request Form (CRF): A form that the Consultant will
                  complete as described in this document and is utilized to
                  request nurse training support from the Nursing Network.

         5.12     Host: A Sure-Med-Registered Trademark- Computer Pharmacy
                  Workstation that is a key component to the
                  Sure-Med-Registered Trademark- system.

         5.13     Equipment: All hardware provided by Productivity System that
                  makes up the Sure-Med-Registered Trademark- system.

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         5.14     DID line: Dedicated Direct Inward Dial phone line used for
                  incoming calls to the modem that is connected to the
                  Sure-Med-Registered Trademark- host. This DID line is used
                  for technical support to the Sure-Med-Registered Trademark-
                  system.

         5.15     Resource Nurse: Account users who with additional training
                  provided by Baxter will in turn support and or train other
                  account staff.

         5.16     Users: Any account personnel who are permitted access to the
                  Sure-Med-Registered Trademark- system.

         5.17     FACE Document: Information complied by the FIE to summarize
                  the interface installation and implementation for each
                  specific account.

         5.18     Drug List: A compiled list of all items to be stocked within
                  the Sure-Med-Registered Trademark- system.

         5.19     Dispenser Grid Form: A physical layout of the unit dose
                  compartment that the Consultant will utilize to define
                  locations of dispensers and cassettes.

         5.20     Backorder:  An ordered item from Customer  Operations that is
                  out of stock and can not be filled at the time of order
                  placement.

         5.21     Cabinet Communication Lines: A point to point communication
                  line from Host to cabinet.

         5.22     Interface  Communication Lines: A communication line utilized
                  to connect  communications from the
                  Sure-Med-Registered Trademark- host to the account computer
                  system(s).

         5.23     Network  Nurse:  A trainer  contracted by  Productivity
                  Systems  supplied by Nursing  Network to institute training of
                  users at the account.

         5.24     Nursing Network: A Baxter group that manages network nurses.

         5.25     In-Service Information Form: A document that is to be
                  completed by the Consultant as described in this document and
                  used to communicate customer account training information to
                  the assigned network nurse(s).

         5.26     Installation Team: A Productivity Systems business unit,
                  employee(s) or consultant(s) contracted by Productivity
                  Systems assembled to complete the on site installation process
                  and meet the needs of the account.

         5.27     Cabinet: A Sure-Med-Registered Trademark- cabinet is a
                  computer-controlled storage unit.

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         5.28      System: All hardware and software that bring together the
                   Sure-Med-Registered Trademark- Distribution System.

         5.29     Account Sales Specialist: Productivity Systems employee who
                  completes sales process per account. They are account manager
                  once completion of installation has occurred.

6.0      PROCEDURE

         6.1      Phase I-Planning: The first and one of the more critical
                  phases of the implementation process of the
                  Sure-Med-Registered Trademark- product is the planning phase.
                  This phase begins upon approved purchase order of
                  Sure-Med-Registered Trademark- During this planning phase the
                  Consultant is assigned to the account and information that is
                  critical to the installation begins to be gathered. Phase II
                  may not begin until all planning is complete.

                  6.1.1    Customer operations receives the approved sales
                           documentation from marketing. Customer Operations
                           will then generate a Sure-Med-Registered Trademark-
                           System Order/Return Form with the approved equipment
                           identified on order. This will be sent to the
                           appropriate Consultant Regional Manager and will
                           serve as notification of equipment to be installed.

                  6.1.2    During this same time period of an approved sale, the
                           Account Sales Specialist generates an Account
                           Information sheet that `is also sent to the
                           appropriate Consultant Regional Manager.

                  6.1.3    Once the Consultant Regional Manager receives both
                           documents, they are then sent to the, assigned
                           Consultant. The Consultant now becomes the project
                           leader of that installation.

                  6.1.4    The Consultant will contact the Account Sales
                           Specialist to acknowledge receipt of account
                           documents. This is to be done within the first 2-3
                           weeks.

                  6.1.5    The Consultant will contact the account within the
                           same 2-3 weeks to introduce themself, and discuss the
                           implementation process of the
                           Sure-Med-Registered Trademark- System. This
                           conversation will include setting realistic
                           expectations, and answering any questions the account
                           might have.

                  6.1.6    At this time the Consultant will determine the type
                           of installation to occur (pre-assembly or
                           traditional).

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                  If pre-assembly is chosen refer to document PHG-133
                  Sure-Med-Registered Trademark- Pre-Assembly Process.
                  Sure-Med-Registered Trademark- order submitted by Account
                  Sales Specialist may have been identified as
                  Pre-Assembly upon placement of order.

                  6.1.7    After initial contact with the account the Consultant
                           will then document conversation(s) in a follow up
                           letter. This letter will be sent to the account with
                           copies to the Consultant's Regional Manager and
                           Account Sales Specialist.

                  6.1.8    The Consultant will notify the Interface Group of the
                           account and will check Field Interface Engineer (FIE)
                           availability to attend the pre-implementation meeting

                  6.1.9    The Consultant will contact the account to schedule
                           the pre-implementation meeting, tentative
                           installation date(s), the Round Lake training date
                           and identify the Chicago trainees. Once the
                           Consultant receives this information (s)he will
                           complete and submit the Productivity Systems Training
                           form to the Training Center.

                  6.1.10   The Consultant will order Pre-Implementation Manuals
                           and Nurse Training Kits from Customer Operations.
                           These are to he sent to the account prior to the
                           preimplementation meeting.

                           6.1.10.1     If Unit Dose
                                        Sure-Med-Registered Trademark-
                                        cabinet(s) are a part of the
                                        installation the Consultant will also
                                        order a drug list to be sent to the
                                        account.

                  6.1.11   The Consultant is to notify the Sales Specialist,
                           Nurse Consultant and FIE of the scheduled
                           pre-implementation meeting and tentative installation
                           date(s).

                  6.1.12   These dates are to be reflected on the Consultant's
                           personal calendar and submitted to his/her Regional
                           Manager. The Consultant Regional Manager will in turn
                           submit a regional calendar to the National Manager
                           Field Engineer for addition to National Field
                           Calendar. This calendar will be sent to all
                           appropriate Productivity System employees. National
                           Manager Field Engineer will assign the Field
                           Application Engineer (FAB) to the installation.

                  6.1.13   At the Consultants discretion a host and or other
                           equipment may be ordered from Customer Operations for
                           availability at the pre-implementation meeting.

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         6.2      Phase II: Pre-implementation Meeting: This meeting will occur
                  at the account facility with the account project leaders and
                  Productivity Systems representatives. All attendees will have
                  received the Pre-Implementation manual prior to the scheduled
                  meeting so as to review the installation process. This manual
                  will serve as the account's reference for the
                  Sure-Med-Registered Trademark- installation.

                  The purpose of this meeting is to discuss the roles of both
                  the account and Productivity Systems as they pertain to the
                  implementation process. An installation timetable will be
                  agreed upon and project goals will be established.
                  Expectations will be defined for the installation process,
                  interface functionality, and customization capabilities.

                  6.2.1    The Consultant will gather the necessary information
                           to complete the Security Configuration Form. The
                           installation team will utilize this form to configure
                           the Sure-Med-Registered Trademark- System to account
                           specifics.

                  6.2.2    The Consultant will gather nursing information
                           necessary to complete both the Clinical Request Form
                           (CRF) and the In- service form. The CRF will be used
                           to request nursing support from the Nursing Network.
                           Account resource nurses and/or nurse educators will
                           be also be identified along with what type of nurse
                           training process to implement i.e., classroom or
                           nursing unit.

                  6.2.3    Discussion will occur to identify and address any
                           expected changes in current practices to both
                           Pharmacy and Nursing. The Consultant will also
                           discuss the importance of developing Pharmacy and
                           Nursing Policies & Procedures for
                           Sure-Med-Registered Trademark-.

                  6.2.4    The Consultant will review the completed drug list
                           with the account, if available.

                  6.2.5    The FIE will review the Sure-Med-Registered
                           Trademark- specifications with the account
                           representatives which will include the following:

                           -        DID line
                           -        Cabinet communication lines
                           -        Interface
                           -        Electrical power

                  6.2.6    The installation team will review any accounts
                           external specifications. Note: To date there have
                           been no known account's with external specifications.

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                  6.2.1    At the conclusion of the Pre-Implementation meeting a
                           walk through of the facility will occur to identify
                           locations for equipment, assembly area and nurse
                           training.

                  6.2.8    At the Consultant's discretion, and if the equipment
                           is on site, set up of the host and any other
                           equipment may occur. If any equipment is set up it
                           will be necessary to train selected users of its
                           functionality.

         6.3      Phase III: Pre-Installation: At the Pre-Implementation meeting
                  a timetable of critical steps which must be completed prior to
                  the actual installation were identified along with the
                  responsible personnel. All steps should be completed and on
                  schedule for if any are omitted or delayed the installation
                  date may also be delayed. Rescheduling the installation could
                  result in a further delay of two or three months. The
                  Consultant is responsible for maintaining contact with all
                  concerned and determine that the project is on schedule.

                  6.3.1    The Consultant will document a recap of the
                           pre-implementation meeting and send copies to the
                           account, regional manager, sales specialist and other
                           attendees.

                  6.3.2    The Consultant will send the completed CRF to the
                           Nurse Consultant who will review and submit to the
                           Nursing Network for assignment

                  6.3.3    The FIE will follow up any interface issues from the
                           pre-implementation meeting and produce the FACE
                           document.

                  6.3.4    Upon receipt of the completed drug list from the
                           account, the Consultant will develop a dispenser grid
                           form (Unit Doze cabinets only).

                  6.3.5    The Consultant will submit the completed
                           Sure-Med-Registered Trademark- System Order/Return
                           form(s) to Customer Operations at least 1 week
                           prior to installation. Customer Operations will
                           then notify the Consultant of any and all
                           backorders. Once all orders have been shipped by
                           Customer Operations the Consultant will verify
                           with the account receipt of the equipment

                  6.3.6    Two weeks prior to installation the Consultant will
                           verify with pharmacy, nursing, IS and engineering
                           that all pre-installation task(s) have been
                           completed, i.e., DID line, cabinet communication
                           lines, interface lines etc. These tasks were
                           identified and documented to account in follow-up
                           Pre-Implementation letter.

<PAGE>

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                  6.3.7    The Consultant will coordinate travel arrangements
                           with the installation team and provide pertinent
                           documents as needed to the team.

                  6.3.8    Nursing Network will inform the Consultant of
                           assigned nurse(s) trainers. The Consultant will in
                           turn contact the assigned network nurse(s) and also
                           provide to nurses(s) the completed Inservice
                           Information packet which will provide all necessary
                           training information specific to that account.

                  6.3.9    Once Chicago training of the account has occurred the
                           Training Center will complete and forward to the
                           Consultant a synopsis of training.

                  6.3.10   One week prior to installation the Consultant will
                           follow up with the account project leader to confirm
                           availability of inventory, pulling of stock, and
                           appropriate resources have been allocated.

         6.4      Phase IV: Installation- The Consultant having determined
                  that all pre-installation steps have been completed
                  approves the installation phase to begin for all
                  Sure-Med-Registered Trademark- equipment. The installation
                  team will then arrive at account site. The Consultant as
                  the Baxter project leader authorizes the commencement of
                  the installation and determines when the project is
                  completed.

                  6.4.1    Upon arrival at the account site the Consultant will
                           establish with the account a time for daily update
                           meetings as well as date and time for an exit
                           meeting.

                  6.4.2    The Consultant will identify and address any
                           deficiencies anticipating the affect an the
                           installation process. This will be documented for
                           future reference with copies sent to Sales Specialist
                           and Regional Manager. These identified issues will be
                           discussed with the account project leader for
                           resolution.

                  6.4.3    The installation team will verify that all equipment
                           and supplies are present. If any discrepancies occur
                           in the received equipment the Consultant will contact
                           Customer Operations for resolution.

                  6.4.4    All equipment will be inspected for damage. If any
                           has occurred the Consultant will notify Customer
                           operations for replacement. Upon receipt of
                           replacement item the Consultant will complete a
                           return report for the damaged equipment received. A
                           copy of this will be sent to Customer Operations as
                           well as attached to the damaged item for return.
                           Customer Operation will complete any follow up
                           required.

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                  6.4.5    The installation team will complete all tasks as per
                           the appropriate equipment checklists.

                  6.4.6    The FAE will refer to the Field Service Manual and
                           Sure-Med-Registered Trademark- version 5.2.1
                           installation/upgrade manual as needed.

                  6.4.6    If any equipment fails during the installation i.e.,
                           laptop, motherboard, dispenser's etc. replacements
                           will be ordered from Customer Operations. Upon
                           receipt of replacement item the accompanied document
                           will be completed by the installation team sighting
                           that item was detective. This document will be
                           attached to the item and returned to Round Lake

                  6.4.7    The installation team will establish and verify
                           communications between the host and the cabinet(s).
                           They will then download the medication and user files
                           to the cabinet(s). The Host will be re-located to its
                           permanent location and all connections will be
                           established.

                  6.4.8    The Consultant will identify and prepare cabinet(s)
                           specified for nurse training.

                  6.4.9    The installation team along with the account will
                           verify the viability of the interface(s).

                  6.4.10   The account project leader is to review and modify
                           the Sure-Med-Registered Trademark- System as needed.

                  6.4.11   The Consultant will review the entire
                           Sure-Med-Registered Trademark- System with the
                           Chicago trainee(s) and support the trainee(s) in any
                           additional system training.

                  6.4.12   The installation team will complete all
                           Sure-Med-Registered Trademark- System testing as
                           required per equipment checklists.

                  6.4.13   Nurse training will follow the developed pre-agreed
                           schedule.

                  6.4.14   Go live of the Sure-Med-Registered Trademark- System
                           will follow the pre-agreed schedule.

                  6.4.15   The installation team will prepare and notify
                           Customer Operations of any supplies to be returned.
                           The returns will include any appropriately labeled
                           damaged or failed equipment and a list of returned
                           inventory. A copy of the returns will be sent to
                           Customer Operation for follow up.

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                  6.4.16   The Consultant, along with the account, will complete
                           the Exit Interview document. This document will be
                           filed with the account folder and copies sent to
                           Account Sales Specialist and Regional Manager.

         6.5.     Phase V: Post Installation: with the completion of the
                  installation the Consultant continues to maintain interim
                  contact with the account. The purpose is to determine any
                  previously unidentified post installation issues and answer
                  any questions that may have arisen.

                  6.5.1    The Consultant will send a thank you letter to the
                           account that will include a statement regarding any
                           outstanding issues. A copy will be sent to the
                           Account Sales Specialist and Regional Manager.

                  6.5.2    The Consultant will contact the account periodically
                           during first month.

                           6.5.2.1      Once the installation team has completed
                                        the installation and has left the
                                        account site all technical support will
                                        come from Technical Assistance Center
                                        (TAC)

                  6.5.3    Once all outstanding issues related to the
                           installation process have been resolved the Account
                           Sales Specialist will then become account manager
                           with Consultant support if required.

                  6.5.4    The FAE will complete the Installation Report and
                           submit it to Customer operations.

                  6.5.5    The Consultant will complete the Installation
                           overview Report and submit to Customer Operations
                           with copies to Regional Manager and Vice President
                           Field Operations.

7.0      TRAINING

         7.1      Training of these procedures for all Field Implementation
                  employees will occur within 90 days by written acknowledgment
                  of reviewing this procedure. Upon receipt of written
                  acknowledgment of the completed training, it will be recorded
                  on the Training Roster.

<PAGE>

December 23, 1999

Mr. Art Mollenhauer
Vice President Finance
I.V. Systems & Medical Products
Baxter Healthcare Corporation
One Baxter Parkway
Deerfield, Illinois 60015

Dear Art:

         Once countersigned by you, this letter constitutes a final and binding
agreement between OmniCell Technologies, Inc. ("OmniCell") and Baxter Healthcare
Corporation ("Baxter") resolving certain issues which have arisen between
OmniCell and Baxter concerning the Asset Purchase Agreement of December 18,
1998, as amended by the Letter Agreement dated as of January 25, 1999 ("APA"),
and the Loan and Security Agreement between Baxter and OmniCell of January 29,
1999 ("LSA"). To the extent our agreement herein requires modification,
amendment or waiver of any provision of either of those agreements, this letter
agreement is a written modification of those other agreements pursuant to
Section 12 of the APA and Section 9.2 of the LSA. Our agreement herein, and any
modification, amendment and/or waiver with respect to the APA and the LSA,
applies only to those items specifically discussed below. All rights, remedies
and obligations of the parties, including, but not limited to, the survival of
certain representations and warranties under the APA, remain in effect and
without modification except as specifically discussed below. All capitalized
terms in this letter agreement are used as defined in the APA and/or LSA.

         We have agreed as follows:

         1. PURCHASE PRICE - The "Purchase Price" shall be $14,754,000,
including the $2,000,000 of cash paid at Closing and $4,840,000 which has been
paid by offsetting amounts collected by Baxter on OmniCell's behalf.

         2. TERMINATION, MODIFICATION AND RELEASE - Sections 2.1, 2.2, 3.5,
3.11, 3.18, 5.9(b), 9.4 (except for the first and last sentences thereof) and
10.4 of the APA and Paragraphs (1), (2) and (5) of the Letter Agreement dated as
of January 25, 1999 referred to above) are hereby terminated effective upon
receipt by OmniCell of the amounts due from Baxter pursuant to Paragraph 3 below
(the "Effective Time").

         As of the Effective Time, Baxter and OmniCell hereby release each other
and their respective employees, agents, shareholders, directors, officers,
attorneys, affiliates and successors, from any and all claims, actions, causes
of action, damages, demands of any nature whatsoever that have arisen or may
arise in law or in equity based upon or arising under the foregoing provisions
of the APA, including the Letter Agreement dated as of January 25, 1999.

         In lieu of Section 3.18 of the APA, Baxter represents and warrants that
the equipment described in the installation schedule referred to in Paragraph 12
below will be capable of being installed using commercially reasonable efforts
by the dates indicated in the installation schedule.

<PAGE>

Mr. Art Mollenhauer
Baxter Healthcare Corporation
December 23, 1999
Page 2.

         OmniCell represents and warrants that it is not currently aware of any
basis for any claim by it that Baxter has breached any of its representations
and warranties or any of its other obligations under the APA as amended by this
letter agreement.

         3. RECONCILIATION PAYMENT - Baxter agrees to pay OmniCell no later than
December 31, 1999), the amount of $1,195,968.

         4. RESTATED PROMISSORY NOTE - The Promissory Note dated January 29,
1999 shall be restated in the form attached hereto as Exhibit A, with a revised
principal amount of $7,914,000. OmniCell shall deliver the original Promissory
Note to Baxter in exchange for the Restated Promissory Note. Baxter and OmniCell
acknowledge that interest on the Promissory Note has been fully paid and
satisfied through December 31, 1999. Simultaneously with the execution hereof,
Baxter is signing and delivering to Silicon Valley Bank an amendment to the
Intercreditor Agreement between Baxter and Silicon Valley Bank in the form
attached hereto as Exhibit B. Baxter hereby releases OmniCell and its employees,
agents, shareholders, directors, officers, attorneys, affiliates and successors,
from any and all claims, actions, causes of action, damages, demands of any
nature whatsoever that have arisen in law or in equity based upon or arising
under the Promissory Note with respect to the nonpayment of interest with
respect to any period through December 31, 1999.

         5. BAXTER/OMNICELL e-COMMERCE RELATIONSHIP - Baxter agrees to introduce
OmniCell to Baxter's e-commerce representatives and to give good faith
consideration to Baxter becoming a supplier to OmniCell, including but not
limited to having its products listed and available for sale on a non-exclusive
basis through OmniBuyer, OmniCell's e-commerce system.

         6. PRIVATE PLACEMENT - Baxter agrees that the limit on private
placements of equity securities before a Mandatory Prepayment is required under
Section 2.8 of the LSA shall be modified to permit OmniCell to complete the
private placement of up to $30,000,000 (total) of equity securities in one or
more transactions or rounds of financing to be completed no later than December
31, 2000 without triggering a Mandatory Prepayment so long as OmniCell shall
apply at least 50% of the proceeds of such private placement to redeem the
Series J Preferred Stock of OmniCell.. The existing exceptions to the prepayment
obligation OmniCell contained in the proviso to Section 2.8(a) of the LSA, will
remain in effect, except that the exception for sales of equity securities not
exceeding 10% of the outstanding equity securities of OmniCell contained in
clause (y) shall not be available for the year 2000.

         7. PWC CONSENT - Baxter agrees to cooperate with PricewaterhouseCoopers
("PWC") and promptly provide any assistance reasonably requested to enable PWC
to issue its consent to inclusion of its opinion on the Sure-Med financial
statements in the S-1 registration statement to be filed in connection with
OmniCell's anticipated public offering.

         8. ACCOUNTS RECEIVABLE - Baxter and OmniCell agree that the items set
forth in Exhibits C1 and C2 all constitute assets transferred to OmniCell
pursuant to the Bill of Sale and Assignment dated January 29, 1999 from Baxter.
Upon written request of OmniCell, Baxter agrees provide notice in writing to all
customers listed on Exhibit C2 in a form reasonably

<PAGE>

Mr. Art Mollenhauer
Baxter Healthcare Corporation
December 23, 1999
Page 3.

satisfactory to OmniCell, that OmniCell is the party entitled to receive
payments under all such accounts, and the party to whom payments by those
customers should be made. The amounts shown on Exhibit C1 have been either
collected by Baxter from the customers indicated on Exhibit C1 or have been
converted to leases between Baxter and such customer. Baxter shall be entitled
to retain all such amounts so collected or to be collected under such leases,
and OmniCell waives and releases in favor of Baxter all claims to such amounts
and such leases.

         9. SEVERANCE ADJUSTMENTS - Baxter shall be responsible for all
obligations to pay severance benefits with respect to all Remaining Employees,
and OmniCell shall be responsible for all obligations to pay severance benefits
with respect to all Transferred Employees. As described in Paragraph 2 above,
Section 5.9(b) of the APA is being terminated and there will be no further
adjustment as between Baxter and OmniCell with respect to such severance
obligations.

         10. CANADIAN ISSUES - Baxter agrees to deliver to OmniCell at Palo
Alto, California or such other place within the continental United States as
OmniCell shall direct in writing the Canadian inventory described in Exhibit D
hereto. All shipping and other costs of such delivery shall be the
responsibility of Baxter.

         11. WESTERN EUROPEAN DISTRIBUTION SERVICES - Baxter hereby waives and
releases any and all claims against OmniCell and its subsidiaries and its
affiliates with respect to distribution of Sure-Med products by Baxter in
Western Europe during 1999.

         12. INSTALLATION SCHEDULE - Baxter and OmniCell agree that they will
work together over the next 30 days to develop a schedule, prioritized by
Baxter, for installation of remaining uninstalled Sure-Med units relating to
outstanding Baxter receivables.

         13. OMNICELL EUROPE - Baxter agrees to waive any claim or right under
Section 6.2 of the LSA in connection with the establishment and maintenance by
OmniCell of subsidiaries or operating branches in Europe for the purpose of
manufacturing, marketing or distributing OmniCell products in Europe so long as
the aggregate book value of the assets of such subsidiaries and branches
calculated in accordance with generally accepted accounting principles
consistently applied shall not at any time exceed USS 1,000,000.

         14. CANADIAN AND EUROPEAN INVENTORY - Baxter acknowledges to OmniCell
that the inventory described in Exhibit D and the inventory located in Europe
that was included in the audited balance sheet for the Sure-Med business that
was previously delivered to OmniCell are owned by OmniCell and Baxter hereby
waives and releases any and all rights or claims thereto.

         15. CONFIDENTIALITY - Baxter and OmniCell shall not disclose the
existence or terms of this letter agreement without the prior written consent of
the other party, except as required by law (including any disclosures required
by Federal or state securities laws) and except that either party may make such
disclosures as may be reasonably required to its respective independent
accountants.

<PAGE>

Mr. Art Mollenhauer
Baxter Healthcare Corporation
December 23, 1999
Page 4.

         16. GOVERNING LAW - This letter agreement shall in all respects be
governed by, and construed and enforced in accordance with, the laws of the
State of Illinois.

         As discussed above, this letter agreement sets forth the complete
agreement between Baxter and OmniCell with respect to the subjects specifically
identified and discussed in this letter. All other terms and conditions of the
APA and LSA remain in effect. This letter agreement is final immediately upon
its execution by both parties.

Sincerely,

/s/ Earl E. Fry
Earl E. Fry
Vice President and Chief Financial Officer
OmniCell Technologies, Inc.

<PAGE>

Mr. Art Mollenhauer
Baxter Healthcare Corporation
December 23, 1999
Page 5.

         ON BEHALF OF BAXTER HEALTHCARE CORPORATION, I HAVE EXECUTED AND AGREE
TO ALL OF THE FOREGOING.

By:    /s/ Arthur Mollenhauer
       Art Mollenhauer
       Vice President Finance
       I.V. Systems & Medical Products
       Baxter Healthcare Corporation<PAGE>

                           Standby Facility Agreement

                                January 27, 2000

Omnicell.com
1101 E. Meadow Drive
Palo Alto, California 94303

Gentlemen:

         Reference is made to the Loan and Security between you ("Borrower") and
us ("Silicon") dated January 27, 2000 (the "Loan Agreement'). (This letter
agreement, the Loan Agreement, and all other written documents and agreements
between us are referred to herein collectively as the "Loan Documents".
Capitalized terms used but not defined in this agreement, shall have the
meanings set forth in the Loan Agreement.)

         You have advised us that you do not anticipate borrowing under the Loan
Agreement, for a period of time, and you have requested that certain of the
provisions of the Loan Agreement not apply during this period.

         Accordingly, this will confirm our agreement that, from and after the
date hereof (the "Standby Period") no Loans will be made under the Loan
Agreement. During the Standby Period, provided no Event of Default has occurred
and is continuing, you will not be required to provide us with daily reporting
of transactions, daily schedules and assignments of Receivables or schedules of
collections (as called for by Section 4.3 of the Loan Agreement), and you will
not be required to deliver to us the proceeds of Receivables (as called for by
Sections 4.4 of the Loan Agreement).

         You may, at your option, terminate the Standby Period, so that you can
thereafter request Loans under the Loan Agreement, by giving us written notice
at least 30 days before the Standby Period is to terminate, together with such
information relating to the Receivables and other Collateral as we shall
specify.

         Upon termination of the Standby Period, you will, then and thereafter,
provide us with the daily reporting of transactions and daily schedules and
assignments of Receivables and schedules of collections, as called for by
Section 4.3 of the Loan Agreement, and deliver all proceeds of Receivables to
us, as called for by Sections 4.4 of the Loan Agreement.

         This letter agreement, the Loan Agreement, and the other Loan Documents
set forth in full all of the representations and agreements of the parties with
respect to the subject matter hereof and supersede all prior discussions, oral
representations, oral agreements and oral understandings between the parties
with respect to the subject hereof. Except as herein expressly amended, all of
the terms and provisions of the Loan Agreement, and all other Loan Documents
shall continue in full force and effect and the same are hereby ratified and
confirmed.

<PAGE>

         If foregoing correctly sets forth our agreement, please sign the
enclosed copy of this Agreement and return it to us.

                                                   Sincerely yours,

                                                   Silicon Valley Bank

                                                   By: /s/ Christopher Hill
                                                   Title: Senior Vice President

Accepted and agreed:

Borrower:

Omnicell.com

By: /s/ Robert Y. Newell
      President or Vice President

<PAGE>

         SILICON VALLEY BANK

                  LOAN AND SECURITY AGREEMENT

         BORROWER:    OMNICELL.COM
         ADDRESS:     1101 E. MEADOW DRIVE
                      PALO ALTO, CALIFORNIA 94303

         DATE:        JANUARY 27, 2000

         THIS LOAN AND SECURITY AGREEMENT is entered into on the above date
         between SILICON VALLEY BANK, COMMERCIAL FINANCE DIVISION ("Silicon"),
         whose address is 3003 Tasman Drive, Santa Clara, California 95054 and
         the borrower(s) names above (jointly and severally, the "Borrower"),
         whose chief executive office is located at the above address
         ("Borrower's Address"). The Schedule of this Agreement (the "Schedule")
         shall for all purposes be deemed to be apart of this Agreement, and the
         same is an integral part of this Agreement. (Definitions of certain
         terms used in this Agreement are set forth in Section 8 below).

1.       LOANS

     1.1 LOANS. Silicon will make loans to Borrower (the "Loans"), in amounts
determined by Silicon in its * up to the amounts (the "Credit Limit") shown
on the Schedule, provided no Default or Event of Default has occurred and is
continuing, and subject to deduction of any Reserves for accrued interest and
such other Reserves as Silicon deems proper from time to time.

     *GOOD FAITH BUSINESS JUDGMENT

     1.2 INTEREST. All Loans and all other monetary Obligations shall bear
interest at the rate shown on the Schedule, except where expressly set forth to
the contrary in this Agreement. Interest shall be payable monthly, on the last
day of the month. Interest may, in Silicon's discretion, be charged to
Borrower's loan account, and the same shall thereafter bear interest at the same
rate as the other Loans. Silicon may, in its discretion, charge interest to
Borrower's Deposit Accounts maintained with Silicon.

     1.3 OVERADVANCES. If at any time or for any reason the total of all
outstanding Loans and all other Obligations exceeds the Credit Limit (an
"Overadvance"), Borrower shall immediately pay the amount of the excess to
Silicon, without notice or demand*. Without limiting Borrower's obligation to
repay to Silicon on demand the amount of any Overadvance, Borrower agrees to pay
Silicon interest on the outstanding amount of any Overadvance, on demand, at a
rate equal to the interest rate which would otherwise be applicable to the
Overadvance, plus an additional 2% per annum.

*PROVIDED THAT IF THE OVERADVANCE RESULTS FROM A CHANGE BY SILICON IN THE
ADVANCE RATE WITH RESPECT TO ELIGIBLE RECEIVABLES, THEN SUCH OVERADVANCE SHALL
BE DUE FROM THE BORROWER TO SILICON ON DEMAND.

     1.4 FEES. Borrower shall pay Silicon the fee(s) shown on the Schedule,
which are in addition to all interest and other sums payable to Silicon and are
not refundable.

     1.5 LETTERS OF CREDIT. At the request of Borrower, Silicon may, in its *
issue or arrange for the issuance of letters of credit for the account of
Borrower, in each case in form and substance satisfactory to Silicon in its
sole discretion (collectively, "Letters of Credit"). The aggregate face
amount of all outstanding Letters of Credit from time to time shall not
exceed the amount shown on the Schedule (the " Letter of Credit Sublimit"),
and shall be reserved against Loans which would otherwise be available
hereunder. Borrower shall pay all bank charges (including charges of Silicon)
for the issuance of Letters of Credit, together with such additional fee as
Silicon's letter of credit department shall charge in connection with the
issuance of the Letters of Credit. Any payment by Silicon under or in
connection with a Letter of Credit shall constitute a Loan hereunder on the
date such payment is made. Each Letter of Credit shall have an expiry date no
later than thirty days prior to the Maturity Date. Borrower hereby agrees to
indemnify, save, and hold Silicon harmless from any loss,

<PAGE>

cost, expense, or liability, including payments made by Silicon, expenses, and
reasonable attorneys' fees incurred by Silicon arising out of or in connection
with any Letters of Credit**. Borrower agrees to be bound by the regulations and
interpretations of the issuer of any Letters of Credit guarantied by Silicon and
opened for Borrower's account or by Silicon's interpretations of any Letter of
Credit issued by Silicon for Borrower's account, and Borrower understands and
agrees that Silicon shall not be liable for any error, negligence, or mistake,
whether of omission or commission, in following Borrower's instructions or those
contained in the Letters of Credit or any modifications, amendments, or
supplements thereto. Borrower understands that Letters of Credit may require
Silicon to indemnify the issuing bank for certain costs or liabilities arising
out of claims by Borrower against such issuing bank. Borrower hereby agrees to
indemnify and hold Silicon harmless with respect to any loss, cost, expense, or
liability incurred by Silicon under any Letter of Credit as a result of
Silicon's indemnification of any such issuing bank. The provisions of this Loan
Agreement, as it pertains to Letters of Credit, and any other present or future
documents or agreements between Borrower and Silicon relating to Letters of
Credit are cumulative.

*GOOD FAITH BUSINESS JUDGMENT

**EXCEPT FOR ANY SUCH LOSS,  COST,  EXPENSE OR LIABILITY  DIRECTLY CAUSED BY
SILICON'S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT

2.       SECURITY INTEREST.

     2.1 SECURITY INTEREST. TO secure the payment and performance of all of the
Obligations when due, Borrower hereby grants to Silicon a security interest in
all of Borrower's interest in the following, whether now owned or hereafter
acquired, and wherever located: All Inventory, Equipment, Receivables, and
General Intangibles, including, without limitation, all of Borrower's Deposit
Accounts, and all money, and all property now or at any time in the future in
Silicon's possession (including claims and credit balances), and all proceeds
(including proceeds of any insurance policies, proceeds of proceeds and claims
against third parties), all products and all books and records related to any of
the foregoing (all of the foregoing, together with all other property in which
Silicon may now or in the future be granted a lien or security interest, is
referred to herein, collectively, as the "Collateral").

3.       REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE BORROWER.

     In order to induce Silicon to enter into this Agreement and to make Loans,
Borrower represents and warrants to Silicon as follows, and Borrower covenants
that the following representations will continue to be true, and that Borrower
will at all times comply with all of the following covenants:

     3.1 CORPORATE EXISTENCE AND AUTHORITY Borrower, if a corporation, is and
will continue to be, duly organized, validly existing and in good standing under
the laws of the jurisdiction of its incorporation. Borrower is and will continue
to be qualified and licensed to do business in all jurisdictions in which any
failure to do so would have a material adverse effect on Borrower. The
execution, delivery and performance by Borrower of this Agreement, and all other
documents contemplated hereby (i) have been duly and validly authorized, (ii)
are enforceable against Borrower in accordance with their terms (except as
enforcement may be limited by equitable principles and by bankruptcy,
insolvency, reorganization, moratorium or similar laws relating to creditors'
rights generally), and (iii) do not violate Borrower's articles or certificate
of incorporation, or Borrower's by-laws, or any law or any material agreement or
instrument which is binding upon Borrower or its property, and (iv) do not
constitute grounds for acceleration of any material indebtedness or obligation
under any material agreement or instrument which is binding upon Borrower or its
property.

     3.2 NAME; TRADE NAMES AND STYLES. The name of Borrower set forth in the
heading to this Agreement is its correct name. Listed on the Schedule are all
prior names of Borrower and all of Borrower's present and prior trade names.
Borrower shall give Silicon 30 days' prior written notice before changing its
name or doing business under any other name. Borrower has complied, and will in
the future comply, with all laws relating to the conduct of business under a
fictitious business name*.

*EXCEPT WHERE THE FAILURE TO SO COMPLY COULD NOT REASONABLY BE EXPECTED TO HAVE
A MATERIAL ADVERSE EFFECT

     3.3 PLACE OF BUSINESS; LOCATION OF COLLATERAL. The address set forth in the
heading to this Agreement is Borrower's chief executive office. In addition,
Borrower has places of business and Collateral is located only at the locations
set forth on the Schedule. Borrower will give Silicon at least 30 days prior
written notice before opening any additional place of business, changing its
chief executive office, or moving any of the Collateral to a location other than
Borrower's Address or one of the locations set forth on the Schedule.

     3.4 TITLE TO COLLATERAL, PERMITTED LIENS. Borrower is now, and will at all
times in the future be, the sole owner of all the Collateral, except for items
of Equipment which are leased by Borrower. The Collateral now is and will remain
free and clear of any and all liens, charges, security interests, encumbrances
and adverse claims, except for Permitted Liens. Silicon now has, and will
continue to have, a first-priority perfected and enforceable security interest
in all of the Collateral, subject only to the Permitted Liens, and Borrower will
at all times defend Silicon and the Collateral against all claims of others.
None of the Collateral now is or will be affixed to any real property in such a
manner, or with such intent, as to become a fixture. Borrower is not and will
not become a lessee under any real property lease pursuant to which the lessor
may obtain any rights in any of the Collateral and no such lease now prohibits,
restrains, impairs or will prohibit, restrain or impair Borrower's right to
remove any

<PAGE>

Collateral from the leased premises. Whenever any Collateral is located upon
premises in which any third party has an interest (whether. as owner,
mortgagee, beneficiary under a deed of trust, lien or otherwise), Borrower
shall, whenever requested by Silicon, use its best efforts to cause such
third party to execute and deliver to Silicon, in form acceptable to Silicon,
such waivers and subordinations as Silicon shall specify, so as to ensure
that Silicon's rights in the Collateral are, and will continue to be,
superior to the rights of any such third party. Borrower will keep in full
force and effect, and will comply * with the terms of, any lease of real
property where any of the Collateral now or in the future may be located.

*IN ALL MATERIAL RESPECTS

     3.5 MAINTENANCE OF COLLATERAL. Borrower will maintain the Collateral in
good working condition, and Borrower will not use the Collateral for any
unlawful purpose. Borrower will immediately advise Silicon in writing of any
material loss or damage to the Collateral.

     3.6 BOOKS AND RECORDS. Borrower has maintained and will maintain at
Borrower's Address complete and accurate books and records, comprising an
accounting system in accordance with generally accepted accounting principles.

     3.7 FINANCIAL CONDITION, STATEMENTS AND REPORTS. ALL financial statements
now or in the future delivered to Silicon have been, and will be, prepared in
conformity with generally 'accepted accounting principles and now and in the
future will * the financial condition of Borrower, at the times and for the
periods therein stated. Between the last date covered by any such statement
provided to Silicon and the date hereof, there has been no material adverse
change in the financial condition or business of Borrower. Borrower is now and
will continue to be solvent.

*FAIRLY PRESENT

     3.8 TAX RETURNS AND PAYMENTS; PENSION CONTRIBUTIONS. Borrower has timely
filed, and will timely file, all tax returns and reports required by foreign,
federal, state and local law, and Borrower has timely paid, and will timely pay,
all foreign, federal, state and local taxes, assessments, deposits and
contributions now or in the future owed by Borrower. Borrower may, however,
defer payment of any contested taxes, provided that Borrower (i) in good faith
contests Borrower's obligation to pay the taxes by appropriate proceedings
promptly and diligently instituted and conducted, (ii) notifies Silicon in
writing of the commencement of, and any material development in, the
proceedings, and (iii) posts bonds or takes any other steps required to keep the
contested taxes from becoming a lien upon any of the Collateral. Borrower is
unaware of any claims or adjustments proposed for any of Borrower's prior tax
years which could result in additional taxes becoming due and payable by
Borrower. Borrower has paid, and shall continue to pay all amounts necessary to
fund all present and future pension, profit sharing and deferred compensation
plans in accordance with their terms, and Borrower has not and will not withdraw
from participation in, permit partial or complete termination of, or permit the
occurrence of any other event with respect to, any such plan which could result
in any liability of Borrower, including any liability to the Pension Benefit
Guaranty Corporation or its successors or any other governmental agency.
Borrower shall, at all times, utilize the services of an outside payroll service
providing for the automatic deposit of all payroll taxes payable by Borrower.

     3.9 COMPLIANCE WITH LAW. Borrower has complied, and will comply, in all
material respects, with all provisions of all foreign, federal, state and local
laws and regulations relating to Borrower, including, but not limited to, those
relating to Borrower's ownership of real or personal property, the conduct and
licensing of Borrower's business, and all environmental matters*.

     3.10 LITIGATION. Except as disclosed in the Schedule, there is no claim,
suit, litigation, proceeding or investigation pending or (to best of Borrower's
knowledge) threatened by or against or affecting Borrower in any court or before
any governmental agency (or any basis therefor known to Borrower) which *
result, either separately or in the aggregate, in ** Borrower will promptly
inform Silicon in writing of any claim, proceeding, litigation or investigation
in the future threatened or instituted by or against Borrower involving any
single claim of $50,000 or more, or involving $ 100,000 or more in the
aggregate.

*COULD REASONABLY BE EXPECTED TO

**A MATERIAL ADVERSE EFFECT

     3.11 USE OF PROCEEDS. All proceeds of all Loans shall be used solely for
lawful business purposes. Borrower is not purchasing or carrying any "margin
stock" (as defined in Regulation U of the Board of Governors of the Federal
Reserve System) and no part of the proceeds of any Loan will be used to purchase
or carry any "margin stock" or to extend credit to others for the purpose of
purchasing or carrying any "margin stock."

4.       RECEIVABLES.

     4.1 REPRESENTATIONS RELATING TO RECEIVABLES. Borrower represents and
warrants to Silicon as follows: Each Receivable with respect to which Loans are
requested by Borrower shall, on the date each Loan is requested and made, (i)
represent an undisputed bona fide existing unconditional obligation of the
Account Debtor created by the sale, delivery, and acceptance

<PAGE>

of goods or the rendition of services in the ordinary course of Borrower's
business, and (ii) meet the Minimum Eligibility Requirements set forth in
Section 8 below.

     4.2 REPRESENTATIONS RELATING TO DOCUMENTS AND LEGAL COMPLIANCE. Borrower
represents and warrants to Silicon as follows: All statements made and all
unpaid balances appearing in all invoices, instruments and other documents
evidencing the Receivables are and shall be true and correct and all such
invoices, instruments and other documents and all of Borrower's books and
records are and shall be genuine and in all respects what they purport to be,
and all signatories and endorsers have the capacity to contract. All sales
and other transactions underlying or giving rise to each Receivable shall *
with all applicable laws and governmental rules and regulations. All
signatures and endorsements on all documents, instruments, and agreements
relating to all Receivables are and shall be genuine, and all such documents,
instruments and agreements are and shall be legally enforceable in accordance
with their terms**".

     *IN ALL MATERIAL RESPECTS

     **EXCEPT AS ENFORCEABILITY MAY BE LIMITED BY EQUITABLE PRINCIPLES OR BY
BANKRUPTCY, INSOLVENCY, REORGANIZATION, MORATORIUM OR SIMILAR LAWS RELATING TO
CREDITORS' RIGHTS GENERALLY

     4.3 SCHEDULES AND DOCUMENTS RELATING TO RECEIVABLES. Borrower shall
deliver to Silicon transaction reports and loan requests, schedules and
assignments of all Receivables, and schedules of collections, all on
Silicon's standard forms; provided, however, that Borrower's failure to
execute and deliver the same shall not affect or limit Silicon's security
interest and other rights in all of Borrower's Receivables, nor shall
Silicon's failure to advance or lend against a specific Receivable affect or
limit Silicon's security interest and other rights therein. Loan requests
received after 12:00 Noon will not be considered by Silicon until the next
Business Day. Together with each such schedule and assignment, or later if
requested by Silicon, Borrower shall furnish Silicon with copies (or, at
Silicon's request, originals) of all contracts, orders, invoices, and other
similar documents, and all original shipping instructions, delivery receipts,
bills of lading, and other evidence of delivery, for any goods the sale or
disposition of which gave rise to such Receivables, and Borrower warrants the
genuineness of all of the foregoing. Borrower shall also furnish to Silicon
an aged accounts receivable trial balance in such form and at such intervals
as Silicon shall request. In addition, * Borrower shall deliver to Silicon
the originals of all instruments, chattel paper, security agreements,
guarantees and other documents and property evidencing or securing any
Receivables, ** receipt thereof and in the same form as received, with all
necessary endorsements, all of which shall be with recourse. Borrower shall
also provide Silicon with copies of all credit memos within two days after
the date issued.

*ON REQUEST BY SILICON

**WITHIN ONE BUSINESS DAY AFTER

     4.4 COLLECTION OF RECEIVABLES. Borrower shall have the right to collect all
Receivables, unless and until a Default or an Event of Default has occurred*.
Borrower shall hold all payments on, and proceeds of, Receivables in trust for
Silicon, and Borrower shall immediately deliver all such payments and proceeds
to Silicon in their original form, duly endorsed in blank, to be applied to the
Obligations in such order as Silicon shall determine. Silicon may, in its
discretion, require that all proceeds of Collateral be deposited by Borrower
into a lockbox account, or such other "blocked account" as Silicon may specify,
pursuant to a blocked account agreement in such form as Silicon may specify.
Silicon or its designee may, at any time, notify Account Debtors that the
Receivables have been assigned to Silicon.

*AND IS CONTINUING

     4.5 REMITTANCE OF PROCEEDS. All proceeds arising from the disposition of
any Collateral shall be delivered, in kind, by Borrower to Silicon in the
original form in which received by Borrower not later than the following
Business Day after receipt by Borrower, to be applied to the Obligations in such
order as Silicon shall determine; provided that, if no Default or Event of
Default has occurred*, Borrower shall not be obligated to remit to Silicon the
proceeds of the sale of worn out or obsolete equipment disposed of by Borrower
in good faith in an arm's length transaction for an aggregate purchase price of
$25,000 or less (for all such transactions in any fiscal year). Borrower agrees
that it will not commingle proceeds of Collateral with any of Borrower's other
funds or property, but will hold such proceeds separate and apart from such
other funds and property and in an express trust for Silicon. Nothing in this
Section limits tile restrictions on disposition of Collateral set forth
elsewhere in this Agreement.

*AND IS CONTINUING

     4.6 DISPUTES. Borrower shall notify Silicon promptly of all disputes or
claims relating to Receivables. Borrower shall not forgive (completely or
partially), compromise or settle any Receivable for less than payment in full,
or agree to do any of the foregoing, except that Borrower may do so, provided
that: (i) Borrower does so in good faith, in a commercially reasonable manner,
in the ordinary course of business, and in arm's length transactions, which are
reported to Silicon on the regular reports provided to Silicon; (ii) no Default
or Event of Default has occurred and is continuing; and (iii) taking into
account all such discounts settlements and forgiveness, the total outstanding
Loans will not exceed the Credit Limit. Silicon may, at any time after the
occurrence * of an Event of Default, settle or adjust disputes or claims
directly with Account Debtors for amounts and upon terms which Silicon considers
advisable in its reasonable credit judgment and, in all cases, Silicon shall
credit Borrower's Loan account with only the net amounts received by Silicon in
payment of any Receivables.

*AND DURING THE CONTINUANCE

<PAGE>

     4.7 RETURNS. Provided no Event of Default has occurred and is continuing,
if any Account Debtor returns any Inventory to Borrower in the ordinary course
of its business, Borrower shall promptly determine the reason for such return
and promptly issue a credit memorandum to the Account Debtor in the appropriate
amount (sending a copy to Silicon). In the event any attempted return occurs
after the occurrence * of any Event of Default, Borrower shall (i) hold the
returned Inventory in trust for Silicon, (ii) segregate all returned Inventory
from all of Borrower's other property, (iii) conspicuously label the returned
Inventory as Silicon's property, and (iv) immediately notify Silicon of the
return of any Inventory, specifying the reason for such return, the location and
condition of the returned Inventory, and on Silicon's request deliver such
returned Inventory to Silicon.

*AND DURING THE CONTINUANCE

     4.8 VERIFICATION Silicon may, from time to time, verify directly with the
respective Account Debtors the validity, amount and other matters relating to
the Receivables, by means of mail, telephone or otherwise, either in the name of
Borrower or Silicon or such other name as Silicon may choose.

     4.9 NO LIABILITY. Silicon shall not under any circumstances be responsible
or liable for any shortage or discrepancy in, damage to, or loss or destruction
of, any goods, the sale or other disposition of which gives rise to a
Receivable, or for any error, act, omission, or delay of any kind occurring in
the settlement, failure to settle, collection or failure to collect any
Receivable, or for settling any Receivable in good faith for less than the full
amount thereof, nor shall Silicon be deemed to be responsible for any of
Borrower's obligations under any contract or agreement giving rise to a
Receivable. Nothing herein shall, however, relieve Silicon from liability for
its own gross negligence or willful misconduct.

5.       ADDITIONAL DUTIES OF THE BORROWER.

     5.1 FINANCIAL AND OTHER COVENANTS. Borrower shall at all times comply with
the financial and other covenants set forth in the Schedule.

     5.2 INSURANCE. Borrower shall, at all times insure all of the tangible
personal property Collateral and carry such other business insurance, with
insurers reasonably acceptable to Silicon, in such form and amounts as *, and
Borrower shall provide evidence of such insurance to Silicon, so that Silicon is
satisfied that such insurance is, at all times, in full force and effect. All
such insurance policies shall name Silicon as an additional loss payee, and
shall contain a lenders loss payee endorsement in form reasonably acceptable to
Silicon. Upon receipt of the proceeds of any such insurance, Silicon shall apply
such proceeds in reduction of the Obligations as Silicon shall determine in its
sole discretion, except that, provided no Default or Event of Default has
occurred and is continuing, Silicon shall release to Borrower insurance proceeds
with respect to Equipment totaling less than $100,000, which shall be utilized
by Borrower I for the replacement of the Equipment with respect to which the
insurance proceeds were paid. Silicon may require reasonable assurance that the
insurance proceeds so released will be so used. If Borrower fails to provide or
pay for any insurance, Silicon may, but is not obligated to, obtain the same at
Borrower's expense. Borrower shall promptly deliver to Silicon copies of all
reports made to insurance companies.

     *   ARE CUSTOMARY IN BORROWER'S INDUSTRY IN BORROWER'S LOCATION

     5.3 REPORTS. Borrower, at its expense, shall provide Silicon with the
written reports set forth in the Schedule, and such other written reports with
respect to Borrower (including budgets, sales projections, operating plans and
other financial documentation), as Silicon shall from time to time reasonably
specify.

     5.4 ACCESS TO COLLATERAL, BOOKS AND RECORDS. At reasonable times, and on
one Business Day's notice, Silicon, or its agents, shall have the right to
inspect the Collateral, and the right to audit and copy Borrower's books and
records. Silicon shall take reasonable steps to keep confidential all
information obtained in any such inspection or audit, but Silicon shall have the
right to disclose any such information to its auditors, regulatory agencies, and
attorneys, and pursuant to any subpoena or other legal process. The foregoing
inspections and audits shall be at Borrower's expense and the charge therefor
shall be $600 per person per day (or such higher amount as shall represent
Silicon's then current standard charge for the same), plus reasonable out of
pocket expenses. Borrower will not enter into any agreement with any accounting
firm, service bureau or third party to store Borrower's books or records at any
location other than Borrower's Address, without first obtaining Silicon's
written consent, which may be conditioned upon such accounting firm, service
bureau or other third party agreeing to give Silicon the same rights with
respect to access to books and records and related rights as Silicon has under
this Loan Agreement. Borrower waives the benefit of any accountant-client
privilege or other evidentiary privilege precluding or limiting the disclosure,
divulgence or delivery of any of its books and records (except that Borrower
does not waive any attorney-client privilege).

     5.5 NEGATIVE COVENANTS. Except as may be permitted in the Schedule,
Borrower shall not, without Silicon's prior written consent*, do any of the
following: (i) merge or consolidate with another corporation or entity**; (ii)
acquire any assets, except in the ordinary course of business (iii) enter into
any other transaction outside the ordinary course of business; (iv) sell or
transfer any Collateral, except for the sale of finished Inventory in the
ordinary course of Borrower's

<PAGE>

     business, and except for the sale of obsolete or unneeded Equipment in the
ordinary course of business***; (v) store any Inventory or other Collateral with
any warehouseman or other third party; (vi) sell any Inventory on a
sale-or-return, guaranteed sale, consignment, or other contingent basis;. (vii)
make any loans of any money or other assets**; (viii) incur any debts, outside
the ordinary course of business, which would have a material, adverse effect on
Borrower or on the prospect of repayment of the Obligations; (ix) guarantee or
other-wise become liable with respect to the obligations of another party or
entity; (x) pay or declare any dividends on Borrower's stock (except for
dividends payable solely in stock of Borrower); (xi) redeem, retire, purchase or
otherwise acquire, directly or indirectly, any of Borrower's stock****; (xii)
make any change in Borrower's capital structure which would have a material
adverse effect on Borrower or on the prospect of repayment of the Obligations;
or (xiii); or (xiv) dissolve or elect to dissolve. Transactions permitted by the
foregoing provisions of this Section are only permitted if no Default or Event
of Default would occur as a result of such transaction.

     *(WHICH SHALL BE A MATTER OF ITS GOOD-FAITH BUSINESS JUDGMENT)

     **EXCEPT FOR MERGERS OF ANY OF BORROWER'S FUTURE SUBSIDIARIES INTO BORROWER

     ***AND EXCEPT FOR NON-EXCLUSIVE LICENSING OF INTELLECTUAL PROPERTY IN THE
ORDINARY COURSE OF BUSINESS, AND EXCEPT FOR THE LEASING OF BORROWER'S INVENTORY
IN THE ORDINARY COURSE OF BUSINESS AND THE SALE BY BORROWER OF ITS INTEREST AS
LESSOR IN SUCH LEASES IN THE ORDINARY COURSE OF BUSINESS

     ****EXCEPT THAT BORROWER MAY REDEEM OR REPURCHASE ITS SECURITIES IN AN
AGGREGATE AMOUNT NOT EXCEEDING $100,000 IN ANY FISCAL YEAR FROM AN OFFICER,
DIRECTOR OR EMPLOYEE, IN CONNECTION WITH THE TERMINATION OF SUCH PERSON'S
EMPLOYMENT OR SERVICES, PROVIDED NO EVENT OF DEFAULT OR EVENT WHICH WITH NOTICE
OR LAPSE OF TIME WOULD CONSTITUTE AN EVENT OF DEFAULT HAS OCCURRED AND IS
CONTINUING

         -EXCEPT FOR THE FOLLOWING, IN AN AGGREGATE AMOUNT FOR ALL SUCH LOANS
NOT TO EXCEED $200,000 AT ANY TIME OUTSTANDING: TRAVEL ADVANCES, EMPLOYEE
RELOCATION LOANS AND OTHER EMPLOYEE LOANS AND ADVANCES IN THE ORDINARY COURSE OF
BUSINESS, LOANS TO EMPLOYEES, OFFICERS AND DIRECTORS THE PROCEEDS OF WHICH ARE
USED CONCURRENTLY TO PURCHASE EQUITY SECURITIES OF BORROWER, AND OTHER LOANS TO
OFFICERS AND EMPLOYEES APPROVED BY BORROWER'S BOARD OF DIRECTORS

     5.6 LITIGATION COOPERATION. Should any third-party suit or proceeding be
instituted by or against Silicon with respect to any Collateral or in any manner
relating to Borrower, Borrower shall, without expense to Silicon, make available
Borrower and its officers, employees and agents and Borrower's books and
records, to the extent that Silicon may deem them reasonably necessary in order
to prosecute or defend any such suit or proceeding.

     5.7 FURTHER ASSURANCES. Borrower agrees, at its expense, on request by
Silicon, to execute all documents and take all actions, as Silicon, may deem
reasonably necessary or useful in order to perfect and maintain Silicon's
perfected security interest in the Collateral, and in order to fully consummate
the transactions contemplated by this Agreement.

6.       TERM.

     6.1 MATURITY DATE. This Agreement shall continue in effect until the
maturity date set forth on the Schedule (the "Maturity Date"), subject to
Section 6.3 below.

     6.2 EARLY TERMINATION. This Agreement may be terminated prior to the
Maturity Date as follows: (i) by Borrower, effective three Business Days
after written notice of termination is given to Silicon; or (ii) by Silicon
at any time after the occurrence * of an Event of Default, without notice,
effective immediately. If this Agreement is terminated by Borrower or by
Silicon under this Section 6.2, Borrower shall pay to Silicon a termination
fee in an amount equal to *, provided that no termination fee shall be
charged if the credit facility hereunder is replaced with a new facility from
another division of Silicon Valley Bank. The termination fee shall be due and
payable on the effective date of termination and thereafter shall bear
interest at a rate equal to the highest rate applicable to any of the
Obligations.

     *AND DURING THE CONTINUANCE

     **$100,000

     6.3 PAYMENT OF OBLIGATIONS. On the Maturity Date or on any earlier
effective date of termination, Borrower shall pay and perform in full all
Obligations, whether evidenced by installment notes or otherwise, and whether or
not all or any part of such Obligations are otherwise then due and payable.
Without limiting the generality of the foregoing, if on the Maturity Date, or on
any earlier effective date of termination, there are any outstanding Letters of
Credit issued by Silicon or issued by another institution based upon an
application, guarantee, indemnity or similar agreement on the part of Silicon,
then on such date Borrower shall provide to Silicon cash collateral in an amount
equal to the face amount of all such Letters of Credit plus all interest, fees
and cost due or to become due in connection therewith, to secure all of the
Obligations relating to said Letters of Credit, pursuant to Silicon's then
standard form cash pledge agreement. Notwithstanding any termination of this
Agreement, all of Silicon's security interests in all of the Collateral and all
of the terms and provisions of this Agreement shall continue in full force and
effect until all Obligations have been paid and performed in full; provided
that, without limiting the fact that Loans are subject to the discretion of
Silicon, Silicon may, in

<PAGE>

its sole discretion, refuse to make any further Loans after termination. No
termination shall in any way affect or impair any right or remedy of Silicon,
nor shall any such termination relieve Borrower of any Obligation to Silicon,
until all of the Obligations have been paid and performed in full. Upon payment
and performance in full of all the Obligations and termination of this
Agreement, Silicon shall promptly deliver to Borrower termination statements,
requests for reconveyances and such other documents as may be required to fully
terminate Silicon's security interests.

7.       EVENTS OF DEFAULT AND REMEDIES.

     7.1 EVENTS OF DEFAULT. The occurrence of any of the following events
shall constitute an "Event of Default" under this Agreement, and Borrower
shall give Silicon immediate written notice thereof: (a) Any warranty
representation, statement, report or certificate made or delivered to Silicon
by Borrower or any of Borrower's officers, employees or agents, now or in the
future, shall be untrue or misleading in a material respect *; or (b)
Borrower shall fail to pay when due any Loan or any interest thereon or any
other monetary Obligation **; or (c) the total Loans and other Obligations
outstanding at any time shall exceed the Credit Limit ***; or (d) Borrower
shall fail to comply with any of the financial covenants set forth in the
Schedule or shall fail to perform any other non-monetary Obligation which by
its nature cannot be cured; or (e) Borrower shall fail to perform any other
non-monetary Obligation, which failure is not cured within **** Business Days
after the date ***** or (f) any levy,  assessment, attachment, seizure, lien
or encumbrance (other than a Permitted Lien) is made on all or any part of
the Collateral ****** which is not cured within 10 days after the occurrence
of the same; or (g) any default or event of default occurs under any
obligation secured by a Permitted Lien, which is not cured within any
applicable cure period or waived in writing by the holder of the Permitted
Lien; or (h) Borrower breaches any material contract or obligation, which has
or may reasonably be expected to have a material adverse effect on Borrower's
business or financial condition; or (i) Dissolution, termination of
existence, insolvency or business failure of Borrower; or appointment of a
receiver, trustee or custodian, for all or any part of the property of,
assignment for the benefit of creditors by, or the commencement of any
proceeding by Borrower under any reorganization, bankruptcy, insolvency,
arrangement, readjustment of debt, dissolution or liquidation law or statute
of any jurisdiction, now or in the future in effect; or (j) the commencement
of any proceeding against Borrower or any guarantor of any of the Obligations
under any reorganization, bankruptcy, insolvency, arrangement, readjustment
of debt, dissolution or liquidation law or statute of any jurisdiction, now
or in the future in effect, which is not cured by the dismissal thereof
within 30 days after the date commenced; or (k) revocation or termination of,
or limitation or denial of liability upon, any guaranty of the Obligations or
any attempt to do any of the foregoing, or commencement of proceedings by any
guarantor of any of the Obligations under any bankruptcy or insolvency law;
or (1) revocation or termination of, or limitation or denial of liability
upon, any pledge of any certificate of deposit, securities or other property
or asset of any kind pledged by any third party to secure any or all of the
Obligations, or any attempt to do any of the foregoing, or commencement of
proceedings by or against any such third party under any bankruptcy or
insolvency law; or (m) Borrower makes any payment on account of any
indebtedness or obligation which has been subordinated to the Obligations
other than as permitted in the applicable subordination agreement, or if any
Person who has subordinated such indebtedness or obligations terminates or in
any way limits his subordination agreement; or (n) there shall be a change in
the record or beneficial ownership of an aggregate of more than 20% of the
outstanding shares of stock of Borrower, in one or more transactions,
compared to the ownership of outstanding shares of stock of Borrower in
effect on the date hereof*******, without the prior written consent of
Silicon; or (o) Borrower shall generally not pay its debts as they become
due, or Borrower shall conceal, remove or transfer any part of its property,
with intent to hinder, delay or defraud its creditors, or make or suffer any
transfer of any of its property which may be fraudulent under any bankruptcy,
fraudulent conveyance or similar law; or (p) there shall be a material
adverse change in Borrower's business or financial condition; or (q) Silicon
may cease making any Loans hereunder during any of the above cure periods,
and thereafter if an Event of Default has occurred********.

     *WHEN MADE

     ** ,PROVIDED THAT BORROWER SHALL HAVE 30 DAYS TO CURE ANY EVENT OF DEFAULT
ARISING FROM THE FAILURE TO PAY WHEN DUE ANY MONETARY OBLIGATION OTHER THAN THE
PAYMENT OF ANY LOAN OR INTEREST THEREON, SUCH 30 DAYS TO BEGIN UPON THE
OCCURRENCE OF SUCH EVENT OF DEFAULT

     ***, SUBJECT TO THE PROVISIONS OF SECTION 1.3 ABOVE

     **** 3

     ***** SILICON GIVES WRITTEN NOTICE TO BORROWER OF SUCH EVENT OF DEFAULT

     ****** HAVING AN AGGREGATE VALUE IN EXCESS OF $25,000

     ******* OTHER THAN IN CONNECTION WITH AN INITIAL PUBLIC OFFERING OF
BORROWER'S STOCK

     ******** AND IS CONTINUING

     7.2 REMEDIES. Upon the occurrence of any Event of Default, and at any time
thereafter*, Silicon, at its option, and without notice or demand of any kind
(all of which are hereby expressly waived by Borrower-, may do any one or more
of the following: (a) Cease making Loans or otherwise extending credit to
Borrower under this Agreement or any other document or agreement; (b) Accelerate
and declare all or any part of the Obligations to be immediately due, payable,
and performable, notwithstanding any deferred or installment payments allowed by
any instrument evidencing or relating to any Obligation; (c) Take possession of
any or all of the Collateral wherever it may be found, and for that purpose

<PAGE>

Borrower hereby authorizes Silicon without judicial process to enter onto any of
Borrower's premises without interference to search for, take possession of,
keep, store, or remove any of the Collateral, and remain on the premises or
cause a custodian to remain on the premises in exclusive control thereof,
without charge ** for so long as Silicon deems it reasonably necessary in order
to complete the enforcement of its rights under this Agreement or any other
agreement; provided, however, that should Silicon seek to take possession of any
of the Collateral by Court process, Borrower hereby irrevocably waives: (i) any
bond and any surety or security relating thereto required by any statute, court
rule or otherwise as an incident to such possession; (ii) any demand for
possession prior to the commencement of any suit or action to recover possession
thereof-, and (iii) any requirement that Silicon retain possession of, and not
dispose of, any such Collateral until after trial or final judgment; (d) Require
Borrower to assemble any or all of the Collateral and make it available to
Silicon at places designated by Silicon which are reasonably convenient to
Silicon and Borrower, and to remove the Collateral to such locations as Silicon
may deem advisable; (e) Complete the processing, manufacturing or repair of any
Collateral prior to a disposition thereof and, for such purpose and for the
purpose of removal, Silicon shall have the right to use Borrower's premises,
vehicles, hoists, lifts, cranes, equipment and all other property without
charge; (f) Sell, lease or otherwise dispose of any of the Collateral, in its
condition at the time Silicon obtains possession of it or after further
manufacturing, processing or repair, at one or more public and/or private sales,
in lots or in bulk, for cash, exchange or other property, or on credit, and to
adjourn any such sale from time to time without notice other than oral
announcement at the time scheduled for sale. Silicon shall have the right to
conduct such disposition on Borrower's premises without charge**", for such time
or times as Silicon deems reasonable, or on Silicon's premises, or elsewhere and
the Collateral need not be located at the place of disposition. Silicon may
directly or through any affiliated company purchase or lease any Collateral at
any such public disposition, and if permissible under applicable law, at any
private disposition. Any sale or other disposition of Collateral shall not
relieve Borrower of any liability Borrower may have if any Collateral is
defective as to title or physical condition or otherwise at the time of sale;
(g) Demand payment of, and collect any Receivables and General Intangibles
comprising Collateral and, in connection therewith, Borrower irrevocably
authorizes Silicon to endorse or sign Borrower's name on all collections,
receipts, instruments and other documents, to take possession of and open mail
addressed to Borrower and remove therefrom payments made with respect to any
item of the Collateral or proceeds thereof, and, in Silicon's sole discretion,
to grant extensions of time to pay, compromise claims and settle Receivables and
the like for less than face value; (h) Offset against any sums in any of
Borrower's general, special or other Deposit Accounts with Silicon; and (i)
Demand and receive possession of any of Borrower's federal and state income tax
returns and the books and records utilized in the preparation thereof or
refer-ring thereto. All reasonable attorneys' fees, expenses, costs, liabilities
and obligations incurred by Silicon with respect to the foregoing shall be added
to and become part of the Obligations, shall be due on demand, and shall bear
interest at a rate equal to the highest interest rate applicable to any of the
Obligations. Without limiting any of Silicon's rights and remedies, from and
after the occurrence of any Event of Default*, the interest rate applicable to
the Obligations shall be increased by an additional four percent per annum.

     *DURING THE CONTINUANCE OF SUCH EVENT OF DEFAULT

     **BY BORROWER

     -(EXCEPT THAT SILICON SHALL GIVE BORROWER ONE GENERAL NOTICE, CONCURRENTLY
WITH OR PRIOR TO EXERCISING ANY OF' THE FOLLOWING REMEDIES, WHICH NOTICE MAY BE
GIVEN VIA FACSIMILE (WHICH WILL BE DEEMED TO HAVE BEEN GIVEN THE DAY OF
ELECTRONIC CONFIRMATION OF DELIVERY VIA FACSIMILE, OR IF THAT DAY IS NOT A
BUSINESS DAY, THEN THE NEXT BUSINESS DAY AFTER ELECTRONIC CONFIRMATION OF
DELIVERY VIA FACSIMILE), STATING, IN GENERAL TERMS, THAT "SILICON IS PROCEEDING
TO EXERCISE ITS RIGHTS AND REMEDIES" OR WORDS OF SIMILAR EFFECT (BUT NO SUCH
NOTICE SHALL BE REQUIRED IF EXIGENT CIRCUMSTANCES MAKE IT UNDULY DIFFICULT OR
IMPRACTICAL TO GIVE ANY SUCH NOTICE)), SILICON

     7.3 STANDARDS FOR DETERMINING COMMERCIAL REASONABLENESS. Borrower and
Silicon agree that a sale or other disposition (collectively, "sale") of any
Collateral which complies with the following standards will conclusively be
deemed to The commercially reasonable: (i) Notice of the sale is given to
Borrower at least seven days prior to the sale, and, in the case of a public
sale, notice of the sale is published at least seven days before the sale in a
newspaper of general circulation in the county where the sale is to be
conducted; (ii) Notice of the sale describes the collateral in general,
nonspecific terms; (iii) The sale is conducted at a place designated by Silicon,
with or without the Collateral being present; (iv) The sale commences at any
time between 8:00 a.m. and 6:00 p.m; (v) Payment of the purchase price in cash
or by cashier's check or wire transfer is required; (vi) With respect to any
sale of any of the Collateral, Silicon may (but is not obligated to) direct any
prospective purchaser to ascertain directly from Borrower any and all
information concerning the same. Silicon shall be free to employ other methods
of noticing and selling the Collateral, in its discretion, if they are
commercially reasonable.

     7.4 POWER OF ATTORNEY. Upon the occurrence * of any Event of Default,
without limiting Silicon's other rights and remedies, Borrower grants to Silicon
an irrevocable power of attorney coupled with an interest, authorizing and
permitting Silicon (acting through any of its employees, attorneys or agents) at
any time, at its option, but without obligation, with or without notice to
Borrower, and at Borrower's expense, to do any or all of the following, in
Borrower's name or otherwise, but Silicon agrees to exercise the following
powers

<PAGE>

in a commercially reasonable manner: (a) Execute on behalf of Borrower any
documents that Silicon may, in its sole discretion, deem advisable in order to
perfect and maintain Silicon's security interest in the Collateral, or in order
to exercise a right of Borrower or Silicon, or in order to fully consummate all
the transactions contemplated under this Agreement, and all other present and
future agreements; (b) Execute on behalf of Borrower any document exercising,
transferring or assigning any option to purchase, sell or otherwise dispose of
or to lease (as lessor or lessee) any real or personal property which is part of
Silicon's Collateral or in which Silicon has an interest; (c) Execute on behalf
of Borrower, any invoices relating to any Receivable, any draft against any
Account Debtor and any notice to any Account Debtor, any proof of claim in
bankruptcy, any Notice of Lien, claim of mechanic's, materialman's or other
lien, or assignment or satisfaction of mechanic's, materialman's or other lien;
(d) Take control in any manner of any cash or non-cash items of payment or
proceeds of Collateral; endorse the name of Borrower upon any instruments, or
documents, evidence of payment or Collateral that may come into Silicon's
possession; (e) Endorse all checks and other forms of remittances received by
Silicon; (f) Pay, contest or settle any lien, charge, encumbrance, security
interest and adverse claim in or to any of the Collateral, or any judgment based
thereon, or otherwise take any action to terminate or discharge the same; (g)
Grant extensions of time to pay, compromise claims and settle Receivables and
General Intangibles for less than face value and execute all releases and other
documents in connection therewith; (h) Pay any sums required on account of
Borrower's taxes or to secure the release of any liens therefor, or both; (i)
Settle and adjust, and give releases of, any insurance claim that relates to any
of the Collateral and obtain payment therefor; (j) Instruct any third party
having custody or control of any books or records belonging to, or relating to,
Borrower to give Silicon the same rights of access and other rights with respect
thereto as Silicon has under this Agreement; and (k) Take any action or pay any
sum required of Borrower pursuant to this Agreement and any other present or
future agreements. Any and all reasonable sums paid and any and all reasonable
costs, expenses, liabilities, obligations and attorneys' fees incurred by
Silicon with respect to the foregoing shall be added to and become part of the
Obligations, shall be payable on demand, and shall bear interest at a rate equal
to the highest interest rate applicable to any of the Obligations. In no event
shall Silicon's rights under the foregoing power of attorney or any of Silicon's
other rights under this Agreement be deemed to indicate that Silicon is in
control of the business, management or properties of Borrower.

*AND DURING THE CONTINUANCE

     7.5 APPLICATION OF PROCEEDS. All proceeds realized as the result of any
sale of the Collateral shall be applied by Silicon first to the reasonable
costs, expenses, LIABILITIES, obligations and attorneys' fees incurred by
Silicon in the exercise of its rights under this Agreement, second to the
interest due upon any of the Obligations, and third to the principal of the
Obligations, in such order as Silicon shall determine in its sole discretion.
Any surplus shall be paid to Borrower or other persons legally entitled thereto;
Borrower shall remain liable to Silicon for any deficiency. If, Silicon, in its
sole discretion, directly or indirectly enters into a deferred payment or other
credit transaction with any purchaser at any sale of Collateral, Silicon shall
have the option, exercisable at any time, in its sole discretion, of either
reducing the Obligations by the principal amount of purchase price or deferring
the reduction of the Obligations until the actual receipt by Silicon of the cash
therefor.

     7.6 REMEDIES CUMULATIVE. In addition to the rights and remedies set forth
in this Agreement, Silicon shall have all the other rights and remedies accorded
a secured party under the California Uniform Commercial Code and under all other
applicable laws, and under any other instrument or agreement now or in the
future entered into between Silicon and Borrower, and all of such rights and
remedies are cumulative and none is exclusive. Exercise or partial exercise by
Silicon of one or more of its rights or remedies shall not be deemed an
election, nor bar Silicon from subsequent exercise or partial exercise of any
other rights or remedies. The failure or delay of Silicon to exercise any rights
or remedies shall not operate as a waiver thereof, but all rights and remedies
shall continue in full force and effect until all of the Obligations have been
fully paid and performed.

8.       DEFINITIONS. As used in this Agreement, the following terms have the
         following meanings:

     "ACCOUNT DEBTOR" means the obligor on a Receivable.

     "AFFILIATE" means, with respect to any Person, a relative, partner,
shareholder, director, officer, or employee of such Person, or any parent or
subsidiary of such Person, or any Person controlling, controlled by or under
common control with such Person.

     "BUSINESS DAY" means a day on which Silicon is open for business.

     "CODE" means the Uniform Commercial Code as adopted and in effect in the
State of California from time to time.

     "COLLATERAL" has the meaning set forth in Section 2.1 above.

     "DEFAULT" means any event which with notice or passage of time or both,
would constitute an Event of Default.

     "DEPOSIT ACCOUNT" has the meaning set forth in Section 9105 of the Code.

     "ELIGIBLE INVENTORY" [NOT APPLICABLE].

<PAGE>

     "ELIGIBLE RECEIVABLES" means Receivables arising in the ordinary course
of Borrower's business from the sale of goods or rendition of services, which
Silicon, in its * judgment, shall deem eligible for borrowing, based on such
considerations as Silicon may from time to time deem appropriate. Without
limiting the fact that the determination of which Receivables are eligible
for borrowing is a matter of Silicon's discretion, the following (the
"MINIMUM ELIGIBILITY REQUIREMENTS") are the minimum requirements for a
Receivable to be an Eligible Receivable: (i) the Receivable must not be
outstanding for more than 90 days from its invoice date, (ii) the Receivable
must not represent progress billings, or be due under a fulfillment or
requirements contract with the Account Debtor, (iii) the Receivable must not
be subject to any contingencies (including Receivables arising from sales on
consignment, guaranteed sale or other terms pursuant to which payment by the
Account Debtor may be conditional), (iv) the Receivable must not be owing
from an Account Debtor with whom the Borrower has any dispute (whether or not
relating to the particular Receivable)*, (v) the Receivable must not be owing
from an Affiliate of Borrower, (vi) the Receivable must not be owing from an
Account Debtor which is subject to any insolvency or bankruptcy proceeding,
or whose financial condition is not acceptable to Silicon, or which, fails or
goes out of a material portion of its business, (vii) the Receivable must not
be owing from the United States or any department, agency or instrumentality
thereof (unless there has been compliance, to Silicon's satisfaction, with
the United States Assignment of Claims Act), (viii) the Receivable must not
be owing from an Account Debtor located outside the United States or Canada
(unless pre-approved by Silicon in its discretion in writing, or backed by a
letter of credit satisfactory to Silicon, or FCIA insured satisfactory to
Silicon), (ix) the Receivable must not be owing from an Account Debtor to
whom Borrower is or may be liable for goods purchased from such Account
Debtor or otherwise. Receivables owing from one Account Debtor will not be
deemed Eligible Receivables to the extent they exceed 25% of the total
Receivables outstanding. In addition, if more than 50% of the Receivables
owing from an Account Debtor are outstanding more than 90 days from their
invoice date (without regard to unapplied credits) or are otherwise not
eligible Receivables, then all Receivables owing from that Account Debtor
will be deemed ineligible for borrowing. Silicon may, from time to time, in
its ** revise the Minimum Eligibility Requirements, upon written notice to
the Borrower.

     * PROVIDED THAT, IN THAT CASE, THEN RECEIVABLES OWING FROM THE ACCOUNT
DEBTOR WILL BE INELIGIBLE ONLY TO THE EXTENT OF THE AMOUNT OF SUCH DISPUTE.

     **GOOD FAITH BUSINESS JUDGMENT

     "EQUIPMENT" means all of Borrower's present and hereafter acquired
machinery, molds, machine tools, motors, furniture, equipment, furnishings,
fixtures, trade fixtures, motor vehicles, tools, parts, dyes, jigs, goods and
other tangible personal property (other than Inventory) of every kind and
description used in Borrower's operations or owned by Borrower and any interest
in any of the foregoing, and all attachments, accessories, accessions,
replacements, substitutions, additions or improvements to any of the foregoing,
wherever located.

     "EVENT OF DEFAULT" means any of the events set forth in Section 7.1 of this
Agreement.

     "GENERAL INTANGIBLES" means all general intangibles of Borrower, whether
now owned or hereafter created or acquired by Borrower, including, without
limitation, all choses in action, causes of action, corporate or other business
records, Deposit Accounts, inventions, designs, drawings, blueprints, patents,
patent applications, trademarks and the goodwill of the business symbolized
thereby, names, trade names, trade secrets, goodwill, copyrights, registrations,
licenses, franchises, customer lists, security and other deposits, rights in all
litigation presently or hereafter pending for any cause or claim (whether in
contract, tort or otherwise), and all judgments now or hereafter arising
therefrom, all claims of Borrower against Silicon, rights to purchase or sell
real or personal property, rights as a licensor or licensee of any kind,
royalties, telephone numbers, proprietary information, purchase orders, and all
insurance policies and claims (including without limitation life insurance, key
man insurance, credit insurance, liability insurance, property insurance and
other insurance), tax refunds and claims, computer programs, discs, tapes and
tape files, claims under guaranties, security interests or other security held
by or granted to Borrower, all rights to indemnification and all other
intangible property of every kind and nature (other than Receivables).

     "INVENTOR" means all of Borrower's now owned and hereafter acquired goods,
merchandise or other personal property, wherever located, to be furnished under
any contract of service or held for sale or lease (including without limitation
all raw materials, work in process, finished goods and goods in transit), and
all materials and supplies of every kind, nature and description which are or
might be used or consumed in Borrower's business or used in connection with the
manufacture, packing, shipping, advertising, selling or finishing of such goods,
merchandise or other personal property, and all warehouse receipts, documents of
title and other documents representing any of the foregoing. *

     *"MATERIAL ADVERSE EFFECT" means (i) a material adverse effect on the
business, operations, results of operations, assets, liabilities or condition of
Borrower, (ii) the impairment of Borrower's ability to perform its obligations
under this Agreement or any other present or future documents or agreements
between Borrower and Silicon, or of Silicon to enforce the Obligations or
realize upon the Collateral, or (iii) a material adverse effect on the value of
the Collateral or the amount which Silicon would be likely to receive in the
liquidation of the Collateral.

<PAGE>

     "OBLIGATION" means all present and future Loans, advances, debts,
liabilities, obligations, guaranties, covenants, duties and indebtedness at any
time owing by Borrower to Silicon, whether evidenced by this Agreement or any
note or other instrument or document, whether arising from an extension of
credit, opening of a letter of credit, banker's acceptance, loan, guaranty,
indemnification or otherwise, whether direct or indirect (including, without
limitation, those acquired by assignment and any participation by Silicon in
Borrower's debts owing to others), absolute or contingent, due or to become due,
including, without limitation, all interest, charges, expenses, fees, attorney's
fees, expert witness fees, audit fees, letter of credit fees, collateral
monitoring fees, closing fees, facility fees, termination fees, minimum interest
charges and any other sums chargeable to Borrower under this Agreement or under
any other present or future instrument or agreement between Borrower and
Silicon.

     "PERMITTED LIENS" means the following: (i) purchase money security
interests in specific items of Equipment; (ii) leases of specific items of
Equipment; (iii) liens for taxes not yet payable; (iv) additional security
interests and liens consented to in writing by Silicon, which consent shall not
be unreasonably withheld; (v) security interests being terminated substantially
concurrently with this Agreement; (vi) liens of materialmen, mechanics,
warehousemen, carriers, or other similar liens arising in the ordinary course of
business and securing obligations which are not delinquent; (vii) liens incurred
in connection with the extension, renewal or refinancing of the indebtedness
secured by liens of the type described above in clauses (i) or (ii) above,
provided that any extension, renewal or replacement lien is limited to the
property encumbered by the existing lien and the principal amount of the
indebtedness being extended, renewed or refinanced does not increase; (viii)
Liens in favor of customs and revenue authorities which secure payment of
customs duties in connection with the importation of goods*. Silicon will have
the right to require, as a condition to its consent tinder subparagraph (iv)
above, that the holder of the additional security interest or lien sign an
intercreditor agreement on Silicon's then standard form, acknowledge that the
security interest is subordinate to the security interest in favor of Silicon,
and agree not to take any action to enforce its subordinate security interest so
long as any Obligations remain outstanding, and that Borrower agree that any
uncured default in any obligation secured by the subordinate security interest
shall also constitute an Event of Default under this Agreement.

     *(ix) LIENS IN FAVOR OF BAXTER HEALTHCARE CORPORATION, WHICH ARE SUBJECT TO
AN INTERCREDITOR AGREEMENT BETWEEN SILICON AND BAXTER HEALTHCARE CORPORATION
DATED AS OF JANUARY 29, 1999 (AS AMENDED FROM TIME TO TIME)

     "PERSON" means any individual, sole proprietorship, partnership, joint
venture, trust, unincorporated organization, association, corporation,
government, or any agency or political division thereof, or any other entity.

     "RECEIVABLES" means all of Borrower's now owned and hereafter acquired
accounts (whether or not earned by performance), letters of credit, contract
rights, chattel paper, instruments, securities, securities accounts, investment
property, documents and all other forms of obligations at any time owing to
Borrower, all guaranties and other security therefor, all merchandise returned
to or repossessed by Borrower, and all rights of stoppage in transit and all
other rights or remedies of an unpaid vendor, lienor or secured party.

     "RESERVES" means, as of any date of determination, such amounts as Silicon
may from time to time establish and revise in good faith reducing the amount of
Loans, Letters of Credit and other financial accommodations which would
other-wise be available to Borrower under the lending formula(s) provided in the
Schedule: (a) to reflect events, conditions, contingencies or risks which, as
determined by Silicon in good faith, do or may affect (i) the Collateral or any
other property which is security for the Obligations or its value (including
without limitation any increase in delinquencies of Receivables), (ii) the
assets, business or prospects of Borrower or any Guarantor, or (iii) the
security interests and other rights of Silicon in the Collateral (including the
enforceability, perfection and priority thereof); or (b) to reflect Silicon's
good faith belief that any collateral report or financial information furnished
by or on behalf of Borrower or any Guarantor to Silicon is or may have been
incomplete, inaccurate or misleading in any material respect; or (c) in respect
of any state of facts which Silicon determines in good faith constitutes an
Event of Default or may, with notice or passage of time or both, constitute an
Event of Default.

     OTHER TERMS. All accounting terms used in this Agreement, unless otherwise
indicated, shall have the meanings given to such terms in accordance with
generally accepted accounting principles, consistently applied. All other terms
contained in this Agreement, unless otherwise indicated, shall have the meanings
provided by the Code, to the extent such terms are defined therein.

9.       GENERAL PROVISIONS.

     9.1 INTEREST COMPUTATION. In computing interest on the Obligations, all
checks, wire transfers and other items of payment received by Silicon (including
proceeds of Receivables and payment of the Obligations in full) shall be deemed
applied by Silicon on account of the Obligations three Business Days after
receipt by Silicon of immediately available funds, and, for purposes of the
foregoing, any such funds received after 12:00 Noon on any day shall be deemed
received on the next Business Day. Silicon shall not, however, be required to
credit Borrower's account for the amount of any item of payment which is
unsatisfactory to Silicon in its sole discretion, and Silicon may charge
Borrower's loan account for the amount of any item of payment which is returned
to Silicon unpaid.

<PAGE>

     9.2 APPLICATION OF PAYMENTS. All payments with respect to the Obligations
may be applied, and in Silicon's sole discretion reversed and re-applied, to the
Obligations, in such order and manner as Silicon shall determine in its sole
discretion.

     9.3 CHARGES TO ACCOUNTS. Silicon may, in its discretion, require that
Borrower pay monetary Obligations in cash to Silicon, or charge them to
Borrower's Loan account, in which event they will bear interest at the same rate
applicable to the Loans. Silicon may also, in its discretion, charge any
monetary Obligations to Borrower's Deposit Accounts maintained with Silicon.

     9.4 MONTHLY ACCOUNTINGS. Silicon shall provide Borrower monthly with an
account of advances, charges, expenses and payments made pursuant to this
Agreement. Such account shall be deemed correct, accurate and binding on
Borrower and an account stated (except for reverses and reapplications of
payments made and corrections of errors discovered by Silicon), unless Borrower
notifies Silicon in writing to the contrary within thirty days after each
account is rendered, describing the nature of any alleged errors or admissions.

     9.5 NOTICES. All notices to be given under this Agreement shall be in
writing and shall be given either personally or by reputable private delivery
service or by regular first-class mail, or certified mail return receipt
requested, addressed to Silicon or Borrower at the addresses shown in the
heading to this Agreement, or at any other address designated in writing by one
party to the other party. Notices to Silicon shall be directed to the Commercial
Finance Division, to the attention of the Division Manager or the Division
Credit Manager. All notices shall be deemed to have been given upon delivery in
the case of notices personally delivered, or at the expiration of one Business
Day following delivery to the private delivery service, or two Business Days
following the deposit thereof in the United States mail, with postage prepaid.

     9.6 SEVERABILITY. Should any provision of this Agreement be held by any
court of competent jurisdiction to be void or unenforceable, such defect shall
not affect the remainder of this Agreement, which shall continue in full force
and effect.

     9.7 INTEGRATION. This Agreement and such other written agreements,
documents and instruments as may be executed in connection herewith are the
final, entire and complete agreement between Borrower and Silicon and supersede
all prior and contemporaneous negotiations and oral representations and
agreements, all of which are merged and integrated in this Agreement. THERE ARE
NO ORAL UNDERSTANDINGS, REPRESENTATIONS OR AGREEMENTS BETWEEN THE PARTIES WHICH
ARE NOT SET FORTH IN THIS AGREEMENT OR IN OTHER WRITTEN AGREEMENTS SIGNED BY THE
PARTIES IN CONNECTION HEREWITH.

     9.8 WAIVERS. The failure of Silicon at any time or times to require
Borrower to strictly comply with any of the provisions of this Agreement or any
other present or future agreement between Borrower and Silicon shall not waive
or diminish any right of Silicon later to demand and receive strict compliance
therewith. Any waiver of any default shall not waive or affect any other
default, whether prior or subsequent, and whether or not similar. None of the
provisions of this Agreement or any other agreement now or in the future
executed by Borrower and delivered to Silicon shall be deemed to have been
waived by any act or knowledge of Silicon or its agents or employees, but only
by a specific written waiver signed by an authorized officer of Silicon and
delivered to Borrower. Borrower waives demand, protest, notice of protest and
notice of default or dishonor, notice of payment and nonpayment, release,
compromise, settlement, extension or renewal of any commercial paper,
instrument, account, General Intangible, document or guaranty at any time held
by Silicon on which Borrower is or may in any way be liable, and notice of any
action taken by Silicon, unless expressly required by this Agreement.

     9.9 NO LIABILITY FOR ORDINARY NEGLIGENCE. Neither Silicon, nor any of its
directors, officers, employees, agents, attorneys or any other Person affiliated
with or representing Silicon shall be liable for any claims, demands, losses or
damages, of any kind whatsoever, made, claimed, incurred or suffered by Borrower
or any other party through the ordinary negligence of Silicon, or any of its
directors, officers, employees, agents, attorneys or any other Person affiliated
with or representing Silicon, but nothing herein shall relieve Silicon from
liability for its own gross negligence or willful misconduct.

     9.10 AMENDMENT. The terms and provisions of this Agreement may not be
waived or amended, except in a writing executed by Borrower and a duly
authorized officer of Silicon.

     9.11 TIME OF ESSENCE. Time is of the essence in the performance by Borrower
of each and every obligation under this Agreement.

     9.12 ATTORNEYS FEES AND COSTS. Borrower shall reimburse Silicon for all
reasonable attorneys' fees and all filing, recording, search, title insurance,
appraisal, audit, and other reasonable costs incurred by Silicon, pursuant to,
or in connection with, or relating to this Agreement (whether or not a lawsuit
is filed), including, but not limited to, any reasonable attorneys' fees and
costs Silicon incurs in order to do the following: prepare and negotiate this
Agreement and the documents relating to this Agreement; obtain legal advice in
connection with this Agreement or Borrower; enforce, or seek to enforce, any of
its rights; prosecute actions against, or defend actions by, Account Debtors;
commence, intervene in, or defend any action or proceeding; initiate any
complaint to be relieved of the automatic stay in bankruptcy; file or prosecute
any probate claim, bankruptcy claim, third party

<PAGE>

claim, or other claim; examine, audit, copy, and inspect any of the Collateral
or any of Borrower's books and records; protect, obtain possession of, lease,
dispose of, or otherwise enforce Silicon's security interest in, the Collateral;
and otherwise represent Silicon in any litigation relating to Borrower. IN
SATISFYING BORROWER'S OBLIGATION HEREUNDER TO REIMBURSE SILICON FOR ATTORNEYS
FEES, BORROWER MAY, FOR CONVENIENCE, ISSUE CHECKS DIRECTLY TO SILICON'S
ATTORNEYS, LEVY, SMALL & LALLAS, BUT BORROWER ACKNOWLEDGES AND AGREES THAT LEVY,
SMALL & LALLAS IS REPRESENTING ONLY SILICON AND NOT BORROWER IN CONNECTION WITH
THIS AGREEMENT. If either Silicon or Borrower files any lawsuit against the
other predicated on a breach of this Agreement, the prevailing party in such
action shall be entitled to recover its reasonable costs and attorneys' fees,
including (but not limited to) reasonable attorneys' fees and costs incurred in
the enforcement of, execution upon or defense of any order, decree, award or
judgment. All attorneys' fees and costs to which Silicon may be entitled
pursuant to this Paragraph shall immediately become part of Borrower's
Obligations, shall be due on demand, and shall bear interest at a rate equal to
the highest interest rate applicable to any of the Obligations.

     9.13 BENEFIT OF AGREEMENT. The provisions of this Agreement shall be
binding upon and inure to the benefit of the respective successors, assigns,
heirs, beneficiaries and representatives of Borrower and Silicon; provided,
however, that Borrower may not assign or transfer any of its rights under this
Agreement without the prior written consent of Silicon, and any prohibited
assignment shall be void. No consent by Silicon to any assignment shall release
Borrower from its liability for the Obligations.

     9.14 JOINT AND SEVERAL LIABILITY. If Borrower consists of more than one
Person, their liability shall be joint and several, and the compromise of any
claim with, or the release of, any Borrower shall not constitute a compromise
with, or a release of, any other Borrower.

     9.15 LIMITATION OF ACTIONS. Any claim or cause of action by Borrower
against Silicon, its directors, officers, employees, agents, accountants or
attorneys, based upon, arising from, or relating to this Loan Agreement, or
any other present or future document or agreement, or any other transaction
contemplated hereby or thereby or relating hereto or thereto, or any other
matter, cause or thing whatsoever, occurred, done, omitted or suffered to be
done by Silicon, its directors, officers, employees, agents, accountants or
attorneys, shall be barred unless asserted by Borrower by the commencement of
an action or proceeding in a court of competent jurisdiction by the filing of
a complaint within * after the first act, occurrence or omission upon which
such claim or cause of action, or any part thereof, is based, and the service
of a summons and complaint on an officer of Silicon, or on any other person
authorized to accept service on behalf of Silicon, within thirty (30) days
thereafter. Borrower agrees that such **  period is a reasonable and
Sufficient time for Borrower to investigate and act upon any such claim or
cause of action. The ** one year period provided herein shall not be waived,
tolled, or extended except by the written consent of Silicon in its sole
discretion. This provision shall survive any termination of this Loan
Agreement or any other present or future agreement.

     *TWO YEARS **TWO-YEAR

     9.16 PARAGRAPH HEADINGS; CONSTRUCTION. Paragraph headings are only used in
this Agreement for convenience. Borrower and Silicon acknowledge that the
headings may not describe completely the subject matter of the applicable
paragraph, and the headings shall not be used in any manner to construe, limit,
define or interpret any term or provision of this Agreement. The term
"including", whenever used in this Agreement, shall mean "including (but not
limited to)". This Agreement has been fully reviewed and negotiated between the
parties and no uncertainty or ambiguity in any term or provision of this
Agreement shall be construed strictly against Silicon or Borrower under any rule
of construction or otherwise.

     9.17 GOVERNING LAW; JURISDICTION; VENUE. This Agreement and all acts and
transactions hereunder and all rights and obligations of Silicon and Borrower
shall be governed by the laws of the State of California. As a material part of
the consideration to Silicon to enter into this Agreement, Borrower (i) agrees
that all actions and proceedings relating directly or indirectly to this
Agreement shall, at Silicon's option, be litigated in courts located within
California, and that the exclusive venue therefor shall be Santa Clara County;
(ii) consents to the jurisdiction and venue of any such court and consents to
service of process in any such action or proceeding by personal delivery or any
other method permitted by law; and (iii) waives any and all rights Borrower may
have to object to the jurisdiction of any such court, or to transfer or change
the venue of any such action or proceeding.

     9.18 MUTUAL WAIVER OF JURY TRIAL. BORROWER AND SILICON EACH HEREBY WAIVE
THE RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING BASED UPON, ARISING OUT
OF, OR IN ANY WAY RELATING TO, THIS AGREEMENT OR ANY OTHER PRESENT OR FUTURE
INSTRUMENT OR AGREEMENT BETWEEN SILICON AND BORROWER, OR ANY CONDUCT, ACTS OR
OMISSIONS OF SILICON OR BORROWER OR ANY OF THEIR DIRECTORS, OFFICERS, EMPLOYEES,
AGENTS, ATTORNEYS OR ANY OTHER PERSONS AFFILIATED WITH SILICON OR BORROWER, IN
ALL OF THE FOREGOING CASES, WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE.

<PAGE>

     BORROWER:

         OMNICELL.COM

         By /s/ Robert Y. Newell
                PRESIDENT OR VICE PRESIDENT

         By /s/ Robert J. Brigham
               SECRETARY OR ASS'T SECRETARY

     SILICON:

         SILICON VALLEY BANK

         By /s/ Christopher Hill
         TITLE Vice President

<PAGE>

--------------------------------------------------------------------------------
SILICON VALLEY BANK

                                   SCHEDULE TO

                           LOAN AND SECURITY AGREEMENT

Borrower:         OMNICELL.COM
Address:          1101 E. Meadow Drive
                  Palo Alto, California 94303

Date:              January 27, 2000

         This Schedule forms an integral part of the Loan and Security Agreement
between Silicon Valley Bank and the above-borrower of even date.

================================================================================

1.   CREDIT LIMIT

(Section 1.1):              An amount not to exceed the lesser of. (i)
                            $10,000,000 at any one time outstanding (the
                            "Maximum Credit Limit"); or (ii) 75% of the amount
                            of Borrower's Eligible Receivables (as defined in
                            Section 8 above).

                                   CASH MANAGEMENT SERVICES AND RESERVES.
                            Borrower may use up to $1,000,000 of Loans available
                            hereunder for Silicon's Cash Management Services (as
                            defined below), including, merchant services,
                            business credit card, ACH and other services
                            identified in the cash management services agreement
                            related to such service (the "Cash Management
                            Services"). Silicon may, in its sole discretion,
                            reserve against Loans which would otherwise be
                            available hereunder such sums as Silicon shall
                            determine in connection with the Cash Management
                            Services, and Silicon may charge to Borrower's Loan
                            account, any amounts that may become due or owing to
                            Silicon in connection with the Cash Management
                            Services. Borrower agrees to execute and deliver to
                            Silicon all standard form applications and
                            agreements of Silicon in connection with the Cash
                            Management Services, and, without limiting any of
                            the terms of such applications and agreements,
                            Borrower will pay all standard fees and charges of
                            Silicon in connection with the Cash Management
                            Services. The Cash Management Services shall
                            terminate on the Maturity Date.

LETTER OF CREDIT SUBMIT
(Section 1.5):                     $100,000

================================================================================

     2.   INTEREST.

               INTEREST RATE (Section 1.2):

<PAGE>

                               A rate equal to the "Prime Rate" in effect from
                               time to time, plus 2.25% per annum. Interest
                               shall be calculated on the basis of a 360-day
                               year for the actual number of days elapsed.
                               "Prime Rate" means the rate announced from time
                               to time by Silicon as its "prime rate;" it is a
                               base rate upon which other rates charged by
                               Silicon are based, and it is not necessarily the
                               best rate available at Silicon. The interest rate
                               applicable to the Obligations shall change on
                               each date is a change in the Prime Rate.

         MINIMUM MONTHLY
         INTEREST
         (Section 1.2)         not applicable

================================================================================

3.       FEES (SECTION 1.4):

               Loan Fee:       $61,250, payable concurrently herewith.

               Collateral
               Monitoring

               Fee:            $750 per month, payable in arrears (prorated for
                               any partial month at the beginning and at
                               termination of this Agreement.

================================================================================

4.       MATURITY DATE
               (Section 6.1):  One year from the date of this Agreement.

================================================================================

5.       FINANCIAL COVENANTS

               (Section 5.1):  Borrower shall comply with each of the following
                               covenant(s). Compliance shall be determined as of
                               the end of each month, except as otherwise
                               specifically provided below:

               MAXIMUM
               TANGIBLE
               NET DEFICIT:    Borrower shall maintain a Tangible Net Deficit of
                               not more than $22,000,000.

               DEFINITIONS.    For purposes of this foregoing financial
                               covenants, the following term shall have the
                               following meaning:

                               "Tangible Net Deficit" shall mean the excess of
                               total liabilities over total assets, determined
                               in accordance with generally accepted accounting
                               principles, with the following adjustments:

<PAGE>

                            (A) there shall be excluded from assets: (i) notes,
                            accounts receivable and other obligations owing to
                            the Borrower from its officers or other Affiliates,
                            and (ii) all assets which would be classified as
                            intangible assets under generally accepted
                            accounting principles, including without limitation
                            goodwill, licenses, patents, trademarks, trade
                            names, copyrights, capitalized software and
                            organizational costs, licenses and franchises

                                   (B) there shall be excluded from liabilities:
                            all indebtedness which is subordinated to the
                            Obligations under a subordination agreement in form
                            specified by Silicon or by language in the
                            instrument evidencing the indebtedness which is
                            acceptable to Silicon in its discretion.

================================================================================

6.  REPORTING.
(Section 5.3):

                        Borrower shall provide Silicon with the following:

                        1. Monthly Receivable agings, aged by invoice date,
                           within fifteen days after the end of each month.

                        2. Monthly accounts payable agings, aged by invoice
                           date, within fifteen days after the end of each
                           month.

                        3. Monthly reconciliations of Receivable agings
                           (aged by invoice date), transaction reports, and
                           general ledger, within thirty days after the end
                           of each month.

                        4. Monthly unaudited financial statements, as soon
                           as available, and in any event within thirty
                           days after the end of each month.

                        5. Monthly Compliance Certificates, within thirty
                           days after the end of each month, in such form
                           as Silicon shall reasonably specify, signed by
                           the Chief Financial Officer of Borrower,
                           certifying that as of the end of such month
                           Borrower was in full compliance with all of the
                           terms and conditions of this Agreement, and
                           setting forth calculations showing compliance
                           with the financial covenants set forth in this
                           Agreement and such other information as Silicon
                           shall reasonably request, including, without
                           limitation, a statement that at the end of such
                           month there were no held checks.

                        6. Monthly outstanding or held check registers, if
                           any, within thirty days after the end of each
                           month.

<PAGE>

                        7. Quarterly unaudited financial statements, as
                           soon as available, and in any event within
                           thirty days after the end of each fiscal quarter
                           of Borrower.

                        8. Annual operating budgets (including income
                           statements, balance sheets and cash flow
                           statements, by month) for the upcoming fiscal
                           year of Borrower within thirty days prior to the
                           end of each fiscal year of Borrower.

                        9. Annual financial statements, as soon as
                           available, and in any event within 120 days
                           following the end of Borrower's fiscal year,
                           certified by independent certified public
                           accountants acceptable to Silicon.

================================================================================

7.   COMPENSATION
 (Section 5.5):            [Omitted].

================================================================================

8.       BORROWER INFORMATION:

PRIOR NAMES OF
BORROWER
(Section 3.2):             Omnicell Technologies, Inc.

PRIOR TRADE
NAMES OF BORROWER
(Section 3.2):             None

EXISTING TRADE
NAMES OF BORROWER
(Section 3.2):             None

OTHER LOCATIONS AND
Addresses (Section 3.3): See Exhibit A hereto

MATERIAL ADVERSE
LITIGATION (Section 3.10): None

================================================================================

9.   OTHER COVENANTS
      (Section 5.1):

                     Borrower shall at all times comply with all of the
                     following additional covenants:

                     (1)    BANKING RELATIONSHIP. Borrower shall at all times
                            maintain its primary banking relationship with
                            Silicon.

<PAGE>

                     (2)    SUBORDINATION OF INSIDE DEBT. All present and future
                            indebtedness of the Borrower to its officers,
                            directors and shareholders ("Inside Debt") shall, at
                            all times, be subordinated to the Obligations
                            pursuant to a subordination agreement on Silicon's
                            standard form. Borrower represents and warrants that
                            there is no Inside Debt presently outstanding,
                            except for the following: _____________ . Prior to
                            incurring any Inside Debt in the future, Borrower
                            shall cause the person to whom such Inside Debt will
                            be owed to execute and deliver to Silicon a
                            subordination agreement on Silicon's standard form.

                     (3)    COPYRIGHT FILINGS. Concurrently, Borrower is
                            executing and delivering to Silicon a Collateral
                            Assignment, Patent Mortgage and Security Agreement
                            between Borrower and Silicon (the "Intellectual
                            Property Agreement"). Within 90 days after the date
                            hereof, Borrower shall (i) cause all of its computer
                            software, the licensing of which results in
                            Receivables, to be registered with the United States
                            Copyright Office, (ii) complete the Exhibits to the
                            Intellectual Property Agreement with all of the
                            information called for with respect to such
                            software, (iii) cause the Intellectual Property
                            Agreement to be recorded in the United States
                            Copyright Office, and (iv) provide evidence of such
                            recordation to Silicon.

Borrower:                                  Silicon:
    OMNICELL.COM                           SILICON VALLEY BANK

    By /s/ Robert Y. Newell                By /s/ Christopher Hill
         President or Vice President       Title Vice President

    By /s/ Robert J. Brigham
         Secretary or Asst Secretary

<PAGE>

SILICON VALLEY BANK

         AMENDMENT TO LOAN DOCUMENTS

BORROWER:         OMNICELL.COM
ADDRESS:          1101 E. MEADOW DRIVE
                  PALO ALTO, CALIFORNIA 94303

DATE:             JANUARY 27, 2000

         THIS AMENDMENT TO LOAN DOCUMENTS is entered into between SILICON VALLEY
BANK (" Silicon") and the borrower named above (the "Borrower"), with reference
to the various loan and security agreements and other documents, instruments and
agreements between them, including but not limited to that certain Loan and
Security Agreement dated March 26, 1999 (as amended, if at all, the "Existing
Loan Agreement"; the Existing Loan Agreement and all related documents,
instruments and agreements may be referred to collectively herein as the
"Existing Loan Documents").

         The Parties agree to amend the Existing Loan Documents, as follows:

         1. PRESENT LOAN BALANCE. Borrower acknowledges that the present unpaid
principal balance of the Borrower's indebtedness, liabilities and obligations to
Silicon under the Existing Loan Documents, including interest accrued through
1-27-00 is $0.00 (the "Present Loan Balance"), and that said sum is due and
owing without any defense, offset, or counterclaim of any kind.

         2. AMENDMENT TO EXISTING LOAN DOCUMENTS. The Existing Loan Documents
are hereby amended in their entirety to read as set forth in the Loan and
Security Agreement, and related documents, being executed concurrently
(collectively, the "New Loan Documents"). The Borrower acknowledges that the
Present Loan Balance shall be the opening balance of the Loans pursuant to the
New Loan Documents as of the date hereof, and shall, for all purposes, be deemed
to be Loans made by Silicon to the Borrower pursuant to the New Loan Documents.
Notwithstanding the execution of the New Loan Documents, the following Existing
Loan Documents shall continue in full force and effect and shall continue to
secure all present and future indebtedness, liabilities, guarantees and other
Obligations (as defined in the New Loan Documents): All standard documents of
Silicon entered into by the Borrower in connection with Letters of Credit and/or
Foreign Exchange Contracts; all security agreements, collateral assignments and
mortgages, including but not limited to those relating to patents, trademarks,
copyrights and other intellectual property; all lockbox agreements and/or
blocked account agreements; and all UCC-1 financing statements and other
documents filed with governmental offices which perfect liens or security
interests in favor of Silicon. In addition, in the event the Borrower has
previously issued any stock options, stock purchase warrants or securities to
Silicon, the same and all documents and agreements relating thereto shall also
continue in full force and effect.

<PAGE>

         3. GENERAL PROVISIONS. This Amendment and the New Loan Documents set
forth in full all of the representations and agreements of the parties with
respect to the subject matter hereof and supersede all prior discussions,
representations, agreements and understandings between the parties with respect
to the subject hereof.

Borrower:                                       Silicon:

OMNICELL.COM                                    SILICON VALLEY BANK

By /s/ Robert Y. Newell                         By /s/
        President or Vice President             Title Vice President

By /s/ Robert J. Brigham
        Secretary or Ass't Secretary

<PAGE>

SILICON VALLEY BANK

CERTIFIED RESOLUTION AND INCUMBENCY CERTIFICATE

BORROWER:         OMNICELL.COM,
                  A CORPORATION ORGANIZED UNDER THE LAWS
                  OF THE STATE OF CALIFORNIA

DATE:             JANUARY 27, 2000

I, the undersigned, Secretary or Assistant Secretary of the above-named
borrower, a corporation organized under the laws of the state set forth above,
do hereby certify that the following is a full, true and correct copy of
resolutions duly and regularly adopted by the Board of Directors of said
corporation as required by law, and by the by-laws of said corporation, and that
said resolutions are still in full force and effect and have not been in any way
modified, repealed, rescinded, amended or revoked.

     RESOLVED, that this corporation borrow from Silicon Valley Bank
     ("Silicon"), from time to time, such sum or sums of money as, in the
     judgment of the officer or officers hereinafter authorized hereby, this
     corporation may require.

     RESOLVED FURTHER, that any officer of this corporation be, and he or she is
     hereby authorized, directed and empowered, in the name of this corporation,
     to execute and deliver to Silicon, and Silicon is requested to accept, the
     loan agreements, security agreements, notes, financing statements, and
     other documents and instruments providing for such loans and evidencing
     and/or securing such loans, with interest thereon, and said authorized
     officers are authorized from time to time to execute renewals, extensions
     and/or amendments of said loan agreements, security agreements, and other
     documents and instruments.

     RESOLVED FURTHER, that said authorized officers be and they are hereby
     authorized, directed and empowered, as security for any and all
     indebtedness of this corporation to Silicon, whether arising pursuant to
     this resolution or otherwise, to grant, transfer, pledge, mortgage, assign,
     or otherwise hypothecate to Silicon, or deed in trust for its benefit, any
     property of any and every kind, belonging to this corporation, including,
     but not limited to, any and all real property, accounts, inventory,
     equipment, general intangibles, instruments, documents, chattel paper,
     notes, money, deposit accounts, furniture, fixtures, goods, and other
     property of every kind, and to execute and deliver to Silicon any and all
     grants, transfers, trust receipts, loan or credit agreements, pledge
     agreements, mortgages, deeds of trust, financing statements, security
     agreements and other hypothecation agreements, which said instruments and
     the note or notes and other instruments referred to in the preceding
     paragraph may contain such provisions, covenants, recitals and agreements
     as Silicon may require and said authorized officers may approve, and the
     execution thereof by said authorized officers shall be conclusive evidence
     of such approval.

     RESOLVED FURTHER, that Silicon may conclusively rely upon a certified copy
     of these resolutions and a certificate of the Secretary or Ass't Secretary
     of this corporation as to the officers of this corporation and their
     offices and signatures, and continue to conclusively rely on such certified
     copy of these resolutions and said certificate for all past, present and
     future transactions until written notice of any change hereto or thereto is
     given to Silicon by this corporation by certified mail, return receipt
     requested.

<PAGE>

     The undersigned further hereby certifies that the following persons are the
duly elected and acting officers of the corporation named above as borrower and
that the following are their actual signatures:

<TABLE>
<CAPTION>

NAMES                            OFFICE(S)                              ACTUAL SIGNATURES
-----                            ---------                              -----------------
<S>                              <C>                                    <C>
Randall A. Lipps                 Chairman                               /s/ Randall A. Lipps

Sheldon A. Asher                 President and Chief Executive Officer  /s/ Sheldon A. Asher

-------------------------------  -------------------------------------  -------------------------
</TABLE>

     IN WITNESS WHEREOF, I have hereunto set my hand as such Secretary or
Assistant Secretary on the date set forth above.

                                        /s/ Robert J. Brigham
                                        Secretary or Assistant Secretary

<PAGE>

                     COLLATERAL ASSIGNMENT, PATENT MORTGAGE
                             AND SECURITY AGREEMENT

         This Collateral Assignment, Patent Mortgage and Security Agreement is
made as of January 27, 2000 by and between OMNICELL.COM ("Assignor"), and
Silicon Valley Bank, a California banking corporation ("Assignee").

                                    RECITALS

         A. Assignee has agreed to lend to Assignor certain funds (the "Loans"),
pursuant to a Loan and Security Agreement dated January 26, 2000 (the "Loan
Agreement") and Assignor desires to borrow such funds from Assignee.

         B. In order to induce Assignee to make the Loans, Assignor has agreed
to assign certain intangible property to Assignee for purposes of securing the
obligations of Assignor to Assignee.

         NOW, THEREFORE, THE PARTIES HERETO AGREE AS FOLLOWS:

         1.       ASSIGNMENT, PATENT MORTGAGE AND GRANT OF SECURITY INTEREST. As
                  collateral security for the prompt and complete payment and
                  performance of all of Assignor's present or future
                  indebtedness, obligations and liabilities to Assignee,
                  Assignor hereby assigns, transfers, conveys and grants a
                  security interest and mortgage to Assignee, as security, but
                  not as an ownership interest, in and to Assignor's entire
                  right, title and interest in, to and under the following (all
                  of which shall collectively be called the "Collateral"):

                  (a) All of present and future United States registered
copyrights and copyright registrations, including, without limitation, the
registered copyrights listed in EXHIBIT A-1 to this Agreement (and including all
of the exclusive rights afforded a copyright registrant in the United States
under 17 U.S.C. Section 106 and any exclusive rights which may in the future
arise by act of Congress or otherwise) and all present and future applications
for copyright registrations (including applications for copyright registrations
of derivative works and compilations) (collectively, the "Registered
Copyrights"), and any and all royalties, payments, and other amounts payable to
Assignor in connection with the Registered Copyrights, together with all
renewals and extensions of the Registered Copyrights, the right to recover for
all past, present, and future infringements of the Registered Copyrights, and
all computer programs, computer databases, computer program flow diagrams,
source codes, object codes and all tangible property embodying or incorporating
the Registered Copyrights, and all other rights of every kind whatsoever
accruing thereunder or pertaining thereto.
                  (b) All present and future copyrights which are not registered
in the United States Copyright Office (the "Unregistered Copyrights"), whether
now owned or hereafter acquired, including without limitation the Unregistered
Copyrights listed in EXHIBIT A-2 to this Agreement, and any and all royalties,
payments, and other amounts payable to Assignor in connection with the
Unregistered Copyrights, together with all renewals and extensions of the

<PAGE>

Unregistered Copyrights, the right to recover for all past, present, and future
infringements of the Unregistered Copyrights, and all computer programs,
computer databases, computer program flow diagrams, source codes, object codes
and all tangible property embodying or incorporating the Unregistered
Copyrights, and all other rights of every kind whatsoever accruing thereunder or
pertaining thereto. The Registered Copyrights and the Unregistered Copyrights
collectively are referred to herein as the "Copyrights."
                  (c) All right, title and interest in and to any and all
present and future license agreements with respect to the Copyrights, including
without limitation the license agreements listed in EXHIBIT A-3 to this
Agreement (the "Licenses").
                  (d) All present and future accounts, accounts receivable and
other rights to payment arising from, in connection with or relating to the
Copyrights.
                  (e) Any and all trade secrets, and any and all intellectual
property rights in computer software and computer software products now or
hereafter existing, created, acquired or held;
                  (f) Any and all design rights which, may be available to
Assignor now or hereafter existing, created, acquired or held;
                  (g) All patents, patent applications and like protections
including, without limitation, improvements, divisions, continuations, renewals,
reissues, extensions and continuations-in-part of the same, including without
limitation the patents and patent applications set forth on EXHIBIT B attached
hereto (collectively, the "Patents");
                  (h) Any trademark and servicemark rights, whether registered
or not, applications to register and registrations of the same and like
protections, and the entire goodwill of the business of Assignor connected with
and symbolized by such trademarks, including without limitation those set forth
on EXHIBIT C attached hereto (collectively, the "Trademarks")
                  (i) Any and all claims for damages by way of past, present and
future infringements of any of the rights included above, with the right, but
not the obligation, to sue for and collect such damages for said use or
infringement of the intellectual property rights identified above;
                  (j) All licenses or other rights to use any of the Copyrights,
Patents or Trademarks, and all license fees and royalties arising from such use
to the extent permitted by such license or rights;
                  (k) All amendments, extensions, renewals and extensions of any
of the Copyrights, Trademarks or Patents; and
                  (l) All proceeds and products of the foregoing, including
without limitation all payments under insurance or any indemnity or warranty
payable in respect of any of the foregoing.

THE INTEREST IN THE COLLATERAL BEING ASSIGNED HEREUNDER SHALL NOT BE CONSTRUED
AS A CURRENT ASSIGNMENT, BUT AS A CONTINGENT ASSIGNMENT TO SECURE ASSIGNOR'S
OBLIGATIONS TO ASSIGNEE UNDER THE LOAN AGREEMENT.

2.       AUTHORIZATION AND REQUEST. Assignor authorizes and requests that the
         Register of Copyrights and the Commissioner of Patents and Trademarks
         record this conditional assignment.

3.       COVENANTS AND WARRANTIES. Assignor represents, warrants, covenants and
         agrees as follows:

<PAGE>

(a)      ASSIGNOR IS NOW THE SOLE OWNER OF THE COLLATERAL, EXCEPT FOR
         NON-EXCLUSIVE LICENSES GRANTED BY ASSIGNOR TO ITS CUSTOMERS IN THE
         ORDINARY COURSE OF BUSINESS.

(b)      Listed on Exhibits A-1 and A-2 are all copyrights owned by Assignor, in
         which Assignor has an interest, or which are used in Assignor's
         business.

(c)      Each employee, agent and/or independent contractor who has participated
         in the creation of the property constituting the Collateral has either
         executed an assignment of his or her rights of authorship to Assignor
         or is an employee of Assignor acting within the scope of his or her
         employment and was such an employee at the time of said creation.

(d)      All of Assignor's  present and future software,  computer  programs and
         other works of authorship subject to United States copyright
         protection, the sale, licensing or other disposition of which results
         in royalties receivable, license fees receivable, accounts receivable
         or other sums owing to Assignor (collectively, "Receivables"), have
         been and shall be registered with the United States Copyright Office
         prior, to the date Assignor requests or accepts any loan from Assignee
         with respect to such Receivables and prior to the date Assignor
         includes any such Receivables in any accounts receivable aging,
         borrowing base report or certificate or other similar report provided
         to Assignee, and Assignor shall provide to Assignee copies of all such
         registrations promptly upon the receipt of the same.

(e)      Assignor shall undertake all reasonable measures to cause its
         employees, agents and independent contractors to assign to Assignor all
         rights of authorship to any copyrighted material in which Assignor has
         or may subsequently acquire any right or interest.

(f)      Performance of this Assignment does not conflict with or result in a
         breach of any agreement to which Assignor is bound, except to the
         extent that certain intellectual property agreements prohibit the
         assignment of the rights thereunder to a third party without the
         licensor's or other party's consent and this Assignment constitutes an
         assignment.

(g)      During the term of this Agreement, Assignor will not transfer or
         otherwise encumber any interest in the Collateral, except for
         non-exclusive licenses granted by Assignor in the ordinary course of
         business or as set forth in this Assignment;

(h)      Each of the Patents is valid and enforceable, and no part of the
         Collateral has been judged invalid or unenforceable, in whole or in
         part, and no claim has been made that any part of the Collateral
         violates the rights of any third party;

(i)      Assignor shall promptly advise Assignee of any material adverse change
         in the composition of the Collateral, including but not limited to any
         subsequent ownership right of the Assignor in or to any Trademark,
         Patent or Copyright not specified in this Assignment;

<PAGE>

(j)      Assignor shall (i) protect, defend and maintain the validity and
         enforceability of the Trademarks, Patents and Copyrights, (ii) use its
         best efforts to detect infringements of the Trademarks, Patents and
         Copyrights and promptly advise Assignee in writing of material
         infringements detected and (iii) not allow any Trademarks, Patents, or
         Copyrights to be abandoned, forfeited or dedicated to the public
         without the written consent of Assignee, which shall not be
         unreasonably withheld unless Assignor determines that reasonable
         business practices suggest that abandonment is appropriate.

(k)      Assignor shall promptly register the most recent version of any of
         Assignor's Copyrights, if not so already registered, and shall, from
         time to time, execute and file such other instruments, and take such
         further actions as Assignee may reasonably request from time to time to
         perfect or continue the perfection of Assignee's interest in the
         Collateral;

(l)      This Assignment creates, and in the case of after acquired Collateral,
         this Assignment will create at the time Assignor first has rights in
         such after acquired Collateral, in favor of Assignee a valid and
         perfected first priority security interest in the Collateral in the
         United States securing the payment and performance of the obligations
         evidenced by the Loan Agreement upon making the filings referred to in
         clause (m) below;

(m)      To its  knowledge,  except for, and upon,  the filing with the United
         States Patent and Trademark office with respect to the Patents and
         Trademarks and the Register of Copyrights with respect to the
         Copyrights necessary to perfect the security interests and assignment
         created hereunder and except as has been already made or obtained, no
         authorization, approval or other action by, and no notice to or filing
         with, any U.S. governmental authority or U.S. regulatory body is
         required either (i) for the grant by Assignor of the security interest
         granted hereby or for the execution, delivery or performance of this
         Assignment by Assignor in the U.S. Or (ii) for the perfection in the
         United States or the exercise by Assignee of its rights and remedies
         thereunder;

(n)      All information heretofore, herein or hereafter supplied to Assignee by
         or on behalf of

(o)      Assignor shall not enter into any agreement that would materially
         impair or conflict with Assignor's obligations hereunder without
         Assignee's prior written consent, which consent shall not be
         unreasonably withheld. Assignor shall not permit the inclusion in any
         material contract to which it becomes a party of any provisions that
         could or might in any way prevent the creation of a security interest
         in Assignor's rights and interest in any property included within the
         definition of the Collateral acquired under such contracts, except that
         certain contracts may contain anti-assignment provisions that could in
         effect prohibit the creation of a security interest in such contracts.

(p)      Upon any executive officer of Assignor obtaining actual knowledge
         thereof, Assignor will promptly notify Assignee in writing of any event
         that materially adversely affects the value of any material Collateral,
         the ability of Assignor to dispose of any material Collateral or the
         rights and remedies of Assignee in relation thereto, including the levy
         of any legal process against any of the Collateral.

<PAGE>

4.       ASSIGNEE'S RIGHTS. Assignee shall have the right, but not the
         obligation, to take, at Assignor's sole expense, any actions that
         Assignor is required under this Assignment to take but which Assignor
         fails to take, after fifteen (15) days' notice to Assignor. Assignor
         shall reimburse and indemnify Assignee for all reasonable costs and
         reasonable expenses incurred in the reasonable exercise of its rights
         under this section 4.

5.       INSPECTION RIGHTS.  Assignor hereby grants to Assignee and its
         employees, representatives and agents the right to visit, during
         reasonable hours upon prior reasonable written notice to Assignor, and
         any of Assignor's plants and facilities that manufacture, install or
         store products (or that have done so during the prior six-month period)
         that are sold utilizing any of the Collateral, and to inspect the
         products and quality control records relating thereto upon reasonable
         written notice to Assignor and as often as may be reasonably requested,
         but not more than one (1) in every six (6) months; provided, however,
         nothing herein shall entitle Assignee access to Assignor's trade
         secrets and other proprietary information.

6.       FURTHER ASSURANCES; ATTORNEY IN FACT.

(a)      Upon an  Event of  Default,  on a  continuing  basis  thereafter,
         Assignor will, subject to any prior licenses, encumbrances and
         restrictions and prospective licenses, make, execute, acknowledge and
         deliver, and file and record in the proper filing and recording places
         in the United States, all such instruments, including, appropriate
         financing and continuation statements and collateral agreements and
         filings with the United States Patent and Trademarks Office and the
         Register of Copyrights, and take all such action as may reasonably be
         deemed necessary or advisable, or as requested by Assignee, to perfect
         Assignee's security interest in all Copyrights, Patents and Trademarks
         and otherwise to carry out the intent and purposes of this Collateral
         Assignment, or for assuring and confirming to Assignee the grant or
         perfection of a security interest in all Collateral.

(b)      Upon an Event of Default, Assignor hereby irrevocably appoints Assignee
         as Assignor's attorney-in-fact, with full authority in the place and
         stead of Assignor and in the name of Assignor, Assignee or otherwise,
         from time to time in Assignee's discretion, upon Assignor's failure or
         inability to do so, to take any action and to execute any instrument
         which Assignee may deem necessary or advisable to accomplish the
         purposes of this Collateral Assignment, including:
                  (i) To modify, in its sole discretion, this Collateral
Assignment without first obtaining Assignor's approval of or signature to such
modification by amending Exhibit A-I, Exhibit A-2, Exhibit A-3, Exhibit B and
Exhibit C, thereof, as appropriate, to include reference to any right, title or
interest in any Copyrights, Patents or Trademarks acquired by Assignor after the
execution hereof or to delete any reference to any right, title or interest in
any Copyrights, Patents or Trademarks in which Assignor no longer has or claims
any right, title or interest; and
                  (ii) To file, in its sole discretion, one or more financing or
continuation statements and amendments thereto, relative to any of the
Collateral without the signature of Assignor where permitted by law.

<PAGE>

7.       EVENTS OF DEFAULT. The occurrence of any of the following shall
         constitute an Event of Default under the Assignment:

(a)      An Event of Default occurs under the Loan Agreement; or
(b)      Assignor breaches any warranty or agreement made by Assignor in this
         Assignment.

8.       REMEDIES.  Upon the  occurrence and  continuance of an Event of
         Default, Assignee shall have the right to exercise all the remedies of
         a secured party under the California Uniform Commercial Code, including
         without limitation the right to require Assignor to assemble the
         Collateral and any tangible property in which Assignee has a security
         interest and to make it available to Assignee at a place designated by
         Assignee. Assignee shall have a nonexclusive, royalty free license to
         use the Copyrights, Patents and Trademarks to the extent reasonably
         necessary to permit Assignee to exercise its rights and remedies upon
         the occurrence of an Event of Default. Assignor will pay any expenses
         (including reasonable attorney's fees) incurred by Assignee in
         connection with the exercise of any of Assignee's rights hereunder,
         including without limitation any expense incurred in disposing of the
         Collateral. All of Assignee's rights and remedies with respect to the
         Collateral shall be cumulative.

9.       INDEMNITY. Assignor agrees to defend, indemnify and hold harmless
         Assignee and its officers, employees, and agents against: (a) all
         obligations, demands, claims, and liabilities claimed or asserted by
         any other party in connection with the transactions contemplated by
         this Agreement, and (b) all losses or expenses in any way suffered,
         incurred, or paid by Assignee as a result of or in any way arising out
         of, following or consequential to transactions between Assignee and
         Assignor, whether under this Assignment or otherwise (including without
         limitation, reasonable attorneys fees and reasonable expenses), except
         for losses arising form or out of Assignee's gross negligence or
         willful misconduct.

10.      RELEASE.  At such time as Assignor shall  completely  satisfy all of
         the obligations secured hereunder, Assignee shall execute and deliver
         to Assignor all assignments and other instruments as may be reasonably
         necessary or proper to terminate Assignee's security interest in the
         Collateral, subject to any disposition of the Collateral which may have
         been made by Assignee pursuant to this Agreement. For the purpose of
         this Agreement, the obligations secured hereunder shall be deemed to
         continue if Assignor enters into any bankruptcy or similar proceeding
         at-a time when any amount paid to Assignee could be ordered to be
         repaid as a preference or pursuant to a similar theory, and shall
         continue until it is finally determined that no such repayment can be
         ordered.

11.      NO WAIVER. No course of dealing between Assignor and Assignee, nor any
         failure to exercise nor any delay in exercising, on the part of
         Assignee, any right, power, or privilege under this Agreement or under
         the Loan Agreement or any other agreement, shall operate as a waiver.
         No single or partial exercise of any right, power, or privilege under
         this Agreement or under the Loan Agreement or any other agreement by
         Assignee shall preclude any other or further exercise of such right,
         power, or privilege or the exercise of any other right, power, or
         privilege by Assignee.

<PAGE>

12.      RIGHTS ARE CUMULATIVE. All of Assignee's rights and remedies with
         respect to the Collateral whether established by this Agreement, the
         Loan Agreement, or any other documents or agreements, or by law shall
         be cumulative and may be exercised concurrently or in any order.

13.      COURSE OF DEALING. No course of dealing, nor any failure to exercise,
         nor any delay in exercising any right, power or privilege hereunder
         shall operate as a waiver thereof.

14.      ATTORNEYS' FEES. If any action relating to this Assignment is brought
         by either party hereto against the other party, the prevailing party
         shall be entitled to recover reasonable attorneys fees, costs and
         disbursements.

15.      AMENDMENTS. This Assignment may be amended only by a written instrument
         signed by both parties hereto. To the extent that any provision of this
         Agreement conflicts with any provision of the Loan Agreement, the
         provision giving Assignee greater rights or remedies shall govern, it
         being understood that the purpose of this Agreement is to add to, and
         not detract from, the rights granted to Assignee under the Loan
         Agreement. This Agreement, the Loan Agreement, and the documents
         relating thereto comprise the entire agreement of the parties with
         respect to the matters addressed in this Agreement.

16.      SEVERABILITY. The provisions of this Agreement are severable. If any
         provision of this Agreement is held invalid or unenforceable in whole
         or in part in any jurisdiction, then such invalidity or
         unenforceability shall affect only such provision, or part thereof, in
         such jurisdiction, and shall not in any manner affect such provision or
         part thereof in any other jurisdiction, or any other provision of this
         Agreement in any jurisdiction.

17.      COUNTERPARTS. This Assignment may be executed in two or more
         counterparts, each of which shall be deemed an original but all of
         which together shall constitute the same instrument.

18.      CALIFORNIA LAW AND JURISDICTION. This Assignment shall be governed by
         the laws of the State of California, without regard for choice of law
         provisions. Assignor and Assignee consent to the nonexclusive
         jurisdiction of any state or federal court located in Orange County,
         California.

19.      CONFIDENTIALITY.  In handling any  confidential  information,  Assignee
         shall exercise the same degree of care that it exercises with respect
         to its own proprietary information of the same types to maintain the
         confidentiality of any non-public information thereby received or
         received pursuant to this Assignment except that the disclosure of this
         information may be made (i) to the affiliates of the Assignee, (ii) to
         prospective transferee or purchasers of an interest in the obligations
         secured hereby, provided that they have entered into a comparable
         confidentiality agreement in favor of Assignor and have delivered a
         copy to Assignor, (iii) as required by law, regulation, rule or order,
         subpoena judicial order or similar order and (iv) as may be required in
         connection with the examination, audit or similar investigation of
         Assignee.

20.      WAIVER OF RIGHT TO JURY TRIAL. ASSIGNEE AND ASSIGNOR EACH 'HEREBY WAIVE
         THE RIGHT TO TRIAL BY JURY IN ANY ACTION OR

<PAGE>

         PROCEEDING BASED UPON, ARISING OUT OF, OR IN ANY WAY RELATING TO: (I)
         THIS AGREEMENT; OR (II) ANY OTHER PRESENT OR FUTURE INSTRUMENT OR
         AGREEMENT BETWEEN ASSIGNEE AND ASSIGNOR; OR (III) ANY CONDUCT, ACTS OR
         OMISSIONS OF ASSIGNEE OR ASSIGNOR OR ANY OF THEIR DIRECTORS, OFFICERS,
         EMPLOYEES, AGENTS, ATTORNEYS OR ANY OTHER PERSONS AFFILIATED WITH
         ASSIGNEE OR ASSIGNOR; IN EACH OF THE FOREGOING CASES, WHETHER SOUNDING
         IN CONTRACT OR TORT OR OTHERWISE.

     IN WITNESS WHEREOF, the parties hereto have executed this Assignment on the
day and year first above written.

                                           ASSIGNOR:

                                           OMNICELL.COM

                                           By: /s/ Robert Y. Newell
                                           Title: Chief Financial Officer
                                           Name (please Print):
                                           Robert Y. Newell

                                           ADDRESS OF ASSIGNOR:

                                           1101 E. Meadow Drive
                                           Palo Alto, California  94303

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